In-house Management In-house Management versus Management versus Management

OutsourcedOutsourced

MIAModule III

Why a Sense of Skepticism and Unease Towards Management Consultants.

Cost versus Value of Advice Separating Consulting Success from

Consulting disaster- Some Revealing Situations.

Contents

Consulting ProductsDates Product Consultant Organisation

1976 Portfolio Analysis Henderson BCG

1980 Five Forces Porter Monitor / Harvard

1985 Value Chain Analysis Hamel & Prahalad Strategos / Harvard

1998 TQM Peters & Waterman  MIT

1990 Core Competencies Reichheld Bain & Co.

1993 BPR Hammer & Champy CSC

1993 Economic Added Value Stewart Stern Stewart

Products have a name, a methodology, an application and great PR

Consultants are charged with introducing ‘fashions’

/ Utilities

Technology Providers

Software Providers

Service providers

McKinsey

IBM

A.T. Kearney

Oliver Wyman

Deloitte

Accenture

PwCCSC

EDS

Scient

Sapient Diamond

Strategy Consultants

A Consulting Typology

Internal versus External consultants

Internal consultants often operate by mandate than choice. Sell your own department’s approach. Convert an adversary. A manager angry with you can be career limiting. Your world is easily referenced. Reputation key. Status in organization can be limiting.

Grove USA Training consultants to be more successful

Consultant’s Boss

Consultant Client

Consultant’s Boss

Client’s Boss

Consultant Client

Why a Sense of Skepticism and Unease

Towards Management Consultants 5 Pros and Cons Pros:1. Specialized - you can get the best 2. Personal attention from a senior practitioner 3. Each campaign treated uniquely 4. Holistic view - consultant is intimately aware of all

aspects of the campaign 5. Relationship - it’s easier to form a long term

relationship with the owner/operator than an account rep that may change jobs

Cons:

Specialized - yet another vendor to manage Has to wear many hats (eat what they kill) Physical limitations on number of clients that can

be serviced Can be more expensive per hour Limited in the number of things that can be done

well

Cost versus Value of Advice: What can big companies do today? Organize. Hire an in house

search specialist or project manager, who should be a strong communicator along with a strong

understanding of SEO Establish an internal team may include Person from technology

Marketing

Editorial/content production

Product development

Strategic planning Sales

Then analyze the data and the roles,- the goal is to notbecome beholden consultants. Lastly, “educate,” and make sure to follow up and stay current.

Cost Vs value of advice

An Ohio company shoots the works on a whole collection of management consultants only to find itself collapsing under the weight of questionable advice and bad strategy decisions.

McKinsey & Co., the consulting company with the most influence, one with all the attributes of a religious order, constructs a stunning old-boy network, builds on its own history, and becomes an international powerhouse, all the time wrestling with its own demons.

Bain & co., the most secretive of the management consulting firms, becomes ensnared in what amounts to an international thriller that underlines the dangers of conflicts of interest and ends up in a mammoth legal battle with the authorities.

Andersen consulting, a company that has turned its skill at technology into a fortune, stumbles over promises it has not been able to keep, a record proving with embarrassing clarity that the bottom line of management consulting in the slash-and-burn era of downsizing was money.

Consulting moves in the living room. Boston consulting group, a company that once focused on boardroom issues, steps into healthcare in a big way, inventing strategies that affect millions of Americans and could ultimately change the way the nation goes to the doctor.

Gemini consulting, a relative newcomer to the field, invents an elegant, expensive, and complicated strategy, a case study in how ideas are marketed. But can business transformation work for a huge insurance company, a small hospital, and Gemini, too?

Sears, Roebuck & co one of the nation’s premier retailers, turns itself around under the guidance of an executive who believes that in the world of consulting, less is definitely more.

Consulting Firm by Industry

Hospitality IT consulting

– Big Data– Cloud-based IT infrastructure– Mobile apps and data services

ODMs consult Electronics consult

Future trends  The numbers of both in-house and agency will

decline; this drop will be partially countered by growth in self-employed consultants.

An interesting uptick in the number of those "not employed" in Induvidual advisers(IA’s). Considering how this number had steadily declined, this is somewhat surprising, but many respondents indicated that they'd move into management, broader work, or new activities altogether. This is supported by predictions in what portion of our jobs will be dedicated to IA in the future. IA ain't the end-all-be all

When to seek outside help?

For a core competency outside your department. If you do not have the time and resources, a “buy in from the top,” it is not worth the time to bring in a consultant or imbedded There has to be a strong commitment from leadership to perform.

There are 3 options that should be considered to be the best

model for the company. “All outsourced” (what most people do) “Hybrid,” and “all in house.” People have started to think along the lines of “I

can build a great team for the $2 million that I am spending on Project Management

This is a growing problem for agencies that need to provide value

Another question to consider: “is the current model working?”

What is the culture? Will vendors fit in, and how are they managed? For the execution, ask “what is the labor resource required? What are customized tools…do we “need something custom?”

For cost efficiency, What is the total cost of each program? What are the barriers to implementation and what will the costs be to overcome them? In measuring/predicting time and success,, he feels that in the end some form of hybrid marketing will rule.

You can do well completely in house, especially for the low-hanging fruit

Then there are more advanced things that may require help such as architectural issues and more advanced coding problems.

So, if you are going with completely in house: spend time at conferences, understand you market share. What are you getting versus what your competitors are getting.

Completely outsourced: It is nice to have someone to assign the work to, but you still need to remain educated, in order to not go in the wrong directions. Remember that you will also have to guide the consultant, especially for keyword selection and copywriting, as well as link building.

The larger the company the more complex the politics, usually.

What are the questions to figure out before hiring someone? “What is the staff t- client ratio?” “What is the employee turnover rate?”

“What is the level of customization?” What is the standard deliverable, and what will cost extra? How does process, training, and on boarding work? Lastly: Meet your team. At the end of the day it is about the people who are working with your business.

Share data. It may take longer to become comfortable with sharing sensitive data, but when you can, it will improve performance. Invest in learning, and plan for long term gains. Reward success – structure something in the contract to give agency extra based on performance. Push for innovation and exceptional results.

In-house Outsourced

Item Cost Item Cost

Employee wages & benefits $3,450500 inbound responses ($3.50 each)

$1,750

Employee technology costs   (computer lease)

$20    

Telecommunications costs $175    

2 days backup coverage    1 vacation day / 1 sick day

$304    

Total Monthly Cost $3,949 Total Monthly Cost $1,750

Summary of the pros and cons of being in-house:

Pros: Strong connection to the product / service offering and in depth understanding of the industry and top competitors.

Concentrated focus on servicing just one client instead of balancing the needs of multiple clients.

It may be less expensive to maintain internal resources, depending on the size and experience of the team.

Timely and complete access to forecasts, sales data, inventory, etc.

Better integration and coordination with other internal departments, including: marketing, merchandising, IT, and finance.

Cons to being in house: Many of the best consultants are extremely competitive

individuals, yet internal positions do not usually foster this competitive spirit.

There is often a sense of boredom and eventual lack of motivation that comes with continually working on the same site as opposed to new challenges and opportunities.

As part of a small internal team there is often a lack of informal learning opportunities which inhibits professional growth and the ability to deliver in a rapidly changing environment.

With a single in house resource, you will be constrained to a single set of strategies, as opposed to best of breed solutions that result from an integrated team approach.

Professionals are rarely equally trained or experienced in both organic optimization and paid search marketing

You may be sacrificing by relying on one resource or investing in a larger team. It is often difficult to drive organizational change from within.

External resources are needed to justify priorities, directional change, and budgets.

At the moment across the ecosystem there does not seem to be a single model that is totally dominant. We have some web analytics teams in companies that are all in-house. We have a whole bunch that are sort of a hybrid, some work done in-house but most of the work done by individual outside Consultants  or via one of the larger web analytics consulting Companies. There are fewer completely out-sourced models for some reason.

So here is a framework to think through stages of the journey and some characteristics of each stage.

Stage One: BirthWhat does it look like?

You have nothing, no web analytics implementation or a really new one. You are just getting started but have some support from management.

What do you need? 1) Web analytics tools

implementation. 2) Show promise from data and convert the masses.

What is your role? 1) Find the most senior person

who owns your company policies and assign them the accountability for deliverables.2) Don’t expect perfection and don’t pick the most expensive tool and don’t pay the consultant lots and lots of money upfront (you’ll do that later).3) Ask to speak to a client that the consultant has recently lost.

What is the consultant’s expected role? 1) Talk to the client owner a lot and some data consumers. 2) Help you find and implement the best fit first tool fast. (Suggested vendor selection process.) 3) Teach you not to make mistakes all their other clients make.

4) Do lots of training sessions and dog and pony shows around your company (makes you look good and shows promise of what’s possible).

What should you be careful about? Most of what will be done in this stage

will be thrown away later, and it is ok. Make sure you set that expectation with your internal company customers / partners. As your first phase targets choose people who have data affinity and your friends (so they’ll stick with you through the birthing pains), most definitely don’t over-stretch and give 500 people login accounts to your new web analytics application.

What do you pay consultants? Small dollars, more frequently.

Stage Two: Toddler to Early Teens

What does it look like? You have won over a few converts, the

consultants are pumping in reports that people are using and you are drowning in questions, some people have started to complain about the fact that they don’t know what action to take, the VP of Marketing is wondering why we keep changing the site but the analytics tool is not telling them why conversion rate is tanking.

What do you need? 1) Consider hiring a Web Analyst to be the

in-house resident expert, someone who’ll collect tribal knowledge and be on the beck and call of the VP. 2) Customized solutions for your business (because you have realized you are unique and standardized KPI’s from books don’t apply to you).3) You will find lots of data is missing and the tags are not right so you will need a massive effort to update your tags and collect new data (say site structure, site outcome details, new cookies/parameters, campaign meta data etc).

What is your role? 1) Help fill the Analyst position as

soon as you can (look for acumen, curiosity and simple web smarts).2) Have the consultant spend a lot of time on the problem talking to the people who run your businesses.3) Find out what the financial goals are for the project or problem, look for benchmarks, find out how the success of others channels is being measured .

What is the consultant’s expected role?

1) Really understand your business and your business success criteria and bring their business acumen to the table (vs. tool expertise in Stage 1). 2) Create those aforementioned customized solutions that incorporate core financial or other goals for key metrics to show real success.

3) Help you put standards in place to capture meta-data that you need to do optimal analysis (meta data round campaigns, products, website customers etc). The consultant has to help you nail all the data problems (either missing data or bad data) in this stage.4) Teach you how to do reporting for yourself.

What should you be careful about? This is a very painful stage for you, the

client. There is more data than you can digest and yet it means little. Be patient, practice zen. You very deliberately want to bring reporting in-house now mostly because it will be cheaper for you to do (and a great way to train your Analyst) and you really want to focus the consultant on doing true and powerful analysis (and teaching you that as you move from toddler to a teen).

What do you pay consultants? Medium sized dollars, less frequently.

Stage Three: The Wild Youth What does it look like?

Problems and analysis rule the roost. Your conversion rate (or Problem Resolution Rate for support sites) has doubled from 1% to 2%. Your decision makers have realized that Path Analysis is a waste of time.

You have extracted all you can from your data Analytics tool.

What do you need? 1) Experimentation and Testing

expertise, to realize you are wrong about what your customers want.2) You need to start moving into collecting Qualitative data (for example surveys).3) Help creating a strategy that would integrate all the new pieces of data you will capture.

What is your role? 1) Expand your team in the

company to get other bright people involved on problem and solution analysis. 2) Identify decision makers who get Customer Centric Decision Making and cozy up to them (you’ll need their sponsorship / air cover / money).

What is the consultant’s expected role?

1) Bring tools and expertise to the table for these new things you know nothing about.2) Knowledge transfer (because soon the general ideas won’t bear huge fruits and you’ll have to bring business expertise to the table) and implementing best practices.

3) Help you integrate your various data sources so that you can do analysis for survey responses or figure our multi-channel impact of your experiments/tests.

What should you be careful about? Start with modest goals and don’t

underestimate the immense resistance you’ll get from your company culture. It is very hard for companies to truly have a customer centric mindset and at very step you should be prepared to massage egos and re-frame things so that they let you bring customer voice to the table and not just kill it because of their opinions.

Create case studies when you do a great test or find out a huge nugget of information via the Research work.(it will pay you back big).

What do you pay consultants? Big sized dollars, a bit initially and then

only periodically.

Stage Four: Maturity

What does it look like? You have truly implemented

something akin to the Trinity. You don’t have enough people to do the analysis work.

What do you need? 1) New and different ways to capture data.

2) More people.3) Create self sustaining processes that feed active decision making.4) Maybe another challenge! : )

What is your role? 1) Chief Cheerleader.

2) Find the right talent.3) Find Insights from Six Sigma and Process Excellence (books maybe).4) Truly consultants who really don’t do much work except come talk to you and give you ideas.

What is the consultant’s expected role? 1) For the new technologies you are

trying you will need help in understanding them and instrumenting new ways of capturing data. 2) Bring truly radical outside perspectives (that a select few consultants in the world have) that will both energize you but also help influence strategy (vs. KPI’s or page design).

What should you be careful about? You are going to be in very rarefied air, make sure

your organization has the appetite for risk and they back you. You will make more mistakes here (but you will also win big), be prepared for it and make sure that that is ok. Ensure that you don’t go so “process crazy” that people have meetings and do graphs just for the sake of process meetings (this happens all the time). Your personal job is to motivate your team (analytics/research/web/whatever) and keep the organization on the right track time and people evolve.

What do you pay consultants? Huge sized dollars, infrequently. It’s that simple. There are many great

consultants / consulting companies.Some of them have different sizes and specialties but they all know what they are doing……

Thank you