Value: a thumbs up in TMT, but financial services clients aren’t so sure

By Alison Huntington

What’s the difference between TMT and financial services clients? There are the obvious things: the jeans and lumberjack shirts versus the sharp suits; the seemingly impenetrable language of technology versus the dictionary of complex financial products; sunshine-soaked Silicon Valley versus the imposing skyscrapers of New York.

But there are less obvious things, and the one we uncovered is that clients in these two sectors have very different opinions of the value added by consultants.

TMT clients are very positive about the value added by consultants: nearly two thirds (64%) agree that the consultants they’ve had recent experience of added more value than the fees paid for them. Financial services clients, on the other hand, are less convinced: only 27% think they get more value than they pay in fees – quite a difference.

One of the key reasons is the type of work these clients turn to consulting firms for. Financial services clients have a huge amount of regulatory and remediation work, with hard deadlines and the threat of hefty fines if they’re missed. They know what they need to do, they just need someone to do it -- and there’s little room for dazzling brilliance when following compliance instructions. Consulting firms are sought because they offer a vast pool of high quality resources that can be flexed as the burden of regulatory activity ebbs and flows. With this kind of work quality is paramount, but value isn’t really relevant – it’s a case of get in, get the job done, and get out.

TMT clients generally can’t afford this luxury – quite literally. As clients fret over how to boost shrinking margins, they’re far more likely to go to the cheaper contractor market if they need bodies to get something done. In order to justify the cost of a management consulting engagement, consultants in TMT simply must add lots of value, and must be achieving something that a pool of contractors couldn’t – otherwise the clients won’t bother with them.

We see this echoed in quality perceptions too. Financial services clients are most positive about consultants’ capabilities in financial management and risk – far more so than TMT clients. But top of TMT clients’ list is business transformation – exactly the kind of high-value, mission-critical work that no one in their right mind would entrust to a ragbag team of contractors.

So what? Well, consultants in both sectors are up against it to articulate the value they add to clients. For TMT consultants, it’s about survival: in a market that tends to be dominated by one or two very big clients (particularly in telecoms), losing a client doesn't just mean losing revenues – it could spell the end of a firm’s TMT practice. And for financial services consultants, it’s about which part of the consulting market they want to operate in: increasingly commoditised services, or the high-value, more unfamiliar issues. A large proportion of financial services clients see consulting firms as commodity providers; to break that perception, consultants need to focus on value, and perhaps be a little pickier about the work they take on if they’re to gain credibility as strategic advisors, rather than interchangeable worker bees.