As consulting faces disruption from technology and changing consumer demands, many consultant firms are searching for ways to keep pace with evolving client expectations. While the top-tier firms may have enough stamina to continue employing the traditional consulting business model for the time being, many small and mid-sized firms are challenged by the new climate technology has created. These firms are searching for ways both to overcome these challenges and to differentiate from their larger competitors. As a result, we see a growing trend in the consulting world:asset-based consulting.
What is asset-based consulting?
Before we dive into the reasons why asset-based consulting is an important trend, let’s discuss what exactly it entails. Asset-based consulting means consulting in which tools and products are the primary asset, rather than human capital. Where traditionally consulting firms rely on their talent for success, asset-based consulting replaces much of the reliance on talent with tools and business models, making use of the technological innovations available today. In other words, asset-based consulting involves taking some of the things that consultants have traditionally performed with their personal skills and expertise and productizing them, turning them into tools that can be used repeatedly for client engagements. KPMG, a premier financial consulting firm, provides a good example of asset-based consulting. Rather than merely continuing to provide financial advisory services to their clients, KPMG created a cloud-based software approach to finance and accounting. This productization of services allows KPMG to offer financial advisory at a fraction of the cost, bring in more clients, and gain a competitive edge.
While certainly consulting firms will continue to depend in part upon their talent, trends suggest that asset-based consulting will soon begin to replace antiquated processes with tools that can perform more consistently and with a more provable ROI. In this next section, we will examine some of the trends that demonstrate the growing necessity for asset-based consulting.
As more and more businesses spread internationally, the traditional consulting model becomes increasingly difficult to follow. In order to truly understand what is going on in an organization, consultants traditionally travel to client sites to perform discovery, embedding themselves in the client organizations to gain holistic understanding. In the case of expanding international companies, the challenges of normal client discovery grow exponentially, as consultants must expend more time and resources traveling to different sites around the world. Asset-based consulting that uses tools to replace or complement the client discovery process can ensure that the same insight is gained without the massive expense of time and resources.
Rising Client Knowledge
Whereas client organizations in past decades knew comparatively little about their industries and competitors, businesses today are becoming wiser with regard to industry best practices and competitor activities, as well as the details around their own internal operations. As a result, many cease to view consultants as they have traditionally. Rather than looking to consultants to provide knowledge around the industry and their own operations, strategy, and performance, clients demand innovative solutions and provable ROI. Big data analytics and technology that leverages organizational intelligence can help consultants gain the level of knowledge necessary to provide those innovative solutions.
Evolving Client Expectations
Clients are also expecting more specialized expertise and results from consulting firms. No longer content with the cream-of-the-business-school-crop talent that top consulting firms offer, clients want consultants with deep knowledge of their industries and experience with the particular challenges they are facing. Larger consulting firms that do not focus on a niche market frequently do not have this type of hyper-specialized talent. Moreover, clients today expect specialized solutions to their problems, rather than the blanket solutions many consultants have traditionally provided. Many begin to demand pricing based on the outcome of the engagements rather than the amount of consultant effort put into them. By productizing their business models and frameworks, consultants can better provide repeatable, trackable solutions to specific client problems. The focus thus lies less on the expertise of the consultants conducting the engagement and more on the outcome of the engagement itself.
The job of the traditional consultant is rapidly becoming productized, piece by piece. Human talent will always be a significant factor in management consulting, but in order to stay ahead of the competition and meet client expectations, many consultants would do well to embrace asset-based consulting as a solution.