Key Learnings for a Successful Services Practice

So after managing several consulting practices including one from start up and being 20 years in business and 10 years in consulting I think there are a number of key rules or guiding principles that one should apply if they want their services practice to be successful regardless of the services you sell (IT or Strategy/ BPR) ...

1) Pick your battles both in terms of the markets you play in and the deals you go after. Better to do fewer things well. Play to your strengths in terms of the verticals you work in and qualify early out of deals you know you can't win.

2) Decompose your budget. Understand how much pipeline coverage you will need and where you will get that pipeline from. As a rule pipeline comes from a combination of Demand Generations (Marketing) and/or Account and Territory Planning activities. But it is never 100% from one or another. Three to four times pipeline coverage is always preferred. If you can't generate the pipeline then you should seriously consider if your budget is realistic.

3) Focus on existing customers and make sure they are happy. It is always easier to on sell or up sell to existing customers where you have established the relationship and value proposition than selling into new customers.

Also it is a truism that at some point in the sales cycle the customer will be trying to minimize risk. One way to do this is provide references of previous customers. This reaffirms the need to keep your current customers happy and referenceable.

4) Make sure you have some strong proven sales expertise within the business. Sometimes the worst sales people are ex consultants because of their propensity to focus on the solutioning/ technical aspects of the deal. This doesn't mean that you should have good consulting and/or pre-sales expertise in your sales teams but you also need strong experience sales people who understand how to manage the sales process and customer relationships.

5) Augment and Cross Train your consulting team skills. If practice profitability is proportional to utilization then making sure your consultants have multiple skill sets that can be deployed on a variety of projects is the key to good utilization.

Clearly if you maintain multiple skills sets on your team it will help you with the up sell and on sell that I talked about in point #4. For example most customers who do an ERP or CRM implementation also need at some point BI or Portal work to be done subsequent. Often before the ERP or CRM implementation the customer will want to reevalute their strategy or business processes.

6) Utilize Variable Compensation Well. HR specialists will tell you that there are two reasons you to provide and employee with a variable compensation model. The first is to motivate staff to do what is right for the business. The second is to reduce labor costs during low periods. For example the billable consultant who has a bonus tied to his utilization will always look out for cross sell and up sell opportunities in accounts and make sure that he cross trains with new skills where ever possible. It will also encourage them to go that extra mile when supporting pre-sales.

However blindly following ones compensation plan may lead them to make the wrong decisions. Compensation plans that are too complex can make it hard for the employee to see the cause and effect of the behavious your are looking to solicit. So a compensation plan needs to simple, role specific and intelligent in it's design to be effective.

7) Consulting is about the people. Always hire for quality and experience. Your practice will need to be balanced between senior and more junior consultants to balance out your rates but at the end of the day people are "buying the consultant". Consequently it is important to have good quality people at all levels and often if can be good practice to over hire for a position. This might mean that because you are turning people away you might miss out on work if your team becomes over utlized but this is often preferable to hiring a consulting because you are over utilized only to find out that it is difficult to sell the person later on other projects for whatever reason.