UK pharma spent £238m on management consultants in 2015, but what are companies buying and is their money well spent? Edward Haigh investigates

(Click to read the full version of this article in the online magazine)

In the list of professions people love to hate, management consultants feature fairly prominently. They might be pipped to the post by perennial favourites – estate agents and the last decade's hottest new entry, bankers – but they're right up there. 

As with those two, public ire gravitates around the idea that management consultants do little and charge lots. Plus, there are a lot of them around; even if you exclude firms with fewer than 50 consultants – removing all the one-man-bands – there are 50,000+ consultants in the UK. In fact, relative to the size of its economy, the UK's consulting industry – worth £6.8 billion in 2015 – is the biggest in the world by some distance, which means you're more likely to find yourself sitting next to a consultant here than anywhere else in the world. 

Yet, if you ask the clients of consulting firms for their opinions, a different story emerges. A recent survey (Source Global Research's Perceptions of Consulting in the UK 2016 survey) found that just over half (53 percent) of UK consulting clients described the capability of consultants as 'high' or 'very high', with just one-in-ten describing it in negative terms. As for doing little and charging lots, a very similar proportion said they got more in value from consultants than they pay in fees, with 15 percent reporting that they get at least five times in value what they pay in fees. It's hardly a damning indictment. 

Perhaps unsurprisingly then, UK consultants' business is booming, growing by just over 8 percent in 2015, although this figure is not half as impressive as what was happening in the pharma sector, where growth was just short of 15 percent. 

It hasn't always been this way, in fact, pharma has traditionally been among the most reluctant to engage with consultants, largely through the belief that they didn't have the necessary specialised knowledge. However, as pressures on the industry have mounted and the questions have become bigger and answers more complex, leaders are increasingly turning to consultants for help. 

While many pharma execs have been frustrated by the inability of consultants to answer some of the industry's biggest growth-related challenges, when the question is about cost reduction, they're rarely as disappointed. Conversations within businesses generally – not just in pharma – may have shifted from back office to front office in recent years but for most of the century so far consultants have been camped out in the back office and there's little they don't know about how to make it more efficient. Against a backdrop of economic uncertainty and swingeing cuts to NHS budgets, this capability is pretty darned useful. 

Whether a discussion starts with growth or cost-reduction, it often ends with transformation. Organisations are so interconnected, problems so complex and the potential disruption so deep that what starts as a discrete project rarely ends up staying that way. Change one thing and you have to change everything. 

That's where consultants can be especially helpful. The world's leading consulting firms have both the scale and breadth of capability to deal with projects that cut across business functions and geographies, and most have spent a lot of money investing in their industry capability, so you get consultants who wear the t-shirt and speak the lingo. 

Added to which, under pressure from clients, many consulting firms are putting their fees at risk, so you only pay them if they deliver the results they promise. This approach needs careful thought on both parts, partly because of the demands it places on the clients to do their bit and measure results, and partly because it can encourage counterproductive, unsustainable behaviour in consultants. However, risk and reward is certainly helping reluctant clients – especially procurement departments – to view consultants in a more favourable light.

For some, their view of consultants is unlikely to change, and they will either continue to baulk at consultants' fees or prefer to keep things inside the organisation, even creating internal consulting divisions. However, the prospects for pharma consultants remain strong; we forecast growth to rise to nearer 16 percent in 2016. So, expect to find yourself sitting next to a consultant sometime soon.

Tips on using consultants:  

Know what you're looking for
Before making the first exploratory phone call to a consulting firm, you need to have a clear idea of what you want consulting to do for you. Being able to articulate where you are and where you'd like to be will make the consulting process easier from first conversations to project's end.

Know who can help you get there
When people look for a consultant, they're usually looking for 'an expert'. But what sort of expert would suit you best? In broadest terms, consulting skills are of two varieties. There are issue-specific skills – for instance, expertise in regulatory compliance. Then there are industry-specific skills – where the consultant speaks your language and knows your industry. Ideally, you'll want someone who offers a healthy mix of both, but getting the balance right means thinking hard about the nature of your project, and its complexity.

CollaborateWithout doubt, the most effective consulting projects are those in which the client and the consultant work together as a team throughout the life of the engagement. By making sure you're giving your consultants all the information they need, promptly supplying all promised resources, and checking in early and often to identify and address stumbling blocks as soon as they appear, you will go a long way toward ensuring a successful project and a solid return on your consulting investment.

Edward Haigh is director of Source Global Research. He can be contacted at edward.haigh@sourceglobalresearch.com

(Click to read the full version of this article in the online magazine)