“We expect that at least one-third of the global workforce could be hired online by 2020 — we’re witnessing an incredible change take hold: In the future, we will all be managers” 
Gary Stewart (CEO Odesk) begins to paint a dynamic – and somewhat frightening – picture of the potential rapid changes to the future global workforces over the next decade. With over 63% of the world’s GDP delivered by services – the impact will no doubt be profound and far-reaching.
Many of the largest professional services firm – like KPMG – saw the same potential for an improved delivery models (including Knowledge Process Outsource) over the past 5 years. New consulting and advisory models have recently emerged into mainstream brands – including Eden McCallum (UK), Business Talent Group (US) and Evisors (US) – which re-configure the value proposition of consulting and professional services. Deloitte’s Centre for the Edge continues to push the exciting boundaries of professional services – especially crowdsourcing, talent management and enhancing performance .
Just-In-Time. About Time.
Few doubt that Professional Services will at some point witness a movement towards a “Just-In-Time” supply chain as a way creating and delivering exceptional value to clients. The philosophy of JIT is simple: inventory is waste. Just in Time (JIT) is often defined as:
“a production strategy that strives to improve a business return on investment by reducing in-process inventory and associated carrying costs.”
Just-In-Time is a powerful concept that we will hear more about in the next decade. We’ve talking “JIT” since the early 1980’s – but somehow professional services has remained immune from flexible and scalable delivery methods which the products world has known for at least 30 years. Demand for professional services is characteristically cyclical (“lumpy”), unpredictable and highly configurable. This is especially the case in “project” based consulting and advisory services, such as:
- Mergers & Acquisitions
- Private Equity
- Complex Taxation
- Management Consulting
Such professions need new supporting business models to help them source and manage networks of highly skilled and experienced workers (i.e. Build the ATeam for each transaction). Most consulting and advisory firms are traditionally built on deep relationships, great capabilities and trust – JIT could provide a systematised process to lower the cost and maintain high quality of service execution. Many lessons and principles can be learnt from well-established JIT literature – like Vendor Managed Inventory. It sounds radical and transformatory – yet we’ve been doing it for a generation in product based businesses (e.g. vehicles). A great deal of waste and inefficiency could be sustainably eliminated.
- Option 1: Hire Full-Time Staff Approach: US$550k
- Full-time M&A Manager ($240k) – 12 months
- Full-time Financial Analyst ($120k) – 12 months
- Recruitment Cost ($30k)
- Training, On Costs and Other Costs ($50k)
- Fixed-Cost Overheads ($60k)
- Business Development ($50k)
- Option 2: Flexibility Approach US$400k
- Key M&A Manager ($150,000 total) – 8 months
- Key Financial Analyst – Perform Business Development “in-house” ($80,000 total) – 8 months
- Flexibility of tasks (purchase twice from trusted partner – like Vumero):
- CoTrans/CoCos Analysis ($10k total)
- Potential Purchasers List ($10k)
- Information Memoranda ($40k – for two)
- 2 Financial Models (c.8 weeks) – $30k (Specialist task)
- Acquisition Analysis ($10k)
- Management Presentation ($20k) (Specialist tasks)
- Dataroom Management ($30k)
- Other Costs ($20k)
Other “hidden” benefits of the JIT approach in Option 2 may include:
- Scale up and scale down as needed (i.e. managing the “bench”)
- Fill sudden gaps in transactional team (skills, seniority, workload)
- Synchronise specialist skills and knowledge as needed (e.g. complex accounting, specialist valuations, etc).
- Reduced setup time – Cutting setup time allowing an advisory to reduce or eliminate time an employees would normally spend “on the bench”
- More rapid flow from deal origination to deal execution. Decomposing transactions into “smaller tasks” (e.g. Information Memorandum, Data Room management) forces managers to reduces delays and simplify processes
- Increased emphasis on client relationships. A company without excess “people inventory” in the offices does not want a supply system problem that jeopardises its ability to executive on a project or transaction.
- Leverage 24/7 workclock (and they can work weekends!)
There are many exciting opportunities for JIT in Professional Services – it remains embryonic and we’re just skimming the surface. Let’s keep adapting and innovative to make sure we can all keep up.