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Reduce consulting costs by up to 60%? - 5 strategies

Enhance Consulting Governance & Procurement Excellence to reduce consulting spend


In today's competitive business landscape, organizations often rely on external consultants to provide specialized expertise and support for various projects and initiatives. While consulting services can be invaluable, they also come with significant costs that can strain budgets if not managed effectively.


Companies can use strategic measures to successfully reduce consulting spend without compromising on quality or results.


Procurement teams also play a key role in controlling this spend and optimizing the value of consulting engagements.



Return on Consulting


Our validated Return On Consulting Framework incorporates key strategies that companies and their procurement teams can consider to optimize the value of consulting engagements and the cost of engaging consulting firms:


  • +40% better results: More effective and efficient management of consulting assignments at company and project level can increase the return on consulting by more than 40%

  • -60% lower costs: Optimal matching and identification of consulting services with the best price/performance ratio can reduce consulting costs by 30-60%.


Here are some key strategies for optimizing the performance of consultants, the achievement of project goals and thus the expenditure on consulting:



Consulting Governance


Reducing consulting spend within an organization requires a coordinated effort from procurement teams along with other relevant stakeholders.


First and foremost among the measures to reduce consulting costs is the improvement of consulting governance throughout the company.


Here are several strategies they can employ:


  1. Policies & Procedures: Establish clear guidelines and procedures for the engagement and management of consultants and for effective and efficient collaboration between internal stakeholders and procurement. This includes, for example, guidelines for selecting consultants, defining the scope of the project, setting budgets and monitoring the progress of the project.

  2. Standardization: Standardizing processes for hiring consultants can help simplify and streamline relevant workflows and ensure consistency across the company. This includes, for example, the creation of standardized templates, tools and procedures for tenders, contracts and the management and controlling of consulting projects.

  3. Supplier Management/ Preferred Suppliers: Implementing robust supplier management systems helps to ensure collaboration with suitable consulting firms and to track the performance and quality of consultants. By consolidating the number of consulting providers, companies can leverage greater purchasing power and negotiate more favorable prices and terms. Building long-term partnerships and negotiating framework agreements with preferred suppliers can also lead to volume discounts and other cost-saving opportunities.

  4. Key Performance Indicators (KPIs): Establishing KPIs serves to measure the success of consulting projects based on stringent criteria, such as adherence to the project schedule and budget, customer satisfaction and results achieved or impact on corporate goals. Regular performance measurements and feedback mechanisms with the consultants can facilitate continuous improvement and cost optimization efforts.

  5. Transparency and Knowledge Transfer: Promoting company-wide transparency and knowledge sharing about consulting engagements and projects between all stakeholders can improve organizational capabilities and encourage best practices, for example by documenting project achievements and deriving lessons learned. Procurement can also promote best practices by continuously staying abreast of industry trends and the consulting market to continuously improve capabilities and adapt to changing business environments.



Project Governance: Selecting the right consultants


One of the key processes that enables organizations to manage consulting spend and optimize return on consulting is the vendor selection process.


Establishing a thorough and informed selection process that assesses the capabilities, experience, track record and competitiveness of consulting firms can help procurement teams and internal stakeholders identify the consultants that best meet the needs of the business.


This process should foster cross-functional collaboration between procurement teams, project managers, and other departments involved in consulting projects. This ensures alignment of goals and objectives, desired outcomes, required consultant qualifications and appropriate consulting approaches and solutions.


The use of new technologies (e-procurement) can also help to simplify cross-functional collaboration, streamline processes and avoid workflow inefficiencies.



Project Governance: Project management & project steering


Processes for the effective management of consulting assignments and consulting projects are also key, but are often neglected. This is because, although project management skills are often available in companies, the management of consulting projects has some special qualities.


Managing collaboration with external consultants involves coordinating objectives and tasks, setting up a suitable internal and external project organization and ensuring effective communication between all project participants throughout the entire project life cycle.


Adequate internal and external team staffing enables project team members to manage projects effectively and efficiently, control external consultants and also reduce dependency on external consultants and the associated costs.


This also includes establishing early warning systems through quality and risk management as well as the creation of steering committees with representatives from project management, finance, purchasing and other relevant stakeholders to monitor consulting projects, review performance and results and make strategic decisions.



Success Factors


The success of implementing these consulting and project governance strategies is linked to a number of accompanying measures, such as ensuring company-wide collaboration between procurement teams, project managers and others involved in selecting consultants and managing consulting projects, as well as effective communication and "storytelling" about objectives, benefits and results achieved (creating acceptance and commitment).


Adopting a proactive approach to monitoring consulting spend through effective vendor selection processes and use of external consultants enables companies and procurement teams to identify cost-saving opportunities and drive continuous optimization efforts.


Regularly reviewing and refining procurement strategies based on insights gathered from data analysis and stakeholder feedback ensures alignment with organizational goals and objectives.



How Cardea can help you save on consultancy costs


Cardea is an expert in supporting managers, purchasing organizations and project managers in the effective management of consulting assignments and consulting projects.


Our services and expertise for selecting the right management consultancies focus on the entire procurement process and the most important "levers" that significantly influence the costs, the performance of consulting companies and the results of consulting projects:



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Find out more about our services for reducing consulting costs through effective management of the selection and use of external consultants:




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