In today’s fast-paced and ever-evolving business landscape, the success of your strategic initiatives often depends on partnering with the right consulting firms. However, to ensure you’re getting the best value and outcomes, it’s crucial to continuously optimise and rationalize your consulting provider panel. This guide will take you through the necessary steps to rationalize your existing panel, build a preliminary list of new providers to fill any gaps, and develop a comprehensive consulting strategy aligned with your future business needs.

Step 1: Develop a Consulting Category Strategy

Before diving into rationalizing your panel or sourcing new providers, the first and most critical step is to develop a clear strategy for managing your consulting category. This strategy should be based on a deep understanding of your organization’s current needs and future goals.

Why You Need a Consulting Strategy

A consulting strategy acts as a roadmap, guiding your decisions on which consulting services to prioritize, where to allocate resources, and how to engage with consulting firms. It ensures that your consulting spend is aligned with your broader business objectives and that you’re prepared to meet upcoming challenges with the right expertise.

How to Build Your Strategy

1. Assess Future Needs: Start by identifying your organization’s strategic goals for the next 3-5 years. What capabilities will you need? Where are the potential gaps in your current skill sets? This foresight will help you determine which consulting services will be essential.
2. Categorize Consulting Needs: Break down your consulting requirements into categories such as strategy, operations, IT, and human resources. This will help you identify which areas need the most attention and where you might require specialized expertise.
3. Align with Business Units: Ensure that your consulting strategy is in sync with the needs of different business units. This alignment will prevent duplication of efforts and enable you to leverage consulting resources more effectively across the organization.

Step 2: Rationalize Your Existing Consulting Provider Panel

Once your strategy is in place, the next step is to rationalize your existing consulting provider panel. This process involves assessing the performance of your current providers, identifying underperformers, and ensuring that your panel is optimised to meet your strategic needs.

1. Let Go of Low-Performers

It’s essential to regularly assess the performance of your consulting providers. Low-performers who fail to deliver expected results should be removed from your panel. If a firm shows inconsistent performance, try to identify patterns—such as specific project types or environments where they struggle—and avoid engaging them for similar work in the future.

When feedback alternates between good and bad, identify the patterns. Perhaps they struggle with specific types of projects, or maybe they don’t excel in certain environments, such as working with very operational teams. Instead of cutting ties entirely, consider whether it’s a matter of using them selectively. If only one partner within the firm is underperforming, request to work exclusively with those who have received positive feedback.

2. Avoid Over-Reliance on a Single Provider

Diversification is key to mitigating risks. It’s best to avoid tying yourself to only one supplier for your strategic needs. Think supplier risk management and apply the same sound principles as with other purchases. Besides, each consulting firm has a different DNA profile and a different portfolio of projects at which they excel.

Find 2-3 different consulting firms for each strategic need. You might end up with the same supplier for several needs, and that is fine. Competition will keep all providers on their toes and ensure you’re receiving the best possible outcomes.

3. Identify High-Performers and Rising Stars

As you evaluate your current panel, highlight the high-performers—those who consistently deliver exceptional results. These firms should be prioritized for future projects. Additionally, identify any rising stars who may have the potential to take on more significant roles in your consulting engagements.

When sourcing new consulting providers, ensure they are high-performers by checking references and validating their experience with relevant projects. Consider using a third party to check references if you need to maintain anonymity or if references are with competitors.

4. Eliminate Redundancies

Look for redundancies in your panel. If multiple providers offer similar services, consider consolidating to streamline your engagements and potentially negotiate better terms with fewer firms.

Lack of bench strength shouldn’t be an issue if you’ve diversified well. But make sure that you’re not stuck with providers who might leave you stranded due to their limited capacity.

Step 3: Source a Preliminary List of Providers to Fill Gaps

With your panel rationalized, it’s time to source new consulting providers that align with the needs and gaps identified in your strategy. Here’s how to build a strong preliminary list:

1. Start with the Ideal Consulting “DNA Profile”

Your first step in building a preliminary list of providers is defining your search criteria based on the ideal Consulting DNA Profile for your project needs. This profile should include capabilities, industry expertise, geographical presence, and the firm’s track record. If your initial search yields too many options, refine your criteria to focus on firms that best match your strategic priorities.

If you realize you have way too many options, increase the granularity of your criteria. If the length of your preliminary list is consistent with your goal, you can start digging into the specifics.

2. Dig into the Specifics

Once you have a draft list of potential providers, it’s time to delve deeper into their specifics. Consulting firms often claim expertise in various fields, but their track record tells the true story. Look closely at their case studies, past projects, and client lists. For smaller firms, the background of their founders and leadership team can provide valuable insights. Determine whether they specialize in high-level strategy, implementation consulting, or a particular industry.

Even though many consulting firms claim they have expertise in all capabilities and industries, their track record often says otherwise. Have a close look at the case studies or the past projects posted on their website. Screen the past clients: Who are they, and what do they do? The background of the founders is an excellent indicator of the firm’s primary focus, especially for small players. Look at the leadership team to understand where their strengths lie.

3. Identify the Best Partners

It’s not enough to simply contact a firm’s general office. Use platforms like LinkedIn to identify the right partners within each firm who have the expertise relevant to your project. Thought leadership, such as articles or white papers, can also be a valuable resource for identifying experts within a firm. This research ensures that you’re connecting with the individuals who can bring the most value to your project.

Most consulting firms are organized by practices based on either industry experience or capability (when not both). They might even display the leadership team on their website with their contact information. If not, LinkedIn is your friend. Look at the partners’ profiles and ensure they align with your needs. Thought leadership pieces—articles or white papers on topics related to your project—are also goldmines of information. They often list the authors, who are typically the firm’s experts in that field.

You should now have a preliminary list of providers that, at least on paper, have the right people with the right skills in the right place. Your next step is to connect with them to check their interest and capabilities in person.

Step 4: Engage with Prospective Partners

Communication is key in the consulting selection process. Once you have your list of potential consulting providers, connect with the partners you’ve identified to set up a call or a meeting. This is where you verify interest, availability, and fit—elements that can only be confirmed through direct conversation.

Here are a few pointers for these exploratory calls:

• Listen to Them: Allow them to explain what they do and how they do it. This will give you insight into their culture, approach, and range of expertise.
• Check Your Criteria: Go through your list of criteria to confirm that they’re indeed a good fit.
• Be Cautious: Don’t share too much about your project at this stage—it’s an exploratory call, not a briefing. Describe the expertise you’re looking for and a few details about the team in charge of the project.
• Set Expectations: Give them visibility on the project’s likelihood and timeline.
• Discuss Budget: You don’t need to provide specific numbers, but it’s helpful to indicate whether the budget is small or if the project is strategic and thus requires a more significant investment.

These calls are the right time to ensure they’re interested in your project and available to take it on. They also help you gauge whether there’s a good cultural fit.

Step 5: Check References Thoroughly

Once you’ve shortlisted firms and entered the RFP process, checking references becomes vital. Don’t rely solely on logos or case studies provided in proposals—request at least two relevant references for similar projects. Verify the authenticity and relevance of these references, ensuring they’re recent and pertain to projects comparable to yours.

Ensure the Reference is Relevant

1. Verify Authenticity: First, ensure that the reference is real. We’ve seen cases where consulting firms provide names of former colleagues rather than actual clients. Verify the name, position, and background of the reference to ensure they’ve held relevant positions.
2. Check Project Similarity: The reference should pertain to a project with similarities to yours. Whether it’s the context, approach, location, or industry, you want to ensure the provider understands how to deliver on your specific needs.
3. Prioritize Fresh References: The more recent the reference, the better. The pace of change in all industries and functions is rapid, and a project from fifteen years ago might not reflect the firm’s current capabilities.
4. Look for Positive Impact: Ensure that the references highlight the positive impact the consultants had on the company. This gives you insights into their performance across dimensions important to your project.

Step 6: Maintain Flexibility and Continuously Optimise

In the fast-paced and ever-evolving world of business, maintaining flexibility and continuously optimising your consulting provider panel is not just a final step—it’s an ongoing necessity. The business environment is in constant flux, and so are the needs and strategies that drive your consulting requirements. Ensuring that your consulting panel remains aligned with your current strategy and is adaptable to emerging challenges is crucial for long-term success.

The Importance of Continuous Evaluation

The nature of consulting is inherently dynamic. Just as your business strategy evolves, so too must your approach to selecting and managing consulting partners. It’s not enough to set your panel and forget it. Instead, you need to engage in regular evaluation cycles that align closely with your strategic planning. This ensures that your consulting providers are not only meeting your current needs but are also prepared to address new challenges as they arise.

The Pareto Effect in Consulting Needs

It’s nearly impossible to predict 100% of your future consulting needs. The Pareto principle, or the 80/20 rule, applies here: you can only prepare for about 80% of your future needs. The remaining 20% will emerge as unforeseen challenges, opportunities, or shifts in the business landscape. This is why flexibility in your consulting provider panel is so essential. You need to be prepared to pivot and bring in new expertise as your business evolves.

Adapting to Changes in the Consulting Landscape

The consulting industry is one of constant change, marked by high turnover rates and significant shifts in personnel. But it’s not just about who’s leaving or joining a firm. Consulting firms themselves are in a state of flux—new firms are founded, others dissolve, and the industry is particularly active on the mergers and acquisitions front. A consulting firm that was perfect for your needs last year might be acquired and undergo significant changes in focus or capabilities.

In addition, new technologies, methodologies, and industry trends emerge regularly. The rise of digital transformation, AI, and sustainability consulting are just a few examples of how the consulting landscape can shift dramatically in a short period. Firms that were once on the cutting edge may fall behind if they don’t adapt to these changes.

Keeping Your Panel Relevant and Forward-Thinking

To ensure your consulting panel remains relevant and forward-thinking, it’s essential to engage in continuous monitoring and optimization. This involves:

1. Regular Review Cycles: Align your consulting panel reviews with your strategic planning cycles. This allows you to anticipate changes in your consulting needs based on shifts in your business strategy.
2. Monitoring Industry Trends: Stay informed about the latest developments in the consulting industry. This includes tracking M&A activity, the emergence of new consulting firms, and advancements in consulting methodologies and technologies.
3. Evaluating New Entrants: Be open to exploring new consulting firms that bring fresh perspectives and expertise. Emerging firms often specialize in innovative areas that established firms may not have fully embraced yet.
4. Adapting to Technological Advances: As new technologies and digital tools become available, ensure that your consulting panel includes firms that are proficient in these areas. Whether it’s AI, data analytics, or digital transformation, having access to cutting-edge expertise is critical.
5. Reassessing Fit and Performance: Just as you check the credentials of new consultants, regularly reassess the fit and performance of your existing providers. Even high-performing firms can become misaligned with your needs if their focus shifts or if your business strategy changes.
6. Maintaining Agility: Be ready to make changes to your panel as needed. If a provider is no longer a good fit, don’t hesitate to replace them with one that better aligns with your current and future needs.

Conclusion: Optimise Your Consulting Provider Panel

Maintaining flexibility and continuously optimising your consulting provider panel is about more than just responding to immediate needs—it’s about anticipating future challenges and ensuring that your business has the support it needs to thrive. By regularly evaluating your panel, staying informed about industry changes, and remaining open to new partnerships, you can ensure that your consulting strategy remains robust, adaptable, and aligned with your overarching business goals.

At Consource.io, we understand the importance of a dynamic approach to consulting management. Our platform provides the tools and insights you need to continuously optimise your consulting panel, keeping it aligned with your strategy and ready to meet future challenges. By partnering with us, you can ensure that your consulting relationships remain strong, relevant, and forward-thinking, setting your business up for sustained success in an ever-changing world.