Consulting services are the silent powerhouse behind many companies’ growth, innovation, and operational improvements. Despite this, consulting spend often gets lumped together with indirect procurement categories like travel and insurance—overlooked as just another expense rather than a key driver of business success. This miscategorisation not only undermines the true potential of consulting services but also limits the strategic value they can bring to the organisation.

Unlike traditional indirect procurement categories, such as office supplies or insurance, consulting directly impacts core business functions. Whether it’s guiding a company through digital transformation, streamlining operations, or sparking new revenue streams, consulting services can significantly influence both the top and bottom lines. Treating this spend as a transactional cost rather than a strategic investment leaves significant value untapped.

This is where Category Management steps in. As a structured approach to procurement, category management allows organisations to segment their spend, align it with business goals, and optimize supplier performance. By applying the principles of category management to consulting, companies can unlock its full potential—improving outcomes, driving better supplier relationships, and creating long-term value.

Managing consulting as its own distinct category, separate from other professional services, allows for more nuanced supplier strategies and a clearer alignment with corporate objectives. With consulting spend typically ranging between 0.5% and 3% of revenues, the potential for value creation is immense. The companies that recognize this and treat consulting as a strategic asset, rather than an overhead cost, will be the ones that stay ahead in today’s competitive market.

#1. Spend Analysis: Understanding Where the Money Goes

To manage consulting effectively as a strategic category, you need to know exactly where your money is going. Spend analysis is the first critical step in this process, offering a detailed look at how much is being spent on consulting services, where it’s being spent, and with whom.

While the strategic value of consulting has been highlighted, spend analysis provides the hard data that allows procurement teams and leadership to make informed decisions. Without this insight, companies are flying blind, unable to leverage consulting for maximum business impact.

Visibility: Shedding Light on Consulting Expenditures

A comprehensive spend analysis provides much-needed visibility into consulting engagements across the organisation. In many companies, consulting spend is fragmented, with different departments engaging various consultants independently. Without a unified view, it’s nearly impossible to see the bigger picture—let alone ensure that consulting projects are aligned with the company’s goals.

By aggregating consulting expenses across departments and divisions, spend analysis delivers a full view of the consulting landscape within the company. It highlights who is using consulting services, how much they’re spending, and what outcomes are being achieved. This visibility allows procurement teams to identify redundancies, such as multiple departments hiring different consultants for similar projects, or missed opportunities where consulting is being underutilized.

Alignment: Ensuring Consulting Spend Matches Business Priorities

Spend analysis doesn’t just tell you where the money is going—it helps ensure that consulting spend is aligned with your company’s overall business strategy. Once you understand who is using consulting services and why, you can assess whether these engagements are directly contributing to the company’s strategic objectives. Are the projects supporting key initiatives like digital transformation, cost reduction, or new market expansion? Or is money being spent on low-priority areas that don’t move the needle?

With a clear picture of where consulting dollars are being spent, procurement teams can work with leadership to align future projects more closely with business priorities. This ensures that every consulting engagement delivers measurable value and supports the company’s long-term goals.

Cost Optimisation: Identifying Savings and Improving Efficiency

One of the most immediate benefits of spend analysis is cost optimisation. With full visibility into consulting engagements, companies can identify areas where they might be overspending or missing opportunities to negotiate better terms.

For example, a spend analysis might reveal that multiple departments are using the same consulting firm, but each is paying a different rate. Consolidating these engagements and negotiating as a unified entity can lead to significant cost savings.

Moreover, spend analysis can uncover underutilized resources. For instance, if certain consultants are being hired for small, non-critical projects, but their expertise could be leveraged for larger, more impactful initiatives, companies can reallocate these resources to maximise their value. This kind of optimisation ensures that consulting spend is not only controlled but also fully utilized to drive better business outcomes.

Backing Strategic Decision-Making with Data

The insights gained from spend analysis empower procurement teams and senior leadership to make data-driven decisions about how consulting is used. Rather than relying on intuition or anecdotal evidence, companies can base their consulting procurement strategy on hard facts. This helps in setting realistic budgets, negotiating more effectively with consulting firms, and ensuring that every dollar spent contributes to strategic objectives.

In short, spend analysis is the foundation of effective consulting category management. By providing visibility into spending patterns, aligning consulting engagements with business priorities, and identifying opportunities for cost optimisation, it turns what was once a nebulous area of procurement into a data-driven, results-oriented function. For companies serious about treating consulting as a strategic asset, spend analysis is not just helpful—it’s essential.

#2. Market Analysis: Leveraging Insights for Strategic Advantage

Understanding the consulting market is crucial for maximizing the value of your consulting spend. While many companies recognize the importance of knowing their internal spending patterns, fewer take full advantage of market analysis to inform their consulting procurement decisions.

Market analysis goes beyond knowing who the major players are—it’s about understanding the full landscape of available consultants, staying competitive, and leveraging your company’s position to get the best deals and partners. This proactive approach is key to staying ahead in a rapidly evolving business environment.

Identifying the Right Consultants for Your Business Goals

One of the most significant benefits of market analysis is its ability to help companies find the right consultants for their specific needs. Consulting firms vary greatly in their expertise, capabilities, and pricing models. While some may excel in strategy and innovation, others may be more suited for operational improvements or digital transformation. A thorough market analysis allows companies to identify which firms are best equipped to tackle their unique challenges.

For instance, if your company is undergoing a digital transformation, market analysis can help you pinpoint consulting firms with a proven track record in this area. It can also highlight smaller, niche firms that might not have been on your radar but offer specialized expertise that aligns perfectly with your goals. By mapping out the capabilities of different consulting firms, you can create a shortlist of potential partners that are most likely to deliver the desired results.

Leveraging Your Position as a Valued Client

A robust market analysis also helps you understand your company’s value in the consulting marketplace. Large companies with consistent consulting needs, for example, may have more bargaining power than smaller firms that engage consultants less frequently. By knowing your position, you can use this leverage to negotiate better terms, secure more favorable pricing, and demand higher levels of service.

Consulting firms are eager to work with clients who offer long-term, high-value engagements. Market analysis can show where your company fits into the broader consulting market and help you position yourself as an attractive client. This not only leads to better deals but also ensures that top consulting firms prioritize your projects, offering you their best teams and resources. By approaching the market from a position of strength, your company becomes a sought-after partner, capable of attracting and retaining the best consultants.

Staying Competitive and Proactive in a Changing Landscape

The consulting market is constantly evolving, with new players, trends, and technologies emerging all the time. A well-conducted market analysis helps companies stay competitive by keeping them informed about these changes. Whether it’s understanding new methodologies in consulting, identifying emerging firms that offer innovative solutions, or spotting trends that could impact your business, market analysis enables companies to stay ahead of the curve.

For example, as more firms focus on digital solutions, companies that proactively seek out consultants specializing in AI, data analytics, or digital transformation will be better positioned to adapt and thrive. Staying competitive isn’t just about reacting to market changes—it’s about anticipating them and positioning your company to take advantage of new opportunities.

Discovering New Opportunities for Value Creation

Beyond just finding the right consultants, market analysis opens the door to discovering new opportunities for value creation. It helps procurement teams and business leaders see where their company’s consulting needs align with untapped capabilities in the market. By understanding the full spectrum of services available, companies can explore new ways that consultants can add value—whether through innovation, process improvement, or strategic initiatives.

For instance, your market analysis might reveal that some consulting firms are offering innovative approaches to sustainability, a topic that could align with your company’s long-term goals. Identifying these opportunities allows your organisation to engage with consultants who can help you stay ahead of industry trends and address challenges you hadn’t previously considered.

Maintaining Strong Relationships with Key Suppliers

Market analysis doesn’t stop at identifying the right consultants; it also plays a crucial role in maintaining long-term relationships with key suppliers. By staying informed about the consulting market, you can continuously assess whether your current consulting partners are still the best fit for your evolving needs. It enables you to renegotiate contracts, adjust expectations, and ensure that your consultants remain aligned with your business goals.

In short, market analysis is not just a tool for finding the right consultants; it’s a strategic process that helps companies stay competitive, discover new opportunities, and leverage their market position. By regularly conducting market analysis, companies can ensure they are working with the best partners, securing the best deals, and continuously driving value through their consulting engagements. This proactive approach positions your organisation for success in an ever-changing business landscape.

#3. Supplier Performance & Relationship Management: The Dual Pillars of Long-Term Success

When managing consulting engagements, success is not just about hitting deliverables on time and within budget. It’s also about cultivating strong, long-term relationships that continuously provide value beyond the immediate project scope. Supplier performance and relationship management go hand in hand, and companies that balance these two elements are the ones that truly maximise their consulting investments.

While performance metrics offer clear indicators of a consultant’s effectiveness, it’s the softer, human aspects of relationship management—like trust, collaboration, and knowledge transfer—that often make the difference between a good project and a transformative one. Let’s dive into why both supplier performance and relationship management are critical to driving continuous value from your consulting engagements.

Quantitative Metrics: Tracking Supplier Performance

Supplier performance metrics are the backbone of any successful consulting engagement. These hard numbers provide a clear picture of whether a consulting firm is delivering on its promises. Key performance indicators (KPIs) for consulting engagements typically include metrics like on-time delivery, adherence to budget, and the quality of deliverables.

By setting these metrics at the beginning of a project and reviewing them regularly, procurement teams can hold consulting firms accountable. Performance reviews should be structured around these quantitative data points, ensuring that consultants are meeting deadlines, staying within budget, and providing solutions that align with the agreed-upon objectives.

For example, if a consulting firm consistently delivers late or overshoots the budget, these metrics give you the data needed to address performance issues and, if necessary, reconsider the partnership. Supplier performance tracking ensures transparency and provides a foundation for making informed decisions about future engagements.

Qualitative Metrics: The Human Element of Consulting Success

While quantitative metrics are critical, consulting engagements are inherently people-driven, making qualitative factors equally important. These include aspects like a consultant’s ability to build trust, collaborate effectively, and transfer knowledge to your internal teams.

The nature of consulting means that your external partners are often deeply embedded within your organisation, working closely with key stakeholders and employees. A consultant’s interpersonal skills—such as their ability to build rapport, communicate clearly, and navigate complex organisational dynamics—can have a significant impact on the success of the project. Poor interpersonal dynamics, on the other hand, can derail even the best-planned engagements.

For example, a consultant who excels at transferring knowledge and empowering internal teams will leave a lasting impact long after the engagement is over. This ensures that the value they create is sustained, rather than fading once the project concludes. As a result, qualitative performance reviews should assess how well consultants integrate with your team, how they handle feedback, and how effectively they communicate and collaborate throughout the project.

Building Trust and Collaboration for Long-Term Partnerships

Beyond performance metrics, relationship management is key to extracting long-term value from consulting engagements. Strong relationships are built on trust, and trust takes time and consistent effort to cultivate. When a consulting firm feels trusted and valued as a partner, they are more likely to go the extra mile, deliver innovative solutions, and invest in your success.

Effective relationship management involves regular communication, not just about performance, but about future needs, potential challenges, and areas for improvement. Holding frequent check-ins and maintaining open feedback loops ensures that any issues are addressed early and that the consultant remains aligned with your evolving business needs.

Moreover, relationship management is about being proactive in building a partnership where both sides feel equally invested. This means looking beyond the immediate project and considering how the consultant can continue to add value in future engagements. A strong, trusted relationship leads to better collaboration, more innovative problem-solving, and ultimately, better outcomes for your organisation.

Knowledge Transfer: Ensuring Long-Term Impact

One of the most critical aspects of managing consulting engagements is ensuring effective knowledge transfer. A successful project shouldn’t just provide a short-term solution—it should empower your internal teams to carry forward the work once the consultants have left. This is where relationship management and performance intersect. You need consultants who are not just effective problem solvers but also skilled at training and transferring knowledge to your team.

A well-managed relationship encourages consultants to invest in the long-term success of your organisation by providing the tools, insights, and skills your teams need to sustain progress. This creates a ripple effect where the value of the consulting engagement extends beyond the initial project scope.

Adapting Relationships Over Time: Flexibility and Feedback

Consulting relationships, like any professional partnership, must evolve over time. What worked for one project may not be suitable for the next, and business needs often shift as companies grow and change. Regular performance reviews, combined with relationship-building efforts, allow companies to adapt these partnerships in real time.

Feedback loops are essential here. By regularly reviewing performance and having open conversations about what’s working and what needs improvement, both the client and the consulting firm can make adjustments. Whether it’s changing the project team composition, shifting focus, or revising timelines, this flexibility ensures that the partnership continues to meet the needs of both parties.

Conclusion: Consulting Category Management – A Bold Move with Big Rewards

Category management is a tried-and-tested methodology for procurement teams, and its principles are being increasingly adopted across industries. However, very few companies recognize consulting as a standalone category and give it the attention it truly deserves. The result? Missed opportunities for significant value creation and optimisation in a complex consulting landscape.

One of the biggest challenges in managing consulting as a strategic category is the complex environment in which it operates. Internal stakeholders often hold the power in purchasing decisions, bypassing procurement teams altogether. Additionally, indirect procurement groups tend to have less influence than their direct procurement counterparts. This imbalance, combined with a general lack of awareness about consulting’s potential impact on both the top and bottom lines, keeps consulting management stuck in the status quo.

Another factor is the lack of recognition for the broader impact procurement can have. Procurement is often seen merely as a cost-control function rather than a strategic driver of value. This perception makes it difficult to move the needle when advocating for consulting to be managed as a distinct category. But for those companies bold enough to break through these barriers and treat consulting spend as a strategic asset, the rewards are immense.

By applying the principles of category management to consulting, companies can unlock significant savings, enhance supplier performance, and, most importantly, create long-term value that drives business success. These companies become more strategic in their consulting engagements, ensuring that every project directly contributes to their business objectives and delivers measurable impact.

In today’s competitive and fast-paced business environment, the organisations that dare to manage consulting as a standalone category are the ones reaping the rewards. Will yours be one of them?