Will the real consultants please stand up?

By K. Basrie

Forecasting the future of this country, which in the midst of an economic and political crisis is not easy. What more forecasting the future of its business sector. Many decisionmakers are knocking desperately on the doors of consultants, whose numbers have been increasing in the past few years. Sometimes the predictions of these consultants are fairly accurate. But more often, clients find them too good to be true.

JAKARTA (JP): Many might agree that consultancy services, particularly those on legal and business matters, are today experiencing a booming business.

Companies are seeking their much respected advice on how to avoid bankruptcy. Some businesspeople are even struggling to pay their debts, lest they be thrown behind bars. Others, to survive, are seeking the opinion of consultants on specific issues, such as strategy, marketing, product development, management or recruiting qualified staff.

Under such dire conditions, it is also very important for entrepreneurs to be aware of the latest developments in the politics and security of the country.

According to Pri Notowidigdo, an executive search consultant for Amrop International, there is a growing number of multinational consulting firms operating in Indonesia.

"These include world-class companies," he said.

Pri said the country's protracted crisis has indeed played a large part in prompting international firms to set up business here.

But the presence of foreign consultancy firms should not be considered a threat to the local players.

The international companies, Pri explained, tended to go for contracts worth between US$500,000 and $2 million each.

Currently, the leading names in the international boutique consultancy firms include Accenture, McKinsey, A.T. Kearney, KPMG Consulting Inc. and the Barents Group.

In management consulting firms, the big players are Accenture, PriceWater House, McKinsey, Ernst and Young, KPMG and Deloitte.

"The main clients of these big firms are mostly multinational companies or big Indonesian companies, including state firms and those which have international affiliation," added Pri, whose company helps consulting firms seek top executives.

Business consultancies here usually cover, for example, privatization, debt restructuring, human resources and organizational development with an average fee of between $2 million and $3 million for each assignment (for leading firms) and between Rp 250,000 and Rp 500,000 for smaller companies.

"But it depends. A local consultancy firm, for example, was paid Rp 500 million for a project which was to be completed in one year," Pri said.

Not only businesses facing difficult times require consultancy services. With globalization and free trade, business players, whether they are veterans or "new kids on the block", need the help of reliable consultants to win the market and acquire a comprehensive knowledge of related matters, including the latest strategies employed by competitors.

Noted consultant Rhenald Kasali said many consultancy firms had turned to the IT sector in line with the strong demand for IT applications in many big companies here.

"The market for IT business consultancy is still wide open as more and more companies and people are entering the IT world," he said.

The need for IT consulting, Rhenald said, did not only cover the Internet and computer software, but also e-business and B2B among others.

Generally, consultants from renowned consultancy firms can expertly guide clients to matters that should be addressed immediately.

"Consultants may offer their advice and suggestions, but the final decision rests with our management," said Bina Suhendra, president director of a big company.

According to him, the advice from consultants is just a second opinion. He reminded that companies should not totally rely on the advice of hired consultants.

Early this year, his company hired consultant Hermawan Kertajaya to help design a blueprint for the firm's corporate strategy.

For the five-month contract, Hermawan was paid Rp 1 billion.

In Indonesia, many local consultancy firms are sought after because of the reputation of their founders or top executives, while in the case of multinational or international companies, it is the big names of their foreign partners that draw the clients.

"Our approach and is based on tried and tested research and analysis methodologies applicable to consumer, commercial and industrial products and services," wrote AMI (Asia Market Intelligence) Business Consulting, which focuses on market analysis and strategy solutions, in its brochure.

Whatever the combination of methodologies, it added, "AMI directors and project managers work closely with clients to provide seamless information and consulting service."

Rhenald Kasali, a senior lecturer at the University of Indonesia, for example, has been hired, on a success-based fee scheme, by the national flag carrier Garuda Indonesia to make massive improvements in its marketing strategy.

But a big name in consultancy, whether local or foreign, is not always a guarantee of success.

Companies badly needing consultancy services should be careful when selecting consultants as some "big names" only provide standard solutions.

"Like a patient visiting the doctor, the company should first know the cause of its illness and have a strong desire to recover," reminded Soekono Subekti, a management observer from the Institute for Management Education and Development (IPPM).

Other than that, looking at the consultancy firm's track record will be helpful.

The other important point is to make sure the strategy suggested is applicable to your company.

Are you still in doubt or is this all too good to be true?