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Could an Internal Consultancy add value? - by Perform Green

Could an Internal Consultancy add value? - by Perform Green


Perform Green - a Consultancy Services (664) supplier - discuss the how Internal Consultancy could add value to an organisation and common pitfalls to look out for.

The pace of change brought about by the digital ‘revolution’ is disrupting the traditional technology and management consulting market. This is evident, for example, in the ability of new, predictive technology to automatically process massive amounts of complex data and produce informed analytics and recommendations faster (and usually cheaper) than a typical external Analyst/Consultant can. This has led to a disaggregation of consulting work, with the big consultancies no longer being the obvious ‘one-stop shop’ for the entire technology strategy and solution. The so-called ‘democratisation’ of access to data and knowledge, a trend towards hard knowledge assets versus reliance on human capital (productising professional services), the advent of the freelance/gig economy and the establishment of digitally connected network of experts (versus traditional hierarchical structures), has enabled the rise of the ‘boutique’ specialist consultancy. But one of the most significant market disruptions has been the advent of the Internal Consultancy (IC), who are increasingly supplementing or winning business from external consultancies.

IC’s aim to solve business critical strategic and operational problems by delivering in-house professional services of a consultative or advisory nature, comparable to those provided by external consultancies, but often at a much-reduced cost to the parent. Strategy, process improvement and change management services are becoming increasingly popular IC offers, especially in the global technology sector. In the UK, major corporations, local and central government organisations and not-for-profits have set up ICs. For example, in the NHS, organisations such as ‘The Strategy Unit’, ‘The Transformation Unit’ and ‘mHabitat’ operate independently as self-funding units that successfully compete for work in both the NHS market and the wider health and care sector.

Perform Green were recently commissioned to produce a Leading Practice report on how organisations have approached the creation and operation of internal consultancies, and what lessons can be learned from their experience. The purpose of the report was to provide an external perspective and to inform a business case for the creation of an IC, as part of a wider programme the Perform Green team are leading.  Based on our research, the table below summarises the general pros and cons of implementing an IC. We explored these themes in detail in our report, where we also examined the pitfalls, good practice and lessons learned that the case study organisations encountered.

Pros:

  • Have company-wide perspective
  • Greater confidentiality
  • Broaden & offer additional career path options 
  • Cost-effectiveness (published & agreed internal rate card)
  • Continuity in strategy to implementation
  • Shared / core values / high trust relationships

  • Enhance parent reputation with defined in-house expertise

  • Opportunity to broaden markets if deliver external services/products

 

Cons:

  • Relatively new, therefore, limited best practice
  • Widely varying practices and effectiveness
  • Freedom to operate from parent can be restricted
  • Independence of advice can be challenged if not recognised as objective
  • Compliance with internal procedures can cause operating issues

  • Focus on company it serves means less opportunity to develop relationships or experiences with counterparts in similar/external organisations – experiential knowledge gap (but opportunity to leverage it could optimise their value)



To complete the report, we conducted original research, through interviews and case studies into organisations in both the public and private sectors. The ICs studied provide digital transformation, strategic transformation and change management services either to the open market and/or to a parent. Analysis of the pitfalls, good practice and lessons learned led to the production of a comprehensive set of key findings and recommendations.

Given that organisational context and sector influences vary widely we do not recommend a universal business model or operating practices for an IC; Perform Green make recommendations specific to an organisation’s vision and objectives. However, through our research we identified a set of interrelated operating practices that impact the decisions to be made regarding people, operations and service offers, and from this we produced example recommendations for organisations to consider, including:
 

  Demand: Invest time in understanding and profiling the demand for your expertise; consider
  future growth, be incremental or ambitious but do not have too rigid a plan! Be ready to take advantage of new opportunities for revenue generation.
 
  Control: Identify and agree with parent what proportion of and how margin can be retained in
  the team to develop its people, services and future business growth.
 
  Expertise: Understand it, articulate it, be explicit, stick to the expertise the team has. Constantly
  innovate and experiment to ensure it remains at the forefront of the market. Be a link in the value chain of transformation. Be clear about what you don’t do.
 
  Values and Purpose: Define and embed them in everything you do; use your value proposition
  to underpin delivery and build great client relationships.
 
  Engage: Build in time for business development in all consultancy roles and put relationship
  management at the core of delivery.
 
  Organise: Understand how to attract talent and how a consultancy can best be organised to
  deliver transformation through innovation, collaboration and experimentation.
 
  Culture: Don’t overlook or underestimate the required cultural and behavioural change to
  transition a successful internal consultancy. Consider culturally what enables delivery of transformation in the digital age and how a consultancy can embody this.
 
  Lead: And finally, provide visible and compelling leadership to guarantee that the values and
  purpose are ingrained whilst the culture and performance evolves to ensure delivery of commercially effective, radical and dramatic transformational outcomes for the client.

 

If you would like to find out more about Perform Green or our Consultancy Services framework (664) please click here.    
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