The view from inside the goldfish bowl

By guest writer, Tale Skjølsvik, Associate Professor at Oslo and Akershus University College

I know I should be happy – happier than anyone else! I live in Norway: the best place in the world to live according to the 2013 Human Development Report by UN. And I am happy: happy to be born in heaven on earth – especially as the amazing Nordic summer unfolds. I am also very happy to be a researcher studying consulting services, not least because it seems that Norway is a great place to be a consultant. In a recently published report from Source on the Nordic consulting market (The Nordic consulting market in 2013) the Nordic region, and by association its consulting market, is compared to a utopian gold fish bowl into which the rest of the world is peering. And right now Norway is the best performing market in the Nordics.

None of which is to say that there aren't challenges: issues around globalization and the entry of low cost service suppliers from the rest of Europe, Asia and the US are affecting Norway just as they are its Nordic neighbours. The nature of that challenge is talked about at some length in Source's report. But in my research I have however discovered another major enemy in the eyes of consultants: purchasing departments.

Through 80 in-depth interviews with clients in major organisations, and with the management of leading international and local consultancies in Norway, I discovered the increasing impact that purchasing departments are having on the industry. Their emergence as a force is partly a result of regulation but also of a desire amongst client organisations to increase knowledge and awareness of the consulting market and to structure their spend more intelligently.

One of the accusations which has been levelled at purchasing professionals is that they tend to apply standard purchasing procedures to consulting services. Their procedures - it's been argued - assume the client knows, and can specify, their need before they buy a service. In fact my research suggests that clients are getting smarter and can do just that. Many clients are ex-consultants themselves and know exactly what they're buying. So standard purchasing processes might be appropriate from a client point of view after all, and are something that consultants may simply have to learn to live with.

The shift to process-based purchasing might lead consultants to conclude that relationships are less important but my research suggests that it's still as essential as ever, even in these changed conditions. Relationships might not generate assignments as easily as they did 10-15 years ago, when many consultants had what was in effect a local monopoly. But a deep knowledge of clients' businesses, gleaned through relationships, remains an essential component in helping a firm to compete effectively.

Indeed, my research shows that relationships work for both consultants and clients because they create value in two important ways: access and customization.  Access refers to the consultants' ‘inside’ access to information about potential and identified assignments. Customization refers to the consultant’s ability to customise their solution to the clients. So relationships are not only a marketing mechanism for the creation of local monopolies, but also an important means through which clients can capture value.

In truth, both process and relationship matter. Working out how to deal with and embrace the changes taking place in the purchasing of consulting services should be among the top issues on the strategic agenda of consulting firms. Over time, the consultancies that manage to do this are likely to be in a great position for the future.

And talking of great positions - I'm off to enjoy one of the few sunny and warm days of the Nordic Summer.

For further reading, please see an abstract of my thesis ‘Beyond the trusted advisor’ here.