Episode 46 Transcript

(Part 1) Understanding the Unique Intricacies of a Consulting Firm w/ Simon England

    Banoo Behboodi: Welcome to the Professional Services Pursuit, a podcast featuring expert advice and insights on the professional services industry. I'm Banoo, and today I am joined by Simon England. Simon spent 27 years with Accenture, 15 of them as a partner, and is now one of the managing partners of Garwood Solutions, a specialist advisory firm to the consulting and professional services sector.

    As you can imagine, he has a ton of knowledge, and so I'm very excited to dive in and tap into that knowledge. He provides independent strategic and business advice to clients in the professional services, financial services, health, and technology sectors. It'll be great to tap into his consulting and share that with the rest of the listeners.

    Simon, we're so excited to have you on the show and tap into your extensive experience and expertise. In fact, there is so much that we may be dividing this up into two sessions. Thanks for joining us and let's dive in and get to it.If you can, let's get started by having you tell us a little bit about your background and Garwood Industries, if you may, to the listeners.

    Simon England: First of all, thank you and nice to meet you.

    As you said, formative part of my career was in Accenture since the late 1980s until about six years ago.I saw Accenture through the whole journey from Arthur Andersen Management Consulting through Andersen Consulting to what it is now.I think I was employee number 70 in the UK in Accenture, and I think it's now got about 20,000 people in the UK. You can see it was one hell of a journey. Majority of my time in Accenture was all market-facing and client roles, so sales, delivery, and other leadership roles in the UK and across Europe from public sector and government clients through health and financial services.

    I was really lucky and fortunate.I saw a massive range of things that I had to do from small stuff to absolutely massive contracts.I've got a lot of scars on my back from that experience. I left Accenture in 2016, and I went independent, which is always an interesting leap to take. I did a couple of quite challenging turnaround CEO roles for the UK government, which was fun and very public. Then I bumped into two guys called Rob Garner and Graham Underwood who'd just founded Garwood Solutions back in 2017, and they asked me to join them as a partner, very close to the start of Garwood in the business, which was great.

    As you say, Garwood specializes in consulting and professional services sector, but we call ourselves the advisors to the advisors.We work with a range of clients from 30 people outfits up to 20, 000 FTE organizations across the whole range of services, M& A, operations improvement, and obviously, technology and with a particular focus on PSAs as you and your colleagues in Kantata know quite well.

    I do a few other things as well just to keep me well occupied.I'm also on the board of HCL Technologies, an Indian-headquartered global IT and engineering services firm that again, will probably be quite well known to some of your listeners. That's me.

    Banoo Behboodi: Fantastic. Wow, that's exciting. Government, public, consulting, you've done it. You've done it all. It's a very exciting experience level. Simon, it's going to be an interesting focus that we're going to take to this podcast because we want to tap in and really understand the consulting side of consulting firms and how there’s very unique aspects to a consulting firm, whether that's a professional service consulting firm like Accenture or one that also includes audit and tax. They operate very differently. They have some very unique needs. We wanted to really understand what some of those differentiations are. How do they operate differently? What are their unique challenges?

    Simon England: I think that's a really good question. Firstly, the obvious point that I think you just made is there's a huge range and diversity of consulting firms, whether that's scale, as I say, from a 10-person consulting outfit to one of the big four with hundreds of thousands of people around the world. Clearly, the breadth of services makes a big difference; consulting, you add audit, you add other advisory, tax, legal, financial, risk, et cetera. Then geo reach, the countries you operate across, is often the biggest driver of differences across the business, we find. If you're operating across multiple European countries and then you go into Asia and then you go into North America, the differences are pretty profound often between those operating geographies, some of that, statutory, some of it, I think, legacy and cultural, probably.

    Having said that, though, I think there are some quite distinctive characteristics of consulting firms that we see from other professional services firms, say, professional services in a tech or a products firm.I think there are some distinguishing characteristics.First of all, is the diversity, the commercial complexity.In a lot of these consulting firms, you really have ended up through history with mixtures of time and materials, fixed price, recurring revenues, and quite often, all of the above, success fees.I came off a call an hour ago with a very, very big client of ours, and they literally, in one contract, will quite happily combine all of those commercial aspects.Actually, dealing with that is quite specific to this sector, and not all professional services businesses have that challenge.

    I think then there are a few important process issues.Selling, very few consulting firms like the selling word.Historically, it's been relationship-driven. It's been driven by partners, senior associates, senior managers.Very few organizations have professional sales teams or business development teams, and that has some quite important cultural differences.Resourcing is different.Quite often, resourcing is done in a very localized team - based way, not necessarily broad talent pools where you have professional resource managers, and some of the consulting firms, you can of course, blend the two.If you have a big consulting firm that is perhaps doing very focused specialist advisory work on the other hand, but is doing Salesforce deployments on the other, then you might obviously combine all of the resourcing approaches as well.

    I think also basics of financial management, so managing WIP, work in progress.Often, there's a lot more sophistication and decision making involved in the process as to how you get time from being captured to being billed to a client. In a lot of organizations, that's pretty automatic and a clear flow.In consulting organizations, it's not always as straightforward as that. Then fundamentally, consulting firms often have a whole load of different metrics and KPIs. Things like usual revenue and margin might exist, but also there might be different measures, things like realization rates, net service revenues, recovery, which are all about price discounting and how you recover against costs, but they're fundamental to the way some of these consulting firms work, and it's really important to keep that in mind.

    Sorry, a little bit of detail, but there are quite a few really important differences, I would say.

    Banoo Behboodi: It’s interesting because it seems like it's not just different from the other professional service types, like embedded service or agencies, et cetera, but also how each of them operate. One consulting firm versus another one could be also a very different operating model in some ways. But how do you then work through all these complexities in consulting firms from an operational standpoint and optimization on how they would optimize their operations?

    Simon England: You're absolutely right. First of all, one size does not fit all. They're all different. But you do get still a reasonable degree of commonality across a lot of organizations, and it does differ by scale, geography, and all the things that I said earlier on. But I think it's a good question. There are however, some consistent things that are often really important to improving operational performance and enabling growth and driving improved maturity of the business.

    A few things we typically see that are really important, first of all, is trying to harmonize some of that operational complexity and processes where possible.Often these firms have grown and evolved over a long period of time, hugely.You get some necessary, but often a lot of unnecessary divergence and variance across countries, service lines, teams, or whatever else. A lot of the challenge we help our clients with is trying to, first of all, understand that and then set them on a path to try to simplify wherever possible.I know that's obvious, but it's often at a huge scale and quite complicated.

    I think the second thing likewise is technology simplification and integration.Lots of these organizations, it's evolved. They have lots of systems, often a bit of an ecosystem where you might have some big platforms like SAP or Salesforce or whatever else, but then a sort of constellation of smaller systems with massive divergence, and of course almost all of them tied together by this, I'll keep the analogy going, but a sort of plasma of Excel everywhere, gluing the whole operation together.Of course, you end up with multiple versions of the truth.You end up with lots of manual wreaking.You end up with lots of inconsistency.That's a very common inconsistent theme is to try to get on top of that and tackle that in a coherent and strategic way.

    Another point that comes up a lot is talent management, often quite small scale, quite localized and inefficient talent management processes.We often see a lot of opportunities for trying to professionalize talent management, resourcing, utilization management, and all the rest of it.That's pretty important as well. Another key theme is the focus on, I know it sounds crazy, but client and contract profitability. It never ceases to amaze me how many very mature organizations leave a lot of value on the table. Sometimes it’s through the technology and creating constraints in what people can see, but often it's a mindset and cultural thing as well, and a lot of management of time way after the event rather than ahead of problems actually happening.

    There are few things.I think probably the final point that I'd add that's almost one of our measures and litmus tests of the operational maturity of a consulting organization is its ability to forecast.I know that sounds really crazy, but so many organizations continue to manage their businesses through the rear - view mirror.Again, it might be because of data.It might be systems, but often it's cultural and mindset. Again, we would see that as a really consistent area for operation performance improvement in consulting firms.

    Banoo Behboodi: I want to focus for a second on talent actually because I know that's one of the areas that's very unique. I started my career at Ernst & Young, and the philosophy, at least it was then, and I'm not sure how much it's evolved, is you spend a few years in the consulting firm, get ready, and then go back out. There is high turnover, so it actually becomes, I would imagine, very critical to have effective processes to manage talent. You are expecting that retention is only at a certain percentage level, I would imagine, but how to onboard, and therefore then tackling the technology side of it. Therefore, it becomes even more critical to have repeatable processes through the technology to make sure that you can sustain. I just wanted to tackle that aspect of it.

    Simon England: You're absolutely right. It's a really hot topic, clearly, particularly because of this talent wave that we've had over the last two or three years, COVID, post-COVID, and all of the implications working its way through the system. This has obviously become a big deal with a lot of organizations that we work with.

    There are two aspects to what you're saying. One is managing your talent, which is a scarce and critical resource. All consulting businesses are talent-driven businesses, and managing the use of that scarce talent and that asset, I know it's obvious, is critically important.There are often lots of ways of getting better data, better visibility, being able to manage that utilization, skill sets, capabilities in a far more optimized fashion.That takes proper focus on processes and the technology to enable that, clearly.

    But the other dimension is exactly what you say is the hire to retire, the people process.I see a lot of firms, they really struggle with antiquated, cumbersome, disconnected processes to get people through the front door, and importantly, once they're in the door up to the point where they're skilled and generating client revenues and then keeping them.I think a lot of big firms are still struggling with this in trying to move very, very fast.Again, I don't think there's any rocket science here.It's large-scale technology-enabled transformation. You can put some bells and whistles and automation and a bit of AI and a bit of this and whatever in it. But at its heart, it's fundamentally looking at that process and redesigning it and getting the right tools for the job to enable that.The big thing now is all of the talent being drawn in or attracted in and recruited by consultants, they expect this stuff to be excellent.If it isn't excellent, it's a massive turnoff to them.It's kind of self-fulfilling, either positively or negatively, this stuff, so it’s really important to get right.

    Banoo Behboodi: You bring up a great point in that the new generation is demanding it. I remember when I got into the firms, basically you did what you were told, and so you were just happy to have a job. That's not the mentality of a Generation Z. They have expectations. They get in. They have demands, and they have to be enabled. Work-life balance is critical to them, all those aspects that the new generation is asking and demanding for, so you have no choice.

    Simon England: Absolutely. It’s the front door of your business. If the first thing the new joiners or people you're trying to recruit see is process and technology challenges, they're going to go to the guys down the road.

    Banoo Behboodi: A hundred percent.

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