By investing more time running a competitive tender process, companies should end up with consulting services that better reflect their business needs.
Due to the encroachment of artificial intelligence, robo-advice and the growing commoditisation of audit and tax services, professional services firms have been forced to search for new ways to add client value.
This has led to a renaissance within the consulting services sector, which now encompasses financial reporting, strategy and risk mitigation, through to a burgeoning range of business advisory services, including the current gravitation towards cloud-enabled real-time accounting.
Unsurprisingly, consulting services now represent 55 percent of what’s collectively a $27 billion tax, audit and consulting industry and increased competition continues to raise the bar on service offerings.
While growing competition within the consulting space should be good news for local businesses, many don’t necessarily understand the full range of services now on offer or what criteria they should use to differentiate value from price.
If like most Australian businesses you are a buyer of consulting services, you need to be able to run a ruler over what’s on offer and pressure test a handful of contenders before making any contractual obligations.
Competitive tender process
If you are planning to run a competitive tender process, the best place to start is by identifying a universe of known entities, which in Australia includes 10 leading providers. Any one of these firms should be able to offer a full suite of expert corporate financial, business advisory and accounting services across national and global networks.
Those that don’t are unlikely to be sufficiently equipped to cater for the growing needs of a large business and certainly not ones with offshore reach.
Once you’ve established a universe of potential service providers, the next step is to run a number of filters to screen out those consultancies that don’t pass muster based on key criteria. As well as performing due diligence on their prior history, brand equity and the capacity of their national and global networks, there are certain questions you also need to ask.
For starters, find out what companies you know of that are currently utilising a consultants services. Then you need to check which of their clients directly reflect your business or sector and whether you can seek any referrals from your own business network.
It’s also useful to find out what sort of weighting each professional service provider has to clients within the Asia/Pacific region within which most Australian businesses focus their energies.
Level the playing field
Having filtered your list to between five to eight contenders, you need to start levelling the playing field. An important way to look beyond the ubiquitous tender document is to get each provider to demonstrate how they would address a threat, strength or opportunity currently confronting your business.
Another good way to ensure you’re levelling the playing is to get an early indication of price considerations. By talking about price early within the tender process you can remove any later barriers, while filtering out those firms at either extreme of your price expectations.
Based on price, the quality of their tender documents and the underlying thinking brought to bear on any company-specific issues, you should then invite the best three contenders to make formal presentations.
In addition to demonstrating their resources and the calibre of their internal expertise, what you’re looking for within the presentation is sufficient evidence they fully understand your business and the risks, threats and opportunities confronting it.
Equally important, the presentation should give you an accurate picture of the resources, network, human capital and innovation the consulting firm will bring to its client engagement.
Tips, traps and misnomers
Before engaging any consulting services, remember not to fall for the lowest price.
As well as ensuring all individual and service deliverability references have been successfully checked, it’s also important to ensure you clearly understand what world-class technological know-how they will also bring to the table.
You also need to understand exactly how available their internal expertise will be to your business when you need it most.
It’s also equally important to gauge how much inconvenience [if any] your internal organisation will experience through any contractual engagement with changing providers and how they manage surprises.
Provide sufficient transparency
The opportunity cost associated with tendering for your business can be expensive, so it’s important to respect the process.
Whether they recognise it or not, businesses that engage consulting services are effectively entering a highly collaborative partnership. To ensure consulting firms aren’t put on the offensive, it’s vital for client firms to be as honest and transparent about their business as is commercially appropriate.
Admittedly, consultants are expected to do their own research on your business and this is very much part of the tender process. But instead of approaching the tender process with arms crossed, client companies must communicate sufficiently about their business to ensure they end up engaging the right financial consultancy.