Types of Consulting Firms
Consulting: "Engaged in the business of giving expert advice to people working in a professional or technical field."
Strategy: "Strategizing explores every business firm's capacity to be unique, different from every other one, a possibility that arises only because our world can never be completely known. There are always "knowledge absences" that are crucial to the discussion."
-Business Strategy, J.-C. Spender
In order to help you make the correct choice when scouting for consulting resources, I wanted to provide you with information from what I've seen in the field throughout my career. Not all firms are the same, not all consulting firms offer consulting services, and not everyone needs a consultant. Below will cover 4 primary firm types that I've come across and what sets them apart from the rest.
An independent is often a highly specialized individual or group practice who focuses on niche services for companies who generally generate less than $500 million in revenue. They sometimes will compete with smaller Niche firms for small projects.. Rates are often reasonably less than that of a Niche firm. This usually identifies as an independent contractor(IC) but some small firms can be considered just a group of IC'c even if they're 1099's. Take for example a firm with around 10 individuals who focus on one specialization, their whole revenue stream is focused on filling talent gaps for that specialty or tier 3 technology support for a difficult problem. These are often not engagement groups going in on a project but rather a single individual.
Pros: Highly specialized, low cost
Cons: Unable to scale, Not holistic solutions, Individual point of view
Example: Azure or AWS Architect(s)
A staffing firm focuses on filling talent gaps and assist with bringing resource candidates in front of the client. This is often one of many aspects in a strategic plan. They sometimes label themselves as consulting firms when in fact they don't offer consulting services outside staffing. Many staffing firms are currently trying to shift to become more of an advisory or service provider. A client may request staffing services when they're having difficulty retaining or attracting a certain skill-set.
Pros: Quick turn-around on staffing, Generally low-cost, Great choice when just needing to fill roles, Can scale(if just staffing)
Cons: Minimum consulting expertise, No business\technology advisory benefit
Example: Azure or AWS Staffing
A niche firm brings together highly specialized professionals as well as a mix of trades from management consulting firms. What separates this type from other similar size firms are whether or not the firm is providing a strategic capability to the business with their services. These firms primarily support clientele with revenues between $500m - $2b and projects can range from $50k - $1m in revenue. These firms generally compete with similar firms with staff anywhere from 15 to 500 individuals. Just as strategy explores every business firm's capacity to be unique, these firms are no different than that definition and therefore often times a smaller private firm is the better direction. Another reason is that as a firm is smaller and still growing, they must at first only hire the best consultants they can attract(unlike global management consulting firms who can afford to hire an analyst out of college and train them up) which ends up being a small team of highly experienced individuals on a project.
Pros: Often local with minimum travel costs, Some frameworks and methodologies, Highly experienced consulting staff
Cons: Generally focuses on a single business unit or technology type, difficult to scale
Example: Azure or AWS Analytics
These firms usually operate on a global scale across multiple business verticals and different technologies. They bring a wealth of proven methodologies, frameworks, and point-of-views. They operate in custom engagement groups to deliver a uniquely requested deliverable. Unlike the other consulting firm types these firms offer true holistic solutions that can focus on a global digital transformation strategy which could include providing the resources in terms of project staffing, advisory to the business process, and the technology that will save cost or drive profit. These programs\projects can last anywhere from 6 months to 3 years.
Pros: Large toolbox of methodologies and frameworks, Holistic Solutions, Expert Advice and Implementation, R&D capabilities
Cons: High cost, More Complex as they often focus on larger projects
Example: Take a pick of any top 10 consulting firm (Accenture, BCG, etc.)
Depicts how well the firm is able to attract top-tier consulting talent in terms of quality and quantity. The Management Consulting and Niche firms will have the most competitive compensation packages. Management Consulting firms often have the upper hand as they have more resources for continuing education in terms of high quality internal training and budgets for external training, as well well as experience on some of the most cutting edge technology projects.
Depicts how narrow a skill-set of a consultant or firm may be. Independents are considered the most specialized while larger consulting firms tend to be less specialized and can offer a range of solutions across a variety of business verticals.
Larger firms often have the luxury of custom internal methodologies that have matured through various projects. Methodologies can range from agile project management methodologies, custom technology frameworks, and strategic assessments.
A knowledge base(KB) includes documentation, presentations, research that has been developed through a firm and is used to support client engagements. This is a luxury of firms as they get larger and have the resources to contribute to their KB and as they increase their knowledge from past engagements.