Most major companies could obtain significantly more value for less expenditure without endangering the positive working relationships on which effective services engagements depend.
The challenge for you as a buyer of professional services is to create a careful balance between good relationships, good contracts and good process management.
We work at board level, with procurement and finance functions, and with other senior executives in the main functional areas of the business. Our skills and breadth of experience ensure that public and private organisations optimise their expenditure on professional services, and that the selected providers can meet the most demanding requirements.
We are a totally independent benchmarking firm with an exemplary track record in assisting clients in multiple sectors to improve their return on professional services. We are staffed by people who have experience on both the buying and selling sides – in many ways “poachers turned gamekeepers” – and with the skills to deploy proven best practices in the procurement and management of professional services.
Overall, our benchmarking services in this area optimise the benefits to be obtained from professional services suppliers, both commercially and from a relationship management perspective.
Typically, our major clients can achieve a 5-30% improvement in bottom line costs from appointing us to undertake Professional Services Benchmarking. On budgets running into hundreds of millions, that’s a very welcome outcome.
Our benchmarking approach helps companies create visibility of expenditure and value for money from the use of different types of services and service providers. A typical benchmarking engagement could look at overall effectiveness of expenditure on one area, such as consulting services, and recommend new ways to improve cost effectiveness. It could also look at overall expenditure on all types of professional services procurement.
Our approach reduces project cost overruns and ensures that competent service providers are used for the right level of work.
Typical results from this type of study are identification of 10-25% reductions in professional services spend and identification of multiple opportunities to improve value for money.
Our benchmarking services are designed to help individual company buyers of professional services to obtain the right contracts, prices and service levels. We also help to interpret the sales strategy of the providers, including what is and is not bundled into the overall set of services.
These types of engagements draw on our extensive expertise in a wide range of projects, and we can cite numerous successful examples in which we helped a department head or project manager to procure the best provider for a clearly defined, watertight set of services. In some instances, this involved replacing existing suppliers, and in such cases we provided appropriate counselling support.
One of the most valued services we offer is totally customised benchmarking of the capabilities, value and service levels of professional services providers. We maintain a unique and constantly-updated database of rates charged by the world’s most respected providers for their full range of consultancy services.
Our benchmarking service also enables us to monitor client perceptions of the skills of individual suppliers, in many cases down to the competence of individual consultants. This greatly benefits our clients when considering the most appropriate supplier for particular projects, saving them time and other resources on generating a short-list.
In all cases, we maintain the strictest confidentiality.
We never publish off-the-shelf reports on fee rates and suppliers, and our clients are never given direct access to our database. This is because, without our expert analysis, the raw data can be misleading. Similarly, we never disclose confidential or commercially sensitive data to other professional services providers.
Our substantial value-add lies in the expertise we bring to bear in analysing the state of the market at any given time and in recommending which suppliers and fee rates should apply to particular engagements. That way, our clients receive the most accurate recommendations on the most appropriate suppliers and fees and can always negotiate from a position of strength.
It is inevitable that a percentage of projects will go off track or even turn into outright runaways.
Our specialist“back-on-track” services help our clients recognise which projects are already failing or at risk, and provide clear insights into what can be done to retrieve them. This is about providing rapid solutions to problems; it is not about apportioning blame. The key to “back-on-track” effectiveness is to identify problems early, to fix them fast and to develop strategies for ensuring they remain on course until they reach their intended conclusion.
Since our clients will make extensive use of providers of professional services over many years, it makes sense to embed a culture of procurement excellence amongst their people. Fulcrium has a range of training courses and software tools to help organisations build a culture of procurement excellence internally. On numerous engagement, we have increased the motivation and effectiveness of in-house staff by supporting them to become better managers of external service providers.
Obtaining best value from IT consultancy is one of the most challenging areas for end-user procurement functions. The supplier market is in a constant state of flux with established providers exiting or changing direction, and new entrants coming on board.
In-house procurement functions are frequently confused as to the relative value of a low fee rate from an offshore provider and a higher fee rate from a locally-based one.
By exerting their substantial buying power offshore suppliers can also push fee rates to unsustainably low levels and compromise the outcomes of the project(s).
Fulcrium’s unique database of suppliers is constantly updated with new information on the skills, performance, cost structures and fees of the major IT consultancies.
This intelligence enables us to advise end-users on the most appropriate suppliers for a particular project and to establish fair fee rates that do not endanger the future of the suppliers in this highly competitive market.
Working at board level in many cases, we are also able to provide a totally independent view on external suppliers and overcome some of the obstacles to appointing them. For instance, an in-house IT function may act as a gatekeeper to prevent a suitable supplier from being appointed.
Our evaluation of the company’s requirements, coupled with sensitive handling of any in-house objections, can frequently lead to a fast-track solution to a seemingly intractable IT problem. Conversely, we can also evaluate whether a company needs to deploy external IT consultants at all, by re-assessing the criteria for particular projects.
A major commercial client asked Fulcrium to evaluate the value that was being obtained from an incumbent supplier and to assess whether or not they should be deployed on a strategically critical SAP implementation. We knew from our extensive in-house benchmarking and intelligence on commercial rates for SAP projects that the incumbents were quoting some 30% higher than best in class providers. Despite these high fee rates, they felt secure in their position as preferred suppliers.
Because of our independence and our unique, comprehensive database, we were able to provide a coherent business case for using an alternative supplier. This was not something that could be initiated internally by the client themselves. In this instance, we were able to act as catalysts for positive change that benefited the client through better commercial terms and also by appointing the optimum supplier for the specified project.
Procurement functions frequently feel disadvantaged when buying Strategy and Business consultancy. In most cases, Strategy consulting is bought at the highest levels within an organisation.
This may mean that the purchase decision by-passes the Procurement function – or compromises the normal commercial judgements made by Procurement functions.
Our services assist Procurement functions to understand how and why Strategic consultancy is bought by their organisations.
We can also help to overcome the natural reluctance by some Procurement functions to question a preference expressed by senior decision-makers for a particular consultancy provider.
We also provide the means to benchmark the outputs of consultancy projects so that their effectiveness can be measured.
In short, we give Procurement functions the skills they need to perform a more valued role in the strategic decision-making process – and to articulate that value to those with the most influence within the organisation.
We assisted the Procurement function of a Top 100 company in the Telecommunication sector in advising their internal clients on how to identify and appoint a suitable Strategic consultancy firm.
As part of the process, we provided market intelligence and benchmark information on the suppliers and counselled the function on the processes followed in strategic consultancy bids.
Once the consultancy had been appointed, we also proposed metrics to measure the outcomes of the assignments.
Fulcrium provides benchmarking from both the client and law-firm side of the Legal market. Our team consists of corporate lawyers from some of the world’s top law firms, experienced in legal panels, coupled with procurement experts from commercial backgrounds. This means that sound business judgement is combined with a thorough understanding of the requirements of our clients for legal procurement and panels.
Working alongside in-house general counsel and procurement functions, and bearing in mind the specialist nature of legal services procurement, typical engagements we undertake include:
This global supermajor used Fulcrium to put its relationships with external counsel on a sound commercial basis and prevent their market arrangements with them becoming grossly sub-optimal.
The initiative reduced the company’s legal services expenditure by $183 million over a three year period, representing 10% saving annually (as validated by the Supermajor’s financial controllers). Less tangible savings included the fact that the in-house legal team had achieved a reinvigorated relationship with its external counsel and felt a greater sense of control.
Contact us for a copy of the full case study.
A major international Bank sought our advice on the law firms they should employ to advise on the acquisition of a UK financial institution.
The deal had considerable implications in terms of competition law and was made more complex by the fact that two European legal systems had to be taken into account.
Our benchmarking service enabled the client to scope the matter effectively and to appoint the most appropriate external law firm.
We provided strategic benchmarking for a government agency that led to an overhaul of legal procurement in a major public service.
The engagement entailed a detailed analysis of expenditure; identification and eradication of multiple inefficiencies by mapping process flows; eradication of unnecessary stages in the procurement process; recommendations on alternative law firms; creation of a new structure for fee rates; and the development of a fast-track exception methodology to deal with a small percentage of matters that fell outside the norm.
Most large organisations deal with multiple banks because there is no single supplier that can meet all their needs for foreign exchange, cash, merger & acquisition funds or treasury services. There is a clear requirement for them to understand the intricate frameworks (including cross-charging mechanisms) that determine how banks charge for their services.
Fulcrium’s banking procurement and benchmarking services are able to take into account the highly complex relationships between different banks and how they establish their fee rates for different banking products and for different customers.
For instance, we can evaluate how a bank providing commoditised services such as foreign exchange as a loss leader to a large customer might respond when asked to tender to support a merger or acquisition.
In some cases, an historical relationship with a particular bank can hamper obtaining optimised commercial terms. We look closely, and with a totally independent eye, at the banking and funding arrangements of our clients, working alongside finance directors and procurement functions.
This enables us to develop professional procurement strategies that balance the commercial frameworks between the two parties and enable our clients to optimise their relationships with their banking partners across the entire range of financial services (corporate finance advisory, foreign exchange and derivatives, transaction services and credit support).
Our work in this area is amongst the most sensitive that we undertake. Our team has the skills and track records to ensure we never compromise the future commercial opportunities of our clients by damaging a relationship with a particular bank.
We undertook an analysis and benchmarking service for a Top 100 client to assist them in maximising the strategic relationships they enjoyed with their banking partners.
Human Resources are one of the growth areas in the consulting market, given impetus by Government legislation and changes in areas such as Pensions. Fulcrium’s expert procurement benchmarking on HR suppliers enables clients to:
We were appointed to assist a major client in the engineering sector to scope a sizeable project in the area of benefits and compensation.
As part of our advice, we prepared a shortlist of potential consultancies and, by providing the most current market intelligence and rigorous assessment, were able to advise the client to replace their incumbent consultancy with a new firm.
A global professional services firm brought Fulcrium in to identify a senior business developer to head a strategically important business practice.
Through our detailed understanding of the client’s business and their requirements for this role, we were able to identify an individual from outside the client’s industry that matched their skills requirement and brought a fresh eye to the challenge.
A global professional services firm hired Fulcrium to advise on drawing up a shortlist of Recruitment consultancies to provide 60 senior IT specialists.
One of the world’s largest head-hunters specialising in middle management recruitment was appointed to manage an incumbent supplier after a detailed scoping and skills analysis exercise.
Fulcrium’s marketing procurement and benchmarking service spans the full range of marketing services from strategic planning and research to brand development, design, and communications.
We operate at the strategic level to bring maximum value to our clients in initiating and managing long-term relationships with Marketing services providers. Typical projects we undertake include:
An international Airline used Fulcrium to evaluate design agencies for a significant re-branding initiative. We benchmarked the incumbent agency, a leading player in the field of brand development and design, against other suitable providers. We were looking not just for a potential reduction in fee rates but also for a supplier that could bring a fresh creative eye to the client’s brand.
Working at board level with the Chief Executive, with the head of Marketing, and with other members of the Marketing team, we:
By applying our benchmarking capabilities, we ensured that any potential new Marketing agencies were not bidding on a loss leader basis (so the fees would remain constant in the medium-term).
The current state of the Accountancy and Tax market is proving a challenging one for large clients seeking to obtain the best value from their procurement in these areas.
The four major accountancy firms are more circumspect than they were pre-Enron in choosing clients for which to undertake both consulting and audit.
Furthermore, they would all prefer to undertake consultancy projects rather than pure accountancy work, as the margins on fees are higher and no Financial Conduct Authority regulations apply.
This combination of reduced choice and more cautious suppliers has placed greater power in the hands of the accountancies and now present unique challenges to end-users in procurement functions.
We assisted a Fortune 50 client in selecting new auditors and in establishing terms with them.
The initiative was highly sensitive and politically charged, with factors such as strong in-house loyalties to the incumbent auditors against a background of a tougher regulatory environment and increased personal liability for individuals.
Another Fortune 50 client appointed us to advise on two areas that are frequently regarded as highly complex: Sarbanes-Oxley and the International Financial Reporting Standard (IFRS) implementation. We were able to save the client substantial amounts in fees.
A diversified European industrial conglomerate brought us in to advise on how to reduce their spiralling corporate tax bills. We were able to recommend a multi-firm model in which a Big 4 firm took the lead role in tax review and calculations, while a smaller firm undertook lower-level form-filling and administration.
The second part of the engagement, once the firms had been appointed, was to advise on managing the relationships between the lead and secondary suppliers.
The client was able to make substantial costs savings and to stem the year-on-year increases in fees.
If you need to optimise your return on Professional Services expenditure and think Fulcrium could be your “secret weapon”, contact us now.