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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.

It almost seems as if eight different professions are emerging,” Scheer adds. “Firms competing on price are really struggling because the world is getting smaller.”

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The dynamics of the consulting profession seem less foreign to utilities today than they were in preceding years, thanks to the significant number of consultants who have joined electric companies.

“More often, we’re sitting across the table from a former consultant on the client side,” Maschoff reports. “That was not the case a number of years ago.” That “been-there, done-that” perspective has helped many, but not all, utilities hold consulting firms more accountable for delivering value and better rates, according to many consultants.

“Purchasers of strategic consulting seem less interested in theory,” notes Omar Abbosh, Accenture’s Londonbased global managing director for utilities. “They really want tangible examples, metrics, and demonstrable benefits.” Buyers of IT services also expect more accountability up front and prefer customized offerings rather than cookie-cutter 32M Pen Recorder approaches because the latter, which were popular during the late 1990s until the recession, are generally perceived as adding questionable value if not as outright failures. In the operations consulting area, Abbosh notes that clients want “a deep, proven track record and genuine commitments in the contract to deliver outcomes that they can measure.”

Former consultants have increased the rigor of selecting, hiring, and managing external consultants, but their outside perspectives tend to fade over time. According to George Rickus, a long-time consultant with executive search firm Preng & Associates, former consultants can bring several assets to electric companies, including expertise in addressing the same problem within many different organizations and, often, a healthy breadth of experience. The downside, he adds, is if their background is strictly consulting, they may not have had to live with their decisions and recommendations.

Rickus has witnessed a shift in how utility clients work with external services providers. Generally, utilities are looking for more measurable results earlier in the consulting process and are looking to pay in stages, he explains, noting that many clients currently treat retained search services in a similar fashion. 128M Pen Recorder “Clients are saying, ‘Rather than paying your fee up front, I want to pay one-third initially, onethird after you give me a qualified list of candidates, and one-third after acceptance,’” Rickus says. “The emphasis is on paying for tangible results.”

It almost seems as if eight different professions are Pen Recorder emerging,” Scheer adds. “Firms competing on price are really struggling because the

world is getting smaller.”

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The dynamics of the consulting profession seem Pen Recorder less foreign to utilities today than they were in preceding years, thanks to the significant

number of consultants who have joined electric companies.

“More often, we’re sitting across the table from a former Pen Recorder consultant on the client side,” Maschoff reports. “That was not the case a number

of years ago.” That “been-there, done-that” perspective has helped many, but not all, utilities hold consulting firms more accountable for

delivering value and better rates, according to many consultants.

“Purchasers of strategic consulting seem less interested in theory,” notes Omar Abbosh, Accenture’s Londonbased global managing director for

utilities. “They really want tangible examples, Pen Recorder metrics, 32M Pen Recorder and demonstrable benefits.” Buyers of IT services also expect more accountability up

front and prefer customized offerings rather than cookie-cutter approaches because the latter, which were popular during the late 1990s until

the recession, are generally perceived as adding questionable value if not as outright failures. In the operations consulting area, Abbosh

notes that clients want “a deep, proven track record and genuine commitments in the contract to deliver outcomes that they can measure.”

Former consultants have increased the rigor of Pen Recorder selecting, hiring, and managing external consultants, but their outside perspectives tend to

fade over time. According to George Rickus, a long-time consultant with executive search firm Preng & Associates, former consultants can

bring several assets to electric companies, including expertise in addressing the same problem within many different organizations and,

often, a healthy breadth of experience. The downside, he adds, is if Pen Recorder their background is strictly consulting, they may not have had to live

with their decisions and recommendations.

Rickus has witnessed a shift in how utility clients work with external Pen Recorder services providers. Generally, utilities are looking for more

measurable results earlier in the consulting Pen Recorder process and are looking to pay in stages, he explains, noting that many clients currently treat

retained search services in a similar fashion. “Clients 128M Pen Recorder are saying, ‘Rather than paying your fee up front, I want to pay one-third initially,

onethird after you give me a qualified list of candidates, Pen Recorder and one-third after acceptance,’” Rickus says. “The emphasis is on paying for

tangible results.”