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Sourcing and Procurement Perspectives from Seven of the World's Largest Management and IT Consulting Clients.

Monadnock Research conducted a number of interviews with consulting category management executives at leading organizations during 2009. This 150 page report provides details on the trends, best practices, and strategic priorities at 7 organizations with leading consulting category management practices. The report also provides details on the Monadnock Research Value Leadership Framework for consulting category management.

Category managers interviewed include:

The Vice President of Global Procurement, the Director of Professional Services, and the Consulting Category Lead of a Fortune 100 international provider of property, casualty, and life insurance services. Based in the US, these individuals have responsibility for global management consulting services spend.

The Vice President of Global Strategic Sourcing for a Fortune 500 international provider of mutual funds and investor services Based in the US, this individual has responsibility for global spending on consulting services, and also has vertical responsibility for the category globally.

The Senior Director responsible for sourcing and procurement of consulting and professional services at one of the world's largest biomedical and pharmaceutical companies. Based in the US, this executive has responsibility for the global consulting and professional services category of spending.

The Sourcing and Procurement Manager for Consulting Services at a Fortune 500 multinational consumer goods company. Based in the US, this individual has responsibility for North American consulting spending.

The category leader for management and IT consulting services at one of the world's largest software companies that controls more than $1 billion in annual consulting spending.

The Global Head of Category Management, based in Europe, responsible for global professional services spending at one of the world's largest and best-performing financial institutions, currently operating in more than 170 countries globally.

This Research Note is the first of our Consulting Services Sourcing & Procurement Insight Series, where we interview leaders of global procurement organizations and discuss consulting category management best practices.

The Director of Indirect Spending at a Europe-based provider of communication technologies, applications, and services, with approximately 78,000 employees globally. Based in the US, this leader has responsibility for America's spending on professional services, and also has vertical responsibility for the consulting category globally.

Table of Contents
INTRODUCTION 9
TRENDS, BEST PRACTICES & STRATEGIC PRIORITIES 11
Consulting Client Decision Maker Priorities 11
Consulting Category Management Priorities 13
CONSULTING CATEGORY MANAGEMENT 14
MONADNOCK RESEARCH VALUE LEADERSHIP FRAMEWORK 14
Stage I: Transaction Executers 14
Stage II: Policy & Process Builders 14
Stage III: Sustainability Managers 15
Stage IV: Value Leaders 15
SOURCES OF POTENTIAL SAVINGS AND UNTAPPED VALUE 17
CONSULTING CLIENT 2009: TRENDS & BEST PRACTICES 19
PROPERTY, CASUALTY & LIFE INSURANCE 21
Trends 21
Consulting Category Management Maturity 22
Engagement Value and Preferred Providers 23
Contracting and Compliance 24
Maverick Spending 25
Consulting Alternatives 26
Charge-Back Schemes 27
Management and IT Consulting Spending 27
Top Consulting Services Procurement Errors 28
Consulting Category Management Challenges 29
The Executive Champion 29
Advice to Companies Just Starting Out 30
Changes Consulting Marketing Practices and Compensation Schemes 30
Procurement Group Structure 30
PHARMACEUTICALS & BIOMEDICINE 33
Trends 33
Consulting Category Management Maturity 34
Forms of Engagement Value 34
Policies, Procedures, and Practices 35
Demand Management 35
Alternatives to Consultants 36
Consulting Agreements and Statements of Work 36
Consulting Spending 36
Consulting Category Management Challenges 37
Maverick Spend 37
Discounting 37
Advice to Organizations Launching Consulting Category Management Initiatives 38
Shifts in Firm Marketing Approaches 38
Organization Structure 39
CONSUMER GOODS 41
Trends 41
Consulting Category Management 42
Forms of Value Beyond Price 43
Policies, Procedures, and Practices 44
Project Performance 45
Consulting Agreements and Statements of Work 45
Consulting Spending 45
Consulting Category Management Challenges 46
Building Consulting Industry Expertise 46
Project Compensation Arrangements 46
New Consulting Opportunities for Firms 47
Organization Structure 47
MUTUAL FUNDS & INVESTOR SERVICES 49
Internal Consulting Organization 49
Analysis of Competitive Bids 51
Consulting Category Management 51
Contracting Strategies and Getting More Value from Engagements 52
Demand Management 53
Vendor Rationalization: Preferred Consulting Providers 53
Firm Performance Management 54
Consulting Spend Analysis and Analytics 55
Common Errors Made by Sourcing Professionals 55
Procurement Challenges 56
Reigning-in Maverick Spend 57
Changes in the Way Firms Market Services 57
Consulting Trends 57
Procurement Group Structure 58
HIGH TECHNOLOGY 59
Trends in Demand Internally for Consulting Services 59
Consulting Project Value 60
Alternatives to Consultants 60
Consulting Agreements 60
Consulting Category Management Challenges 61
Changes in Consulting Services Sales Techniques 61
Emerging Service Opportunities 62
Procurement Organization Structure 62
FINANCIAL SERVICES 63
Trends in Demand for Consulting Services Internally 63
Managing Internal Demand for Consulting Services 63
Consulting Category Management Maturity 64
Engagement Value 64
Policies, Procedures & Practices 64
Alternatives to External Consultants 65
Consulting Agreements and Performance-based Fee Arrangements 65
Contracting Mistakes 66
Category Management Challenges 66
Emerging Service Areas 67
Procurement Group Structure 67
COMMUNICATIONS 69
Trends and demand for consulting services 69
Consulting Category Management Maturity 70
Engagement Value 71
Consulting Alternatives 71
Contract Terms and Conditions 72
Consulting Category Management Challenges 72
Changes in Firm Marketing Techniques and New Service Areas 73
Procurement Group Structure 73
INTERVIEW TRANSCRIPTS 75
PROPERTY, CASUALTY & LIFE INSURANCE INTERVIEW TRANSCRIPT 77
PHARMACEUTICALS & BIOMEDICINE INTERVIEW TRANSCRIPT 89
CONSUMER GOODS INTERVIEW TRANSCRIPT 101
MUTUAL FUNDS & INVESTOR SERVICES INTERVIEW TRANSCRIPT 113
HIGH TECHNOLOGY INTERVIEW TRANSCRIPT 129
FINANCIAL SERVICES INTERVIEW TRANSCRIPT 139
COMMUNICATIONS INTERVIEW TRANSCRIPT 151
MONADNOCK RESEARCH PUBLICATIONS AND SERVICES 159
RELATED READING 161