For the past four years, the phrase “back to basics” has described the prevailing strategy among most shareholder-owned electric utilities. For many, the current environment of rising fuel costs global-e-world and growing operating costs may continue to make that approach necessary, but the vast majority of consultants who serve the utilities sector suggest that an exclusive focus on cost-reduction is no longer sufficient.
Most RecentEnergy Articles.”In the last year or so, there has been a realization among utility executives that we can’t shrink our way to greatness,” notes Paul O’Rourke, a vice president and cohead of the energy and environment practice with CRA International. “That realization has sparked some strategic soul searching: What do we want our company to do? How do we get back on a growth trajectory? What is our strategic vision for the next 10 years?”

In a sense, as they look for growth, utilities are going back to basics with consultants, ensuring their companies get the most bang for their consulting buck. Consultants are responding to those expectations, and that means that service offerings are changing. (see the sidebar, “Consulting Confidential.”)

Consulting Market Snapshot

Most of the consulting firms vying to help utility clients develop and execute strategies to address the complex combination of pressures confront a unique set of pressures of their own. The overall Mini Flashlight,Pen Recorder,Digital Watches,Electronic Cigarette consulting market continues to expand, although closer scrutiny indicates that the polarization of the profession into highly successful firms and firms struggling to survive, a trend that emerged during the last recession, continues.

In aggregate, the typical consulting firm grew by an average rate of 2 percent in 2004, according to Jess Scheer, editor of Kennedy Information’s Consultant News. Scheer expects the average growth rate for 2005 to increase slightly, somewhere between 3 percent and 6 percent.

Despite a distinctly modest overall growth rate, 30 percent to 40 percent of consulting firms are thriving, posting annual growth rates above 10 percent, according to Scheer. Another 30 percent to 40 percent of firms are struggling.

For his research, Scheer divides the consulting industry into four sectors according to their primary offerings: IT, human resources (HR), strategy, and operations management. In addition, each of those www.global-e-world.com categories appears to be splitting in two, with several firms that offer unique, highly customized, intellectual-capital-heavy products occupying the top half and the firms whose services are quickly becoming a commodity occupying the lower half.