Asset Based Consulting (ABC) isn’t a new concept in the consulting industry. Comparing with the traditional people-based consulting, ABC provides many benefits to customers, consulting companies and individual consultants. However, it’s yet widely (effectively) adopted. In this article, we’ll share our point of view on the “red flag” that slows down the adoption of ABC.
When we talk to people about the Asset Based Consulting, the first question we usually receive is “What type of asset are we talking about?” To answer this question, we group assets into two types to explain:
- Consultant-Oriented Assets – this type of assets are for enablement purpose targeting the internal capability build. It can be tools and platforms with Intellectual Property (IP) embedded, internal knowledge base with specialized knowledge, frameworks, blueprints, methodologies and best practices.
- Customer-Oriented Assets – this type of assets are customer facing products (e.g. applications or platforms) with IP packaged in them. It to certain extent replaces the traditional pure people-based consulting model. These products are treated as primary assets that can be used repeatedly and consistently alongside the human talent during the consulting period. Customers can keep using these products when the consultants leave.
Another way to look at these two types is that the first one is for internal use only. The second one can be packaged up and sold to customers. For consulting companies who own such assets, they can offer their packaged products or services to their customers, in different ways:
- Subscription – this model is suitable for all sizes of customers, especially benefits the small to medium ones. Usually these customers are reluctant to work with large consulting firms. This pay-as-you-go model provides more options to customers and opens a bigger market for the large consulting firms.
- Perpetual – when people see the word perpetual, the first impression is big capital investment. It doesn’t have to be that way. Consulting companies can provide modular-based offerings to their customers. For example, developers nowadays try to convert the monolithic applications into micro services. Consulting firms can take the same approach by decoupling their service offerings to modules. Customer can choose and pay for what they need based on their requirements.
Having talked about “What is ABC”, let’s have a quick touch on “Why we need ABC” before moving on to the “red flag” part.
Every new technology or methodology got invented for a reason. A main reason is to solve problems for certain group of people. In the consulting world, let’s take a look at the problems faced by three different groups of people.
From the Customer Side
A common problem customers are facing is getting consistent high-quality consultancy service. It’s quite a common pattern that consulting companies put their top-gun consultants in the initial customer engagements, e.g. during the pre-sales stage. Once customers signed contract, the top guns move on and the next-tier teams fill in. Even customers put named-resources in the contract, it can’t guarantee the quality of the whole consultancy team. Bigger consulting companies with deep human resource pools may disagree, but they are also facing bigger number of customers.
From the Consulting Company Side
One of the challenges consulting companies are facing is how do they differentiate themselves from the others in the market? By investing on human capital, e.g. hiring more Subject Matter Experts (SME)? Well, people can move. And people nowadays move a lot more than before. Even consultants choose to stay, the consulting companies will face ongoing cost pressure when consultants are on bench. Regardless which scenario, people movement is a known disruption to consulting companies. Another financial related challenge is how can consulting companies make their service pricing more competitive. Outsourcing is a common solution to reduce the costs. But if the overseas resources are not enabled properly, the efficiency and even the company brand will be impacted.
From the Consultant Side
In certain fast developing domains, e.g. the IT domains, the consultant brains are facing enormous challenges. The IT industry and technologies are developing in such a high pace that SMEs’ existing knowledge and expertise will fade very quickly. They must keep pushing them to refresh their brain to keep up with the updated and new technologies. And the wider technology domains their brain needs to cover, the worse the situation. We’ve seen some professionals who have a wide range of certificate badges added to their sleeves. Don’t get us wrong. This is a good way to keep acquiring new technical knowledge. But each certificate will only be valid for only 1-2 years. To keep up with renewing all these certificates, it will be a full-time job already.
So we have clear problems from all three groups of people, and we know ABC can solve the problem. But why it’s not widely (effectively) adopted?
The scene shown in the picture is known as the Red Flag Act (i.e. the Locomotive Act 1865 in UK). This law required all cars to have a man walking in the front and waving a red flag. In addition, it set the speed limit to 2 mph in urban areas and required every car to also have a stocker onboarded. This is an example of how we welcomed the biggest transport evolution. It turned out later that the industries, e.g. the stagecoach industry, threatened by this new technology were behind the lobbying that led to the Red Flag Act. So who are the “stagecoach industry” that slow down the growth of ABC?
The first one is the customer. Yes, you saw it right, customers. Let’s use another analogy to describe this situation. When people need to take a surgery in the hospital, they always want the most senior surgeon to handle it. But there are only limited number of senior surgeons. So this “I want the best” type of requirement can’t always be fulfilled. On the other hand, if we tell a patient that we’ll let a machine to handle the surgery, guess what the patient would say? Most likely the answer is no.
Coming back to the consulting world, it will take time for customers to adopt the asset part of the consultancy. Consulting companies in this case play an important role in introducing the concept and convincing the customers to have a try. But consulting companies in the meantime are also putting up a red flag in front of themselves.
Consulting companies have been operating in the same business model for decades, i.e. loaning consultants to their customers to solve their problems. So they have put a lot focus on finding good consultants in the market. Once they acquired talents, the focus shifts to sending them to billable projects. Some consulting companies have started to invest on building the asset they can sell. But the development of the internal asset is still neglected or set as low priority.
From the consultant side, there is also a fear that giving out their ideas and knowledge will make them less competitive or even losing their job. From the individual level, It’s a typical mindset that giving out one thing means losing it. But if we look at it from the group level, say a group of 10 people. Each person sharing one thing with the others means everyone will get nine more things back. So it requires the right guidance and culture set from the company level.
Among these three groups, the consulting companies play a critical role in keeping or removing the red flags for themselves and for the other two groups. How can consulting companies get over this mindset hurdle? The car industry again is setting another good example for us. If we map electricity cars to ABC, and petrol cars to traditional consulting model, the story line is clear. The late coming mindset changers will become less competitive in the market.
Once the mindset part is sorted, the technology side believe or not is the easier part. The cloud technologies have made the infrastructure tier way easier to set up. For the consultant-oriented asset management, there are already a number of off-the-shelf SaaS solutions available, e.g. Microsoft SharePoint, Atlassian Confluence, etc. For customer-oriented asset, consulting companies can choose to adopt external tools and rebrand it to their own packaged services as well. Or they can develop their own fully packaged and automated services. And this doesn’t have to be a full-blown waterfall development. Based on their own situation and customers’ need, they can iteratively develop their consulting asset.
Both type of assets will provide many benefits to all three groups of people. We are listing a few of them below:
- Provide assurance of consistent, repeatable and successful delivery
- Reduce manual efforts with automations to achieve high efficiency and low costs
- Smooth the onboarding process and learning curve for new/junior consultants
- Provide geographical flexibility and attract more talents from remote locations
- Increase scalability and agility for both consulting companies and their customers
- Enable integrations with fast growing technologies like Big Data and AI
With these benefits, the pain points we’ve mentioned earlier can be all addressed. And there are many other benefits ABC can provide depends on the consulting domains and industry verticals.
The aim of the Asset Based Consulting should be increasing the value proposition and making consultants more effective instead of replacing them. For consultant-oriented asset, it is no doubt an enabler for the effectiveness improvement. For customer-oriented asset, the focus should be relieving pains and creating gains for customers instead of replacing consultant to reduce human costs. But first thing first, we need to remove the red flags in front of the Asset Based Consulting.