Magazine article New Zealand Management

MANAGEMENT CONSULTANTS: More Bang for Your Buck - A Two-Way Thing; Companies and Governments around the World Are Spending More and More on Management Consultants. but Are They Getting What They Want and What Is the Local Experience?

Magazine article New Zealand Management

MANAGEMENT CONSULTANTS: More Bang for Your Buck - A Two-Way Thing; Companies and Governments around the World Are Spending More and More on Management Consultants. but Are They Getting What They Want and What Is the Local Experience?

Article excerpt

Byline: Mark Peart

Recent global research commissioned by Ernst & Young on the merits and virtuosity of management consultants offers a compelling yet bittersweet message for consultants and clients, depending on where you sit.

Pollster Ipsos MORI last year interviewed 456 people within a wide range of large companies in the US, UK, France, Germany and Italy that had recently commissioned projects or who had worked on projects with a management consultancy firm. The responses indicated that businesses and government departments around the world are spending unpre-cedented amounts on management consultants. But most of them feel that they see little or no benefit for their investment.

Businesses and governments worldwide conservatively spend about US$150 billion a year on consultancy - an increase of 1000 percent in just 10 years. The US is the world's largest market, followed by the UK where businesses and institutions spend around [pounds sterling]12 billion annually on external advisors. The increased spending on consultancy has been driven by the challenges of globalisation, mergers and acquisitions, and especially by increasing investment in IT, systems integration, and disruptive technologies arising from the increasing use of the internet.

So the research clearly shows that clients are spending as never before, but also they are far from happy, leading to the unpalatable conclusion that consultants are failing their clients.

The survey also found there is surprisingly little trust between clients and their consultants - 40 percent would not describe the consultants they used as trustworthy. More than half (53 percent) thought that the work that had been delivered had neither effectively, nor very effectively, improved the performance of their business.

In New Zealand, however, consultants NZ Management spoke to insist they maintain high standards of professionalism and service, and that not to do so would, apart from being rather foolish, drive their businesses into the ground before long.

The managing partner of Deloitte's consulting business in New Zealand, Matthew Hitch, was particularly forthright about the role large practices like his have in advising big business on major projects.

Hitch said he believed there could be little overlap between large firms like his and smaller, boutique firms operating in more specialist, niche markets.

Major projects of necessity had to be largely the preserve of big firms because that was where the expertise to manage them largely resided, he said.

The earliest developments in management consultancy began in the US in the late 19th and early 20th centuries. In Europe, management consulting grew more slowly. In the 1930s and 1940s the first UK consultancy firms practised the application of scientific measurement to business, and since then, the range of services provided by consultancies has broadened as has the types of consultant. Today, of the world's 25 leading consulting practices, 16 have primary businesses outside the sphere of professional services.

From the early days of management by objectives and time and motion studies, Ernst & Young says, businesses have grown to rely increasingly on consultancies for help and advice on all aspects of their operations.

As the survey shows, broadly speaking, clients know what they want.

This includes:

* Objective advice.

* Solutions tailored to their needs.

* A firm that will develop a close working relationship with them.

* A company with real insight into their business.

* A solution that delivers sustainable performance improvement.

So what clients say they want, it turns out, is what consultancies have been telling them for years that they already supply. But what client organisations say they are getting, turns out to be something different. …

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