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Business Transformation: insourcing v the consultancy approach

By Steve Deverill. Published on 2 June 2015

As Business Transformation becomes more mainstream, Jean-Pierre Green, partner at Eton Bridge Partners, talks about why he believes insourcing and developing internal capability is preferable to buying it in through the consultancy approach, and three top BT experts shares their views on the topic.

There’s no doubt that in today’s market we’re seeing a real gathering of pace as organisations start to realise that transformation and change is becoming business as usual.

Previously, Business Transformation projects would be identified and, nine times out of ten, a call would go out for consultants to manage the programme.

Now it’s different, the market is so dynamic that transformation is happening constantly and it requires (if not demands) its own centre of excellence to deliver that change.

As a specialist in Business Transformation executive search, I’m seeing an acknowledgment that building a longer term commitment to internal capability for delivering change, is fast becoming a viable and more widely adopted alternative.

Many organisations have already gone down this route, enabling them to manage multi-million pound, cross-functional business change initiatives in-house.

This is definitely an upward trend, albeit one that applies mostly to bigger organisations who have the capacity to embrace the scale of transformation.

Indeed, the opportunity is such that my only question is why more FTSE 100/250 companies aren’t doing the same and I wonder if, in some cases, this is down to the lack of commitment at a senior level.

In-house capability allows organisations to develop their own way of transforming the business; to set their own agenda, one which closely matches their culture instead of “the consultancy way”.

Building an insourced central transformation function provides a single, holistic version of the truth that everyone can jointly work towards. It retains knowledge and intellectual capital and helps to create a pipeline of future talent.

Contrast this with the consultancy approach, which can lead to pockets of transformation teams working in silos as they focus on different elements within a business, with little or no co-ordinated approach.

After all, how many of us know of businesses where you can find several different management consultancies engaged at different levels in different functional areas? No surprise that some of these projects fail to deliver tangible results or never see the light of day.

Investing in internal capability reduces risk, increases continuity and consistence of governance and provides for a much greater sharing of knowledge – both now and in the future. It is also more cost effective, enabling transformation benefits to be compared between different programmes and allowing better prioritisation of investment.

Critical to success however, is finding the right person to take that in-house lead.

Business Transformation candidates come from all walks of life, such as IT, operations, finance, project management and transformation programme management; while others will be ex-consultancy.

The latter bring with them a strong track record of working with FTSE 100 blue chip companies and you absolutely know that they will understand how to transform an organisation.

That said, there is an element of risk around their ability to transform themselves into an-house role with all the composite parts that entails. Questions can sometimes be asked about their ability to demonstrate cradle to grave programme delivery, and whether or not they have been with an organisation long enough to ultimately see through the benefits that should be achieved.

For me, the ideal wish list would be someone who blends a Big Four consultancy background with a CV that shows they’ve also earned their industry stripes by leading major change and transformation programmes in-house or delivered tangible benefits, such as in an operational role.

Those skill sets do exist, although they are in increasingly shorter supply and, if my own experience is anything to go by – I am currently in discussions with a dozen organisations where insourcing is on the agenda – these individuals will become more and more sought after.

Business Transformation expert Richard Haseldine is someone who has that hands-on experience. After a lengthy career with an international airline, which included steering major change programmes, more recently he has been working as the EMEA Programme Director for a leading car hire company.

There, he successfully streamlined a raft of consultant-led projects, demonstrating how insourcing could reduce cost and keep key skills in the heart of the business.

“When I joined, there were a high number of projects, the majority of which were being managed by some 70 consultants,” said Richard. “By showing the level of spend and presenting an alternative scenario, whereby a core team of 12 people could be employed permanently for a lot less cost to the business, I was able to win the insourcing argument.”

He believes a team of 12 perfectly fits the bill for in-house Business Transformation, explaining: “If you create an army then you lose credibility, larger teams means you constantly have to justify the expense; anything smaller and you end up bringing in more consultants to support the project anyway. Contractors are an ideal source to support peaks in demand or expertise you don’t have in the company.

“You need a core team of really good experienced people with a nucleus of skills at managing change programmes. These are people who are either at, or near the top, of their career, none of them are learning on the job, they have all done it before.

“They know that 90% of managing change is about people and relationships, rather than 90% about the project plan and terms of reference. I always say we are in the people business and you need to employ the right people with that approach ingrained in their DNA. If you get that core team right, then they will always be successful and they are worth 10 of anyone else.”

It is that hands-on experience which provides another edge over consultants who, he says, are very good at establishing the vision and the goals, but less so on the practicalities of engaging people on the very first rung of the ladder and understanding the realities and the costs involved.

In addition, he struggles to see sense in the model which sees consultants coming into a business and walking out of the door some months later, having added to their own skills level but without leaving that all important legacy.

“My argument is that by employing consultants, you are paying people to become experts in your industry sector, enabling them to take that expertise and go and work for your competitors. That makes no sense.

“Insourcing allows you to retain that knowledge, to have the methodology, the processes and a way of managing change from conception through to sign off and delivery. It gives employees involved in change programmes the chance to invest in long term relationships with people who really understand the business, rather than having the constant churn as new consultants come and go.”

Summing up, he concludes: “At the end of the day, as permanent employees, I and my Business Transformation team work for the same company that everyone else works for. I like to say we have ‘skin in the game’, which means we really invest in what we’re doing at an emotional level and it gives us more resonance with the staff around us.

“Either we are both successful, or we both fail. Surely that has to be better for the business and better for everyone.”

Fellow insourcing expert Delfino Canas says it’s important to think about the relationship and knowledge that an internal team brings.

“The advantage of an internal team versus a consultant is that the team will know the business, its specificities and internal politics,” he said. “It will be recognised by the organisation as a centre of excellence they can trust to do the best for them and the overall business.

“They will help address the emotional part of the transformation better than a group of external consultants who are only seen as being there for the money and who do not always think long term, which also impacts on who owns the outcome of the transformation. Often, transformation will fail because employees see it as yet another change and wait for it to fail, their lack of engagement being the key driver of the failure.”

Transformation expert Arlette Correia, says in-house Business Transformation teams are an effective way to deliver sustainable and ongoing innovation and excellence.

“Change is the new constant to ensure any company remains competitive and relevant to their clients, shareholders and employees – the big organisations understand that, but more and more we are seeing SMEs needing to bring the expertise in-house,” she said.

“An in-house team should be the difference between a series of change events versus a continuum of improvements, with synergies leveraged across projects, business units and areas of expertise.”

Whereas historically transformation programmes have been seen as the way to fix problems and external expertise brought in on a temporary basis, Arlette says an in-house team is able to predict and address the next area of problems before they impact the bottom-line.

She believes the commitment and support of the C-level leaders is critical, concluding: “The best Business Transformation in-house teams are led by a Transformation professional who sits at the table where operational and financial challenges and results are discussed while new strategies are created; this ensures the in-house team consistently drive the agenda for change across the company.”

If you’d like to get in touch with Jean-Pierre Green, please email him at:
Jean-Pierre.Green@etonbridgepartners.com or call on 01753 303 600

Follow us on Twitter @EtonBridgePtrs

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Steve Deverill

PARTNER
HEAD OF BUSINESS TRANSFORMATION & TECHNOLOGY

Steve is Head of the Business Transformation & Technology Practice and manages executive level interim appointments. He supports global businesses, FTSE 100s and entrepreneurial SMEs with transformational business change projects.

Having developed the Business Transformation & Technology Practice from a start-up, Steve and the team have supported a diverse range of clients to deliver successful transformation and change initiatives, assisting many companies to achieve their strategic objectives.

Steve’s consultative approach has enhanced his ability to work cross-functionally and advise at board level. Often working in close partnership with a well developed associate network, the advice, commitment, and delivery of our clients business solutions have allowed us to become trusted partners to a number of key clients.

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