150,850 members

Skip to content. | Skip to navigation


Intelligence is worth paying for


Blog headlines

Friday, 18 June 2010

Intelligence is worth paying for

When the going gets tough, a predictable list of non-essential items gets cut.

Advertising, marketing, customer support and back-office staff are the first things in the firing line during any recession and the only things to remain tend to be the things that bring in money. History shows that companies that exhibit this behaviour don’t do well and it’s obvious why. Expecting the sales force to sell more of something you don’t advertise, market or support doesn’t compute.

Businesses that continue to invest in these areas see their profit margins and share values eroded in the short term but do better in the long term, generally by winning customers and market share from cheese-paring competitors.

The other soft target in a recession is consultancy. Department of Health spending on management consultants has been slashed and PCTs who are not already reviewing their own spending run the risk of being pilloried in the press, grilled by the board and carpeted by the DH. The coalition government has already said that it considers public sector spending on consultants to have been a waste of money. Many will simply take the route of least resistance and cut consultancy contracts altogether.

In 2009, according to the Commons’ health committee PCTs spent an average of £900,000 each on consultants. In individual cases the figure was much higher, with one London PCT spending in excess of £5m. The high-spending London PCT also happens to be near the top of the world class commissioning assurance table and is widely recognised as an exemplar of good management and high standards of care.

More often we hear it said that consultancy produced no discernible benefit or that the costs of delivering if far exceeded any saving.

The problem is that there is usually more prejudice than science in the argument. Consultants are up there with traffic wardens and estate agents in the popularity stakes, so their failings and misfortunes are always celebrated with enthusiasm.

What would be useful would be a review of consultancy spending that provided a robust analysis of where it was and was not providing a return on investment. This would almost certainly show that some consultants delivered value for money and others did not. It would probably also show a clear correlation between positive outcomes and good management of consultancy projects by the customer. Employing a consultant is just another act of commissioning, which can be done well or badly.

One of the most fatuous arguments against consultancy is to look at what the money might have done had it been deployed elsewhere. It is always seductive to argue that the billions spent on consultancy could have paid for x thousand doctors or y thousand more nurses, but we also know that merely increasing resources without looking at how they are directed does not get results. We know this because this is precisely what the NHS has been doing for the past decade.

Increasing resources or making better use of the resources you’ve got requires a sound strategy, astute analysis and high-quality management. Consultancy will always fail to deliver results if it is used to compensate for the lack of any of these things in the commissioning organisation. But well run organisations are never satisfied that they have enough intelligence and are prepared to pay for it.