Purchasing consultancy

Published on July 1, 2015   28 min

Other Talks in the Series: Management Consultancy

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Hi, my name is Frida Pemer. I'm an assistant professor at the Stockholm School of Economics in Stockholm, Sweden. I do research about how organizations use and purchase consulting services. And in this talk, we're going to talk about how organizations organize their purchasing of consultancy. Now, this is an activity that has become increasingly common and strategically important in many organizations. And large sums of money are spent each year on consultancy. However, purchasing consultancy is often perceived as very difficult and risky. So in this talk, we will have a look at how private and public organizations do to deal with these difficulties, and how you organize the purchasing of consultancy. We're going to look closer on the private sector and the public sector. But first, let's start with the background.
Over the last two decades, the consulting industry has grown very rapidly, and organizations spend increasingly large sums of money on consultancy. One could even say that use of consultants has become part of everyday life in many organizations, both in the private and the public sectors. Now, why is that? Well, a first explanation is the rapid developments that are taking place in society today. On the one hand, we have technological developments. Rapid technological developments have changed communication patterns in the entire value chain from suppliers to customers. It has also created new markets, products, and services, and new demands from customers. We also have the globalization trend, which has increased competition and also opened up new markets for many companies. And together, this has created a need for new knowledge in many organizations for how to navigate in the new landscape, and how to improve their competitiveness. The second explanation is the lack of resources. And this is part of the outsourcing trend that has taken place in the last decade. Many organizations focus today on core competencies, and are rather slim. And this means that they don't have enough resources internally to develop new knowledge. So instead, they have to buy it from external knowledge providers. And here, consultants play an important role as knowledge brokers. They're really good at translating new knowledge and transferring new knowledge to a lot of organizations. So as a result of these developments, being able to purchase consultants in a good way has become essential skill in the organizations.