The acquisition of Bishopsgate Financial by CubeMatch was announced late last month – an excellent deal for both firms. I was delighted to be advising Bishopsgate.
Mike Hampson, CEO of Bishopsgate, and I had known each other for a number of years but we hadn’t done any business together. Mike contacted me towards the end of 2020 and talked about wanting to merge with another firm to enable him to both take a wider set of services to Bishopsgate’s global banking clients and enable Bishopsgate’s expertise to reach a larger range of clients. An important part of any tie up would also be for Mike to join with an existing executive team to drive the combined business forward.
We approached a selected group of organisations in January and soon found ourselves in a number of interesting conversations. Bishopsgate, and Mike as its leader, are well known in the market and so discussions quickly moved to exploring the benefits of the various options that we had.
In CubeMatch, Mike saw that he could achieve his objectives. Headquartered in Ireland, and with offices elsewhere, CubeMatch was keen to expand its London operation. Bishopsgate’s range of services and a client base that added to its existing portfolio was of great interest. The business case for both was clear – all we had to do then was the paperwork!
The combined business has a team of over 250 professionals supporting financial services clients globally and, with revenues of c. £25m and good profitability, it has a strong platform to build on. There will be much more to see from this business as it continues on its growth path.
Consulting firms and their clients have now broadly adapted to the remote working world. Projects have been prioritised – some put on ice at one end, new urgent projects added at the other and a mix in-between.
Client thoughts are turning to the future, now that it’s clear that we won’t be “coming out of this” any time soon. When we do emerge, we’ll be doing it into a new world…but what will it look like?
Strategy consulting firms have seen backlog and pipeline drops by around one third over the past couple of months. This shouldn’t have come as a surprise – who has wanted to strategise over the past few weeks? I believe that these firms are about to come into a new wave of activity, however, scenario planning for their clients, working out what they’ll need to do to adapt to the new world. They’re getting ready for this and the volume of post-COVID-19 “insights” on the major strategy consulting firms’ websites has been steadily increasing over the past week or so – much of this is at an overall “preparing for the new normal” level but some is quite focused on individual sectors or the potential use of specific solutions such as AI. Interesting reading!
Every sector will have its own scenarios to consider – to mention just a few examples, will Utilities think about onshoring their call centres, how can airports utilise contact-free technologies to transform customer journeys whilst maintaining high levels of security, which manufacturing supply chains still operate effectively and which need to go back to the drawing board, will retail banks take the opportunity to radically downsize their branch networks, how much can the health sector provide via home-based care with the support of virtual patient engagement technologies? There will be a huge amount to do and a lot of advice and support to be provided by the consulting and IT industries in particular.
Don’t relax at this point, however. It’s not the case that all firms will benefit equally. You need to prepare, and do it now!
I was reviewing a consulting firm’s Financial Services Digital proposition recently. It was fine…good, even…but I realised that it was deficient in that it looked at the world through a “pre-COVID” lens. Financial Services has, to date, viewed Digital as primarily another channel. Now that, for example, the over 60’s are using PCs and tablets for video calls and are having to use the internet for shopping, banking etc, there’s an argument that the “cork is out of the bottle”. Digital Transformation is about to hit Financial Services organisations like a tsunami! Digital will be expected by the majority of the retail and business customer bases and there will be a permanent switch in traffic volumes between channels. The impact on operating models, staff skillsets, data accessibility and the like is significant.
Taking this on board (admittedly just a scenario!), the consulting firm’s Financial Services Digital proposition suddenly needs a rethink – it should be more “all-encompassing”, at least in terms of providing the framework, and then the client can understand the scope of the overall transformation required and the elements that this consulting firm can help to address.
The same holds true for many consulting propositions – they need to be reviewed and then updated to take the new world into account. Oh, and just to add an additional flavour, I suggest there are two new world time horizons to think about – “medium term” whilst social distancing remains essential (probably until there’s a vaccine that many of us have been able to benefit from) and “longer term” when we’re properly in the new world.
A very high proportion of consultants has either come up through the ranks or joined from industry. They are subject matter experts, industry experts, team leaders, programme managers and the like, and we and our clients love them for it! Often, however, they are blinkered on the topic of sales, feel uncomfortable when asked to sell our firms’ services and shy away from sales activity, preferring to disappear into valuable client delivery activity, knowledge management or internal training. Why?
The clue is in the first sentence of this post – very few people in consulting firms have come from professional sales backgrounds and whilst IT Services firms tend to have some people with sales training, even these feel more comfortable in a product or solution “features and benefits” world. Professional Services and much of IT Services sales is around “concepts” – there’s nothing to hold, show or point to without creating it from prior client deliverables or accelerator tools, for example.
Sales training is useful in order to make consultants familiar with the “methodology” of sales but, in itself, can create a mechanical process. Adding sales targets to this environment can serve to increase the feeling of discomfort, leading to high stress levels and likely failure. What to do?
More fundamental than the mechanical tools associated with sales is the mindset. I’ve encountered many, many consultants, including at Partner level, who believe that sales is not part of their job description, that trying to sell to a client would damage their trusted advisor relationship and/or that sales is about responding to inbound requests from client organisations. Hmmmm! I can almost smell the fear!
There are many ways to address this but I often find that appealing to the ethical standpoint that all quality consultants have is the best way forward. Would we try to sell something to a client that isn’t in their organisation’s best interests? Would we try to sell them something that we’re not truly capable of delivering? Of course not! Good, so that creates a list of things (that we don’t need to write down!) that we’re not going to raise with them. So let’s look at what we are going to raise.
Whether we’re focusing on a new business sales campaign or expanding an existing account, understanding the relevant issues that the client or potential client is, or may be, facing is a good start point. We can do that, it’s called research and is part of what consultants are trained to do! Then we match these against our firms’ capabilities and identify which issues we’re able to help to address, using combinations of our capabilities – again, standard consulting stuff known as analysis. Next, we develop our proposition, how we can use our bundle of capabilities to focus on the client problem and produce a solution – otherwise known as design.
OK, so we have our head sorted out and we’ve used our core consultant training to develop something that we can go and talk to a client or potential client about – and it’s not just “something”, it’s something that’s in the client’s interests and something that we are capable of delivering. It suddenly isn’t so “scary” after all, is it?!
Now to put the mechanical sales training to good use!
Theresa May stood outside Number 10 after her audience with Her Majesty the Queen on Friday and announced that she will now form a Government to provide Britain with “certainty”. Really? The only thing more certain coming out of this election is that the country has a much stronger second party in Opposition than was the case before she called it.
So should we be despondent? What does all this uncertainty mean, for business and for our Professional Services and IT Services industry in particular?
Well, let’s take a look at what needs to happen in the wake of recent events. Both Public Sector departments and private sector businesses have a broader range of forward Brexit scenarios to consider than they thought before and they’ll need help with scenario planning now and with solution design and implementation later. Security, both physical and cyber, needs another round of thinking and additional solutions to be implemented to make citizens, consumers and businesses be and feel better protected. Businesses with strong export trade have a window of opportunity to exploit with an even weaker pound – let’s help them expand in existing overseas markets and conquer new ones. Equally, our own services are now even cheaper to buy by non-UK clients for a period – we should be talking to our international client base and capitalising on this.
Quite apart from these, there’s a huge amount of change happening that has no link to whether things are certain or uncertain in UK politics – the pace of change won’t slacken just because of a somewhat unexpected election result. We’re heavily involved in lots of this change and the demand for our expertise and resources won’t diminish any time soon as:
consumers continue to utilise digital channels alongside traditional ones, requiring omni-channel business strategies and integrated IT and supply chain solutions
software manufacturers push their customers towards their shiny cloud-based solutions and the customers have to decide whether to go with this and the IT transformation programmes that result or stick with existing systems that work well enough but which may need to be self- or third party-supported
big data gets ever bigger – analysing data and extracting the critical intelligence needed to make business decisions swiftly is becoming ever more important
the opportunities created by artificial intelligence become better understood – it’s not just about automated factories any more
….and so on….
The political environment may be uncertain but the future for our industry is bright!
At the time of writing, I’m looking at a foreign exchange website and seeing that £1 will buy around €1.18 or US$1.25, making our overseas summer holidays more expensive this year. Maybe stay at home and mix with the larger volume of inbound tourists?
Overseas businesses are seeing things more like US$1 will buy 80p or €1 will buy 84.7p, which is much more sterling than they’re used to – so, now that it’s clearer to them that the UK won’t cease to exist after Brexit and is even likely to prosper, they’re seeing the UK as a good investment prospect, as evidenced by recent announcements from Qatar, Nissan and Lidl.
The UK has always been a stepping stone for US businesses wanting to expand into Europe and vice versa. Outside of this, the English speaking world likes to set up a base in the UK and even list on the UK Stock Exchange, which has tended to provide a stable foundation to build upon. The weakness of the pound, which isn’t likely to change much any time soon, is contributing to an increased volume of such activity.
In our Professional Services and IT Services world, we’re seeing a similar picture and there is a number of UK-focused acquisition programmes led by overseas headquartered firms that I’m aware of. This activity in the market is pushing valuation multiples up a little but it doesn’t matter too much for the acquirer as the exchange rate is more than making up for this.
Does this mean that the time to package up your firm and sell it is now? Well, it depends. Initial search activity from overseas buyers may not necessarily be as well focused as it could be – “let’s go and research what’s available in the UK and see if there are some reasonably decent firms that we can pick up for an OK price!” – so you may get some initial inbound enquiries and/or interest if you hang up a “for sale” sign. It doesn’t take long beyond a first meeting, however, for an acquirer to focus in on the fundamentals of a firm, including:
– quality of work
– breadth and depth of capabilities
– a client base to leverage
– a decent revenue, gross margin and EBITDA profile
– a baseload of forward business.
I’m amused to see how some firms have been “respraying” themselves to look “hot” – e.g. process improvement consulting firms now displaying a Business Transformation message, IT advisory and project management firms jumping on the Digital bandwagon and some even trying to “double up” on Digital Transformation! If it’s a genuine change in direction for these firms, they’ve invested in the new positioning and have evidence (case studies, industry awards, a decent number of trained consultants etc) to back this up (Note: it’s normally a three or so year programme to change direction properly) then fine. A swift respray, however, is unlikely to work since these overseas acquirers aren’t desperate to buy – they’re taking a look and may buy if the search exercise uncovers something genuinely interesting. In my own activities on the acquirer side, it isn’t difficult to distinguish between the ends of the spectrum and “pure respray” firms are unlikely even to know that we’ve taken a brief look!
So the overseas acquirers are here for a reason, they’re investing but they’re not being silly!
The largest cost item in any professional services firm’s P&L account is people. Boards/Executive Partners worry about this cost and delay recruitment, preferring to run with the variable (higher!) cost of Associates until they’re sure that the forward revenue stream for a particular type of person is truly there. Then, once consultants are recruited and have been taken through some form of induction, they often disappear into the inner workings of the firm, only to reappear on the Partners’ radars at six monthly or annual appraisal rounds unless they’ve been resourced onto an assignment that has active Partner involvement.
Why is this? I would argue that the Partners are understandably focused, on a day-to-day basis, on their clients since without them noone gets fed. Without the people, however, there is not only noone to feed but also noone to deliver the great results for our clients that we desire. We need to get the balance right.
Each firm has requirements of its people (e.g. deliver the client result, keep personal utilisation high, write white papers) but its people also have requirements of the firm (e.g. pay me the going rate, give me a career path, give me interesting and stimulating assignments, create an environment in which I can expand my business and personal network). It’s tempting (and old school!) to say that Operations should be on top of most of the first area and HR on top of the second but, if we’re honest with ourselves, we know that this is not correct.
Mechanical aspects, largely the ones that suit the firm’s requirements, can often be met these days by correct use of end-to-end professional services automation and HR management systems – modern, cloud-based solutions that are reasonably well priced and powerful in what they can deliver. Knowledge of utilisation levels, both backward and projected forward, is relatively simple, keeping detailed skill sets up to date and that fit with personal development plans is doable and resourcing people onto the right projects is a lot quicker and easier than the steam driven approaches of the past. For me, these systems are a no-brainer, allowing Partners to lift their focus out of the weeds.
Addressing the people’s requirements of the firm will come back to reward that firm in many ways. Whether you subscribe to models such as Maslow’s hierarchy of needs (the original five stage model or the expanded version) or not, such models do, as a minimum, tend to give a helpful checklist of topics that every firm should consider and decide on its approach. Yes, basic needs are met by paying people the going rate, establishing an office environment that people want to go to when not on client site, having equal opportunities policies etc., and these are topics to review occasionally. Higher level needs are harder to address and require a culture of continual support. When we get it right, our people feel that they belong, they exude confidence and they choose to go the extra mile for both the client and the firm – this is when the magic happens!
Most services businesses, from law firms through consultancies to outsourcers, rely on people entering time into timesheets. At the most basic level, timesheets provide some form of audit trail that work has been done and, not least in Time & Materials projects, they provide data to support a fortnightly or monthly bill to the client. Most firms have now moved beyond paper or spreadsheet-based timesheets and have either built or bought a simple timesheet system. So far so good.
Unfortunately, complexity and human nature then enter the fray! Consultants and associates dial into the timesheet system at the end of the week (if you’re lucky!) and input a mixture of reality, the way they remember things and/or the answer that the project manager tells them to enter – filling in the timesheet is a mechanical exercise, a chore! Project managers use a timesheet approval process to manipulate reality to reflect the time estimates given in the project plan. Also, there may or may not be a company policy in place about the “professional day” and how timesheet data is used to create client invoices – for example, if the (very!) simple figure below showed an individual’s timesheet for a single week, how many days would you charge the client for Project A?
Depending on firm policies and client contracts in place, any one of the following (and more!) could well be correct:
– 5 days
– 4.875 days
– 5.2 days
– 4 days.
In passing, we used to have a timesheet code for “Internal/Other” – it took some time before we realised that it was being used as a bucket to enter time into when it wouldn’t fit anywhere else!
What we need is an internal culture whereby people enter their actual hours worked honestly into a timesheet system that is easy to use and clever enough to apply different sets of rules by project depending on company policy and client agreements (e.g. “a day’s a day” or “”a day is a period of eight hours with part days charged pro rata”)…..but that’s just the billing bit!
If the system can also compare actual time entered with what was expected when an assignment was set up, it can then report out variances to client Partners, project managers etc. to allow them to address project issues, identify potential training needs and learn about over/under estimates applied during the sales process. I’d like it to go further, however, and hold data about resource costs too so that we can understand, without resorting to endless spreadsheet analysis, real gross margin figures and compare them with plan, and highlight the right assignments to be discussed at Partner level…..now it becomes a more powerful and useful business management tool!
When used properly, timesheets contain a wealth of information that can be used to help the Partner team to optimise their business and keep their consultants fresh and ready for the next challenge.
Many Professional Services firms don’t really “get” Marketing – it’s a drain to pour money down which could otherwise go into Partners’ pockets! IT Services firms tend to “get it” more but the spend can often be focused on things that take up lots of time and budget for little effect. So what’s the problem?
Marketing professionals talk about the “Marketing Mix”. In Services Marketing, the original 4Ps of product, price, promotion and place are expanded to 7Ps, adding in process, people and physical environment …. and some people even add an eighth, namely performance – this is a lot of Ps! If we’re running a services firm and don’t have much Marketing experience, we find all these Ps a bit difficult and uncomfortable and, hence, tend to gravitate to one end of the spectrum and do only what we feel comfortable with (e.g. buy hospitality tickets for the rugby and invite some clients and a few prospects) or the other and try to cover all the bases. Both approaches fail in most cases.
Let’s start with what we’re trying to achieve. When we boil it down, we’re looking for Marketing activity to generate sales leads. In services businesses, sales leads must lead to face-to-face sales meetings because we all know that, in this industry at least, people buy from people…so they’d better meet and get the chemistry going as soon as possible if any sale is going to be made!
Now, it’s increasingly true that there are hygiene factors to consider that don’t directly lead to sales leads or which, if handled poorly, can hold sales opportunities back. A consulting firm that I’m working with had a sales campaign put on hold recently when the potential client wouldn’t introduce the consulting Partner to his boss to get a decision until the firm’s web site was more fit for purpose…which it now is! Which hygiene factors to address and how much to spend on them is worth thinking about – I’d suggest that you do just enough to create an environment within which your target market might start to get a warm and fuzzy feeling. So you want to tweet – why? You want an article in the FT – do the people who buy your services read the FT?
It’s best to decide which specific messages you want to get to which specific audiences and then, alongside creating something of an environment around this, research how to get to these audiences – which industry journals they read, which conferences they attend etc – and then put Marketing spend and effort into delivering your messages into these places, consciously and deliberately avoiding spend in places that don’t fit with this. If this involves face-to-face contact as part of the Marketing activity then this is fantastic since it gives you a better opportunity to start building a relationship and increases the likelihood of getting that all important face-to-face sales meeting.
About five years ago, I worked with an IT services firm focused on Business Intelligence and Data Warehousing – they had reached a plateau and were getting frustrated. We took the same Marketing budget that they were spending by trying to cover all the bases and focused it onto getting specific messages into three vertical industries, and we aligned the sales team up behind these industry messages. The result? 50% growth in revenues the next year and 65% growth on top of that the following year.
Appointed by BearingPoint to introduce appropriate consulting firms to them from my network, I was delighted to be in at the start of this acquisition activity.
BearingPoint is a significant player in mainland Europe, most notably in France and Germany, and is growing fast in the UK. Our aim was to find consulting firms in the UK that would provide greater local capability in supply chain and similar services and also fit well with the existing horizontal capability teams and vertical practices of BearingPoint elsewhere in Europe.
LCP Consulting is an award-winning consultancy and the team there is seriously strong. They needed a home where they could spread their wings and grow more quickly.
This tie up is a great example of “1+1=3” – both organisations bring things to the party that the other has been looking for. Culturally, they fit well too and it was evident even at the first meeting that the two firms could create something special.
Well, the deal is now done and well done to all! I look forward now to seeing the special things being delivered in the market and the BearingPoint brand gaining increasing recognition in the UK as a result.