Consulting Categories

The types of consulting that firms (that are relevant to the Management Graduates like us) offer can be divided into five general categories: strategy, operations, information technology, e-business, and human resources. An additional category is boutique consulting, which reflects size (small) and focus (narrow). These categories often overlap, and most consulting firms offer multiple areas of consulting. Clients can now hire one firm, not several, to formulate overall strategy, review operational efficiency, and implement technology solutions.

Strategy Consulting

Strategy consulting aims to help a client’s senior executives (for instance, the CEO and board of directors) understand and face the strategic challenges of running their company or organization. Strategy consultants work with the client’s most senior management, since senior management sets a company’s strategy and long-term plans.

Historically, strategy consulting firms made their recommendations, presented a “deck” (a report detailing the issues and recommendations), and walked away. Increasingly, however, clients expect strategists to stick around and implement their suggestions. Consequently, more consulting firms now tout their implementation capabilities. This implementation often involves Internet applications, or what consultants tenderly call “e-consulting.”

Examples of typical strategy consulting engagements:

• Analyzing why a clothing retailer generates lower sales per square foot than its competitors
• Understanding why Broadway theaters keep losing money and how the theaters can reposition themselves to profit most from new markets
• Positioning a snack manufacturer to enter China, determining types of snacks most wanted, and assessing the market’s willingness to pay for snacks
• Determining the value of a PC manufacturer on a stand-alone basis and suggesting possible acquirers to help divest itself of non-core businesses

Leading strategy consulting firms include:
• Bain & Company
• Boston Consulting Group
• McKinsey & Company
• Monitor Group

Operations Consulting

Operations consultants examine a client’s internal workings, such as production processes, distribution, order fulfillment, and customer service. While strategy consultants set the firm’s goals, operations consultants ensure that clients reach these goals. Operations consultants investigate customer service response times, cut operating or inventory backlog costs, or look into resource allocation. They improve distribution, heighten product quality, or restructure departments and organizations (a specialty of the “re-engineering” craze of the early 1990s).

Unlike strategic consultants, who tend to hand off their findings and leave, operations consultants generally assist in assuring implementation of their suggestions. Major consulting firms now offer both strategic and operations services.

Examples of typical operations consulting engagements:

• Streamlining the equipment purchasing process of a major manufacturer
• Determining how a restaurant chain can save on ingredient costs without changing its menu
• Working with a newly-merged commercial bank to increase its customer response efficiency
• Creating a new logistical database for a tire manufacturer

Leading operations consulting firms include:
• Accenture
• Cap Gemini Ernst & Young
• Deloitte Consulting

Information Technology Consulting

Information Technology (or “IT”) consultants help clients achieve their business goals. IT consultants (also called systems consultants) work with corporations and other clients to understand how they can best leverage technology for the organization. They design custom software or networking solutions, test for system and program compatibility, and ensure that the new system is properly implemented.

Most IT consultants, by definition, boast sharply honed technical skills. But IT solutions must be implemented as an overall part of a business solution. Otherwise, clients are sure to scream for cost-justification and/or fire their IT department heads for wasting money when solutions start to fail.

Examples of typical IT consulting engagements:

• Testing an investment bank’s vulnerability to hackers
• Converting a commercial bank’s mainframe system into an Oracle-based
client-server environment
• Implementing a firewall for a retail chain’s customer service servers
• Upgrading a major law firm from a word processing application to an
operating system
• Troubleshooting on a major SAP software installation (software used by
companies to manage accounting, personnel, inventory and other issues)

Leading information technology firms include:
• American Management Systems
• Accenture
• Cambridge Technology Partners
• Computer Sciences Corporation
• Electronic Data Systems

E-consulting

The Internet is still a revolution. E-consultants concern themselves with solving problems connected with electronic business (or e-business) and electronic commerce (e-commerce) on a widespread basis. E-business refers to any kind of business conducted online, whereas e-commerce specifically
involves a transfer of monetary funds over the Internet.

E-consulting began as web consulting, which involved mostly front-end design work: programming, graphic design, and prototypes. With the proliferation of dot-coms, almost all consulting companies now offer a wider range of services: e-commerce, B2B, valuations, branding, marketing, and so on.
Pure-play e-consulting firms have taken a massive beating. Many, like MarchFIRST, are gone; others, such as Razorfish, are probably not long for the business world. Still others, like Sapient, have hunkered down and are waiting for the next tech upturn.

Examples of typical e-consulting engagements:

• Transforming a department store’s online ordering systems
• Creating online catalogues for a mail order company
• Advising a mutual fund company on how to provide its clients with access
to account information online

Leading e-consulting firms include:
• Digitas
• Razorfish
• Sapient

Boutique Consulting Firms

Boutique firms support their clients with highly-specialized expertise. Boutique firms choose to focus on a smaller number of industries (energy, life sciences, retail), functions (M&A, economics and litigation, turnaround), or methodologies (real options, EVA).

There are a couple of common misconceptions about boutique firms. One is that being a “boutique consulting firm” necessarily implies being a small firm. This is not the case. Aboutique is determined not by size, but by focus. L.E.K. Consulting (which was founded by a handful of former Bain partners) has roughly 500 employees, but we would consider the company a boutique because of its specific focus on three types of strategy consulting problems- M&A, shareholder value, and business strategy. Another misconception is that boutiques are less prestigious than the multi-functional firms. This highly depends on the area of focus. For example, BCG is extremely well regarded across many industries for most types of strategy problems, but for a decision analysis or real options strategy problem, clients would turn to Strategic Decisions Group, who has the best reputation in the business for these sorts of problems.

All this said, we should note that many boutiques are indeed small, ranging from upwards of 200 employees down to a single consultant. Often, boutique consulting firms grow from the expertise and client relationships of one to five founding partners, and unless it sells a consistently large flow of work, the firm has no compelling reason to grow quickly. Also, smaller boutiques can deliver services at lower costs than the larger consultancies because a smaller firm requires less overhead and less extra “capacity” (i.e., consultants), so their services might seem more attractive to prospective clients than those of the more expensive firms.

If you are especially interested in a particular industry or type of consulting problem, definitely do your homework on the outstanding boutiques in that field. If you find the right company to match your interests, you will spend all of your time doing the work you dreamt of, and that is a much harder goal to achieve within a more diverse consulting firm.

Examples of boutique consulting projects:

• A consulting firm with a well-known shareholder value methodology helps a beverage company establish value metrics in its business units
• An economics consulting firm helps a foreign government decide how to structure the privatization (sale) of its utilities through an auction
• A niche R&D strategy consulting firm deploys two consultants to a high growth semiconductor company in Silicon Valley for a 3 month project to improve R&D processes
• A process reengineering boutique snares a 6-month project to assist implementation of new supplier standards for an automotive consortium
• A turnaround consulting firm helps a telecommunications hardware firm restructure its organization


Leading boutique and internal consulting firms include:• Charles River Associates (economics and litigation consulting)
• L.E.K. Consulting (shareholder value, M&A, and business strategy)
• Marakon Associates (shareholder value methodology)

Apart from these there are firms which are HR Consultancies (like Hewitt) of which I am not going into the details.

Thus Spake Socrates