AI is Disrupting the Traditional Consulting Commercial Model – Accelerating the Need to Define and Manage Value Delivered

I’ve been in consulting for almost 30 years and know that consulting firms have long relied on the time and materials model to bill their clients. Under this traditional approach, clients pay for the number of hours consultants spend on a project and the materials or expenses incurred. However, the rise of artificial intelligence (AI) and digitization is reshaping how consultants deliver their services. While AI-driven automation reduces the time spent on repetitive tasks, it simultaneously reduces the number of hours that can be invoiced. These technological advancements are challenging the old model and prompting firms to reevaluate and clearly articulate the value they provide to their clients -- and subsequently attach a price to it.

I’ve long been an advocate for managing and tracking the benefits from transformation, but, as I’ve said before, this has often fallen on deaf ears once funding has been approved. In response to the imminent shift towards value-based pricing, consulting firms must establish a profound presence within their clients' organizations,

engaging in close collaboration to gain a comprehensive understanding of their distinctive challenges, objectives, and evolving needs. This involvement enables consultants to identify value drivers at every stage of the transformation journey and establish a commercial model to trigger payment for value delivered. To effectively execute this, the consulting firm must maintain a comprehensive view of outcomes extending beyond each implementation phase, along with a deep awareness of any shifts in the client's strategy and the corresponding implications on the defined

outcomes.

As AI continues to accelerate, now is the time for consulting firms to reevaluate not only their commercial models but their approach to clearly articulating the value they provide to their clients and tracking the value throughout the transformation journey and beyond. This is a significant shift in the industry's approach to pricing and client relationships. By transitioning from traditional time and materials billing to models that align payment with the value delivered, consulting firms position themselves ahead of the curve. This approach underscores their commitment to achieving tangible, measurable outcomes for their clients. It also incentivizes consultants to focus on delivering substantial value, rather than merely logging billable hours. In doing so, consulting firms not only enhance client satisfaction but also differentiate themselves in a competitive market, ultimately solidifying their position as trusted partners in driving meaningful, transformative change for their clients.