Measuring ROI from consultancy? It’s not as hard as you think
There is a common misconception that it’s not possible to measure return on investment (ROI) when working with consultants. I disagree.
Yes, it might be difficult to perfectly translate consultancy work onto the balance sheet. But this doesn’t mean you have to simply hand your money over and hope for the best.
If you follow the steps below you’ll have a much better chance of not only measuring the value you’re getting from your consultancy, but also ensuring you’re getting value in the first place.
Understand what consultants are for
Before you even think about working with consultants – whether it’s to help with IT or any other area of your business – you need to be clear about where they can actually add value.
A consultant is not a miracle-worker – somebody who can walk into your business and solve all your problems without any input from your side. A consultant is there to enable your organisation to do something it can’t currently do.
This enablement comes from a variety of means: carrying out work, yes, but also educating people to build and improve capability within the organisation.
Once you understand why consultants exist, it’s much easier to plan what you want to achieve from the consultancy process. You’ll also be able to more accurately tell if the consultant is delivering valuable ROI.
Create a shared understanding of outcomes
Achieving and measuring ROI can only stem from having a clear picture of what ‘good’ looks like. This needs to be ironed out long before any engagement begins.
You must have a shared understanding with your consultant as to what you want to get out of the process.
When I meet a new client, the first thing I do is create a document capturing our collective vision of how the engagement is going to work and what the desired outcomes are. This value will come from variety of places, including improvements in your financial performance, operational efficiency, and quality of delivery
The outcomes may change over time – not everything will be clearly visible at the start of the process. But you need to have a very clear focus on the desired tangible benefits, and be willing to share this with your consultant to achieve a common view.
Once you’ve got a shared understanding of outcomes, the consulting process can begin. But again, you as a client have to play an active role throughout the engagement to ensure those outcomes are achieved.
To me effective consultancy is all about pragmatic action – what can we do to get a business from where it is now to where it wants to be, as quickly as possible? The process should ultimately shorten the timescale between strategy and action.
But working with a consultant isn’t the same as outsourcing. It’s about solving problems, and you can’t simply outsource an entire problem to somebody else. You, as a client, have to play a leading role, to shape and define the engagement with the consultant and to ensure that your business is engaged with what you are trying to achieve.
And once the process is over, it is ultimately your responsibility as the client to ensure the organisation reaps the ongoing value. Consultants can provide organisations with guidance, education and suggestions, but only that organisation has any real power to implement change.
Getting the best possible ROI from your consultant means playing an active part before, during and after the process:
Before – make sure you’ve got a clear view of what you’re trying to achieve, ensuring that view is shared across the organisation.
During – make time to engage with your consultancy to help them guide activity in the face of emerging issues or changes in scope.
After – ensure your organisation harbours the benefits of consultancy. The consultant is there to advise how to implement change, but only the business can make that happen.
Enjoyed this post? Here’s more from Strategic Consulting:
- Running proofs of concept the right way: six top tips
- How to avoid common pitfalls in digital transformation
Contact us about XpressWay to find out how we can help your clients discover, prove, apply and evolve their new ways of working.
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