The era of root-and-branch organisational changes undertaken by the
multinationals is nearing completion. Today businesses are more often
looking to maximise investments in their existing systems, structures and
ways of working without projects that take years to implement or involve
vast capital outlay. Performance improvement has, as a result, become a
growth business for many consultancies – offering a way to fine-tune a
single business process or several at once to boost efficiencies and drive
profitability.
Such work often involves short projects offering specific, measurable gains,
better profitability and often rapid returns on investment, says Brendan
Cahill, chief executive of specialist operations consultancy Trinity Horne,
based in London. “A typical project for us is six to nine months, and you’re
starting to deliver benefits in four or five months. Typically, the return
on investment will be achieved after 12 months. We’ve seen projects return
£16 for every £1 spent over a three-year period,” he claims.
Fierce global competition is driving this need to optimise multiple aspects of
a business from procurement and supply functions to operations and sales,
according to Jeff Thompson, leader of Price Waterhouse Coopers’s performance
improvement practice in the UK. “Clients are under growing pressure from
shareholders to cut costs as well as from regulators. It’s not just the
private sector, though. Other organisations in the pubic sector are under
just as much pressure to demonstrate efficiency and value for money.”
The potential gains can be substantial, he says. “We have a client with an
international supply business throughout Europe. Because of the regulations
then in force, they had originally set up separate tax entities in 27
countries. Following a change in the rules, however, they can start to
consolidate that.
“We helped them set up a shared service centre to handle all the tax and
payment functions. Not only is it much more efficient and cost-effective, it
enabled them to see clearly for the first time how much tax they were
paying, where they were paying most and how to restructure their business
accordingly.”
At their most effective, consulting projects can deliver rapid returns on
investment, cut costs and leave an organisation with the tools it needs to
carry on improving once the consultants have moved on. The work that Hamish
McKechnie-Sharma, 34, an executive consultant at Capgemini and this year’s
MCA Performance Improvement award-winner, did with the Metropolitan police
to improve its procurement processes and cut costs achieved those aims. With
procurement expenditure of £850m, there was scope to create significant
savings across a whole range of spending categories from batons and helmets
to helicopters and horses.
Using a series of analytical and procedural tools to drive change in the
supply chain, McKechnie-Sharma helped the force introduce more standardised
procurement processes. These enabled it to compare spending across
categories and across boroughs, identifying where cost savings and more
efficient buying processes could be introduced.
The work he and his team at Capgemini have already done is saving the force up
to 8% across a range of procurement categories.
The strong demand for performance improvement consulting stems from a desire
among companies and large public sector organisations to effect change
quickly, says McKechnie-Sharma. “Longer projects of 18 months or more need
real justification; most of the work we do is very much focused on quicker
wins.”
A lot of performance improvement work offers organisations scope to maximise
large-scale investments they have already made in processes such as IT by
helping them make better use of existing systems, he says. “Increasingly,
our work is also about ensuring the improvements we make are sustainable,
giving our clients the tools to continue improving time and time again.
“Improving performance in terms of corporate and social responsibility is
another fast-growing area. That could be something as simple as minimising
the use of plastic cups in the coffee machine, or procuring biodiesel for
the company fleet.”
For some businesses, performance improvement can involve radical and
potentially transformational change without vast expense. Continuous
improvement is the new creed among many organisations, and it is
consultancies that can give them the tools they need to keep fine-tuning
their operations.
It is an option that should result in them being better equipped to implement
their own innovations, rather than calling in consultants to hold their
hands every six months.
Being able to apply these tools across the whole organisation is becoming an
increasingly pressing need, according to Chris Wakerley, managing director
of the Boxwood consultancy.
Performance improvement work that produces the most dramatic change in
efficiency and profitability is about more than tinkering with one business
function at a time, says Wakerley.
“These days, businesses cannot afford to have a chink in their armour. Supply
chain, operations, IT and the cost of IT all have to be right. You have to
be good at everything, and you have to be good at implementing the right
innovations in these areas quickly.”
How well an organisation’s constituent functions operate together is where a
great deal of value is created or destroyed, he says. “It’s about looking at
the efficiency of the organisation from end to end.”
It isn’t easy to find good consultants with the right set of skills to help
organisations foster a culture of continuous improvement that works once
they have moved on to the next project. They must have the right blend of
personal and technical skills along with suitable project experience,
according to Thompson.
“We look for people with practical experience of managing large teams and
people with very good financial and accountancy knowledge – analytical
people who understand how a business performs and who know what to do with
their findings,” he says. “It’s not about technology, it is much more about
the softer skills side. It’s a hard thing to teach – it has to be learnt on
the ground.”
Fostering continuous improvement within a company creates value because it
tackles the central problem of why big projects within organisations so
often fail after the consultants have moved on.
