160# - Your Overreliance on Big Consulting Firms is Hindering Your Transformation Success
Antonio Nieto-Rodriguez
World Champion in Project Management | Thinkers50 | CEO & Founder | Business Transformation | PMI Fellow & Past Chair | Professor | HBR Author | Executive Coach
In the last decade, big consulting firms have seen remarkable financial success, with the industry growing from approximately $200 billion in 2013 to over $300 billion in 2023—a 50% increase. This growth has been driven by the world's largest consulting giants, including Accenture, Deloitte, PwC, Ernst & Young (EY), and McKinsey & Company, who have doubled their revenues, expanded their workforces, and embedded themselves as indispensable advisors to organizations globally.?
For instance, Accenture’s revenue surged from $28.6 billion in 2013 to over $61.6 billion in 2023, supported by a global workforce that now exceeds 700,000 employees. Deloitte, doubled its global revenues to $65 billion in 2023, marking a significant increase from previous years. Similarly, Boston Consulting Group (BCG) achieved revenues of $11 billion in 2021.
While these firms offer expertise and resources that can be invaluable in the short term, there is growing concern about their long-term value.
A survey commissioned by digital consultancy Emergn revealed that 84% of senior executives found major consulting firms needing to be more helpful in corporate transformation projects, with only 13% stating they provided more help than hindrance.
This dissatisfaction often stems from a perceived misalignment of incentives; consulting firms may not be interested in expediting transformations, as prolonged projects can lead to increased billable hours and higher fees.
Why Consulting Firms Are Not Designed to Speed Up Your Transformation?
Despite the reliance on consulting firms and the staggering financial investments poured into transformation initiatives, studies indicate that up to 70% of large-scale transformation projects still fail to meet their objectives.?
One fundamental reason for this dependency cycle is that consulting firms have little incentive to complete projects quickly. Consulting fees are typically based on time or project duration; extending engagements increases revenue. From a consulting firm’s perspective, the longer a transformation project lasts, the greater the profit. Therefore, while an organization’s primary goal is to drive change efficiently and with impact, the consulting firm’s interests may subtly (or overtly) encourage a slower pace and prolonged involvement.
Understandably, a consulting firm may not always recommend a project pause or suggest the cancellation of an initiative that no longer brings value, as this would directly impact their revenue.
Instead, momentum is often sustained regardless of results, and resources continue to flow into extended timelines and expanding project scopes. Without a built-in incentive to prioritize quick and effective transformation, consulting firms may inadvertently slow down the very change they were hired to accelerate.
Case in Point: SAP Implementations
A classic example of this paradox is the implementation of SAP, one of the world’s leading enterprise resource planning (ERP) systems. Developed over two decades ago, SAP has become a standard solution across industries. Yet, despite its maturity and millions of implementations worldwide, SAP projects are notorious for massive delays and budget overruns.
领英推荐
How do so many organizations, working alongside top consulting firms, still struggle to complete SAP projects on time and within budget??
An example of this was the SAP implementation at Queensland Health in Australia in 2010, which ended up costing nearly $1.2 billion after significant issues in payroll processing.?
Despite exhaustive resources and consultant involvement, the project suffered severe delays, impacting budget and functionality. While organizations expect consultants to mitigate such risks, the recurring issues with SAP implementations indicate that more needs to be learned from past experiences to prevent these overruns.
The High Costs of Outsourcing Transformation
Relying on external consultants strains budgets and often delays cultivating an organization’s “transformation muscle.” Outsourcing this critical work might appeal to CEOs and senior leaders, who might assume that consultants will bring about swift, effective change.?
However, delegating transformation to an external team is comparable to wanting to build physical strength but sending a friend to the gym in your place; the desired growth and endurance never materialize within your organization.
Without investing in internal capability-building, organizations become increasingly dependent on consultants, especially in today’s climate of constant change.?
So, the question arises: Is our over-reliance on consultants actually hindering our ability to transform effectively?
Transform Faster, Higher, Stronger – Together
At Projects & Company, we partner with you to accelerate transformations, significantly reduce dependency on large consulting firms, and build your organization’s internal transformation capabilities—slashing external costs. Our unique approach empowers your team to drive change independently, making transformation faster, more impactful, and more sustainable.
We’d be delighted to help you regain momentum, share insights, and deliver immediate impact to your initiatives.?
OCM and SAP Enable Now Training Consultant
3 个月I would add that the right incentives need to be in place to align the consultant and client priorities. When I deliver training to my clients I make it clear that while I offer continued consulting, I expect them to be self-sufficient and that they should not need it if I did my job properly. I enjoyed the article.
Author of 'Agile Beyond IT'
3 个月Excellent Antonio. 20 odd years ago, to facilitate massive Change investment in the UK Department of Work and Pensions, the then COO formed a team of Transformation troubleshooter. We were all independent consultants unfettered by the conflicting demands of big consultancies and the numerous Sir Humphreys (are you familiar with the BBC's Yes, Minister?). All of these had there own agendas often at odds with the taxpayer and government policy. How times have changed......oh wait a minute. That said I worked with incredible and dedicated folk at the coal face....amazing people.
Project Management Specialist | PhD Candidate at the University of Minho
3 个月Excellent point, Antonio! From my limited experience dealing with consulting companies, my view is that they come, develop a diagnosis, in general sth that we did know, and sometimes it was under the carpet, they throw light on it, and plant the seeds for the solution, expecting a new contract. If you can afford it, right, maybe you come to a solution, a change or a transformation in your organization. On the other hand, if you have a qualified team you can cultivate the seeds by yourselves and, luckily, with a good sponsor as well, the plant may grow and fructify. If both paths are not possible, the consultant reports will lie in a comfortable file or bookshelf.?
Head of Delivery and Service Management
3 个月Antonio Nieto-Rodriguez I fully agree with what you have stated so clearly and I dare say courageously. Fortunately, I work in a company that has been embracing these same principles and values for years, focusing on the value of developing internal knowledge and therefore on the growth of its staff and using external consultancy carefully, only where it is potentially useful. Thank you for your valuable articles that continue to inspire and guide me. ??
Strategy Implementation Swiss Knife- Supply Chain & Digital Transformation
3 个月On the other hand, why don’t their customers invest more in their own people to build these muscles?? For the specialized (including transformational) skills provided by consulting companies? Partially. But you can find it much cheaper, working with the right freelances.?? For the methodologies provided?? Again, partially, I would say.? For the assurance that they will not get blamed for having worked with the recognized brands? Sometimes, I guess.? Or maybe because they are not willing to invest with a long-term perspective and help their people develop in a broader way, feeling the pressure of short-term results, keeping them (too?) long in the same operational job ?