Smith Community Discusses Current Trends in the Consulting Industry at Fifth Annual Consulting Forum

The consulting industry is changing. That's what more than 100 students, alumni, and corporate friends heard from keynote speakers and panelists at the Smith School's Fifth Annual Consulting Forum, Nov. 7, 2003. The event was organized and sponsored by students in the Smith MBA Consulting Club.

Industry regulation, a rebounding economy, and the emergence of new players are just some factors that have sparked recent changes in the consulting industry. Much of the forum's discussion focused on the effects these factors have hadand will haveon the consulting industry's core business, client relationships, and internal processes.

"[The consulting industry] has experienced more dynamic change in the past 18 months than we have seen in the last 40 years," said Fernando Murias '81, managing partner at PricewaterhouseCoopers, during his keynote address. Murias spoke about the effects of the most recently enforced regulatory controls on the consulting industry as a whole. "Traditionally, where you've had one firm to supply service and assurance across the client firm, now you have multiple firms," he said.

Consulting firms now have to be more than problem-solvers for their clients. They are involved at the front end of client operations, work more closely with management, and are held more accountable by client audit committees. Murias talked specifically about accounting firms, saying, "Financial reporting is now only a piece of the value chain for our clients. The specialists in these firms have had to change their mindsets to involve more of a [client] relationship perspectivea very significant shift for us."

"Corporate stakeholders are demanding a business environment of transparency, integrity, and accountability," said Murias. "Our goal as an industry is to take a hard look at what we need to do to restore corporate public trust."

"Fifteen years ago, I could take a consulting firm and throw it into a bucket," said Tom Rodenhauser, founder of Consulting Information Services and partner with The Hocquet Group, during his keynote address. Nowadays, not all firms can be lumped into categories of IT, operations, and strategy, as they once were. Consumer product companies are significant new players and there will be a "product-oriented focus in the consulting industry," he said.

Over the past 2-3 years, there has been a slump in the consulting industry, Rodenhauser said. In the late 1990s, there was too much growth because of the Internet boom. Firms grew quickly to meet clients' demands. Consultants have a parasitic relationship with clientsthey solve immediate problems and identify others, he said. "You have to feed the beast you've created," he said. "But to be a good consultant, you have to be able to say, 'no'."

He also stressed that on-shore versus off-shore operations will be a major issue affecting the consulting industry in the next few years. Another change Rodenhauser highlighted is the trend of giving away consulting to get outsourcing contracts.

Rodenhauser predicts that in five years, traditional strategy-focused consulting companies may be thought of as "knowledge companies" and "think tanks," not consulting firms. "BPO [business process outsourcing] will become the definition of consulting," he said. It's a good time to be entering the consulting industry because the economy is picking up and we are at the forefront of the third generation of the industry, Rodenhauser concluded.

After his keynote address, Rodenhauser participated in a panel discussion about the future of the consulting industry with Rakesh Bhatia, managing director of wireline telecommunications, BearingPoint; Gary Farha, director, McKinsey & Company; and Morris Zwick, MBA '89, partner, IBM Business Consulting Services.

Another panel discussed the value-creating consulting engagement. Smith Teaching Professor Hugh Courtney moderated the session with panelists Prashant Sharma, MBA '00, Capital One; Lynn Reyes, MBA '99, IBM Business Consulting Services; Adi Padha, MBA '98, BearingPoint; and Tim Kiang, MBA '99, PricewaterhouseCoopers.

"The MBA Consulting Club's executive board worked hard to bring knowledgeable and dynamic keynote speakers and panelists to participate in this year's Smith Consulting Forum," said second-year MBA student Amrita Ajrawat, president of the MBA Consulting Club. "Our ultimate goal was to provide beneficial perspectives and insights on the latest issues in the consulting industry not only to Smith students, but also to our alumni and corporate friends," added Ajrawat.