Assoconsult's open letter to Prime Minister Renzi: 20% of what the PA spends on consultancy today is enough to modernise the country

Contribute to the realisation of the spending review programme.  This is the spirit of the open letter addressed to the Prime Minister, Matteo Renzi, by Ezio Lattanzio, President of Confindustria Assoconsult, an association representing the most significant consulting firms in Italy. The missive was circulated at the conclusion of the Stati Generali del Management Consulting that took place today in Rome on Tuesday 27 May. Mauro Bonaretti, Secretary General of the Presidency of the Council, took part in the proceedings.

The objective of the letter from the Italian consulting companies is to propose to the country a model of action that the government would give extraordinary proof of: the ability to initiate innovation processes in the PA with the support of consulting as a tool for the selective identification of waste, the rethinking of services, and operational feasibility. All this, spending five times less than the estimated value of current PA expenditure on consultancy and with greater transparency.

'In recent years,' writes Ezio Lattanzio in a passage of the letter, 'the measures aimed at cutting and rationalising spending in the public administration have been various, but spending has even grown in the face of worsening services. It is clear that indiscriminate cuts fail or produce modest results if they are not associated with reorganisation processes, such as the reduction or amalgamation of offices, just to give an example'.

Then there is the great theme of digital and new ICT technologies: here the public administration,' the president of Confindustria Assoconsult continues, 'is in the stone age and a gigantic investment is needed.  Which, however, runs the risk of turning into a waste of resources if left only to ICT vendors and those in charge of PA information systems, as has happened so far'.

A lot of resources could be found from cuts in the public administration's own consultancy expenditure. 'Estimates,' reads another passage of the letter, 'speak of two billion euro, in reality it could be twice as much. Of these expenses, not only 50 per cent can be cut, but up to 80 per cent. And with the value left over, 20% of today's expenditure, if used in a targeted and organic manner, the entire public administration could be reformed'.

It is worth mentioning that during the States General on Tuesday 27 May, the data of the Confindustria Assoconsult Observatory Report 2013/2014, produced in collaboration with the University of Rome Tor Vergata, were presented. The Italian management consulting sector counted three billion euros in turnover in 2013; more than 18,000 total companies, 85% of which with less than three employees; 35,000 operators with a contribution to employment of 0.16% and a high rate of young people in the sector.  In Italy, the contribution of management consulting to GDP is 0.2% against a European average of 0.52%. Here, too, Italy is at the tail end.

Read the full text of the open letter below.
Open letter to the Prime Minister, Matteo Renzi

The courage we need, starting with cuts in consultancy.

Dear President,

In the coming weeks your government will launch the reform of the public administration.

As Confindustria ASSOCONSULT, which represents the most significant management consulting companies in Italy, we are interested that your 'revolution' - based on human capital, innovation, cutting unnecessary structures - together with the work of the Commissioner for the spending review, Carlo Cottarelli, goes in the right direction. The quality of public services is the first factor in increasing the competitiveness of our country's system.
In recent years, there have been several measures aimed at cutting and rationalising spending in the public administration, but spending has even increased while services have deteriorated. It is clear that indiscriminate cuts fail or produce modest results if they are not combined with reorganisation processes, such as the reduction or amalgamation of offices, to give just one example.

Then there is the big issue of digital and new ICT technologies: public administration is in the stone age and a gigantic investment is needed. Which, however, runs the risk of turning into a waste of resources if left only to ICT vendors and those responsible for PA information systems, as has happened so far.

Reorganisation of processes is essential and, in this sense, the external contribution of consultancy and in general of KIBS - Knowledge Intensive Business Services - is fundamental, as urged by the United Nations, the OECD and the European Union. All over the world, public administration uses consultancy firms both to identify waste and cut excess spending selectively but also to rethink services.

As we know, Italy is the country of anomalies. In Italy we have the in-house phenomenon, whereby the public administration buys consultancy from itself. Without knowledge from outside, the public administration alone becomes increasingly self-referential. I recall that in other countries, such as Germany, recourse to in-house is only possible if it is cheaper than the market alternatives. But with us, there is little transparency and almost no media attention.

In Italy, only a fraction of public expenditure on consultancy is assigned to entities organised as companies; unfortunately, this expenditure is distributed in a myriad of micro assignments to natural persons, and as a result there is well-founded doubt as to the return in terms of added value. The level of transparency is among the lowest in Europe and it is estimated that only 12% of total consultancy expenditure is awarded through tenders.

But a lot of resources can be found from cuts in the public administration's own consultancy expenditure. Estimates speak of two billion euros, in reality it could be twice as much. Of this expenditure, not only 50% can be cut, but up to 80%. And with the remaining 20% of today's expenditure, if used in a targeted and organic manner, the entire public administration could be reformed.

Management consulting is ready to take responsibility for initiating growth and innovation processes in the PA. A fundamental topic of the States General of Confindustria Assoconsult, held today in Viale dell'Astronomia, is the added value of consultancy as a feasibility and concretisation tool for the choices that institutions and politicians are called upon to make for the modernisation of country systems, also with reference to support for the implementation of the spending review programme.

This is why we believe that a comparison between the institutions and our sector is of added value: public administration reform is a change within our reach that we can achieve together.

Good work President Renzi. Cordially,

The President
Ezio Lattanzio

Confindustria Assoconsult is the association representing the most significant consulting companies in the sector. It is a member of Confindustria, Confindustria Intellect, FEACO European Federation of Management Consulting Associations.
Confindustria Assoconsult is made up of around 400 large, medium and small consulting companies that share the same ethics, values and vision. Together, they participate in the development of initiatives, thematic meetings, exchanges of experience, working groups, research, networks and events for their field of specialisation.
Every year, Confindustria Assoconsult, in cooperation with the University of Rome Tor Vergata, publishes the results of the Observatory on the consultancy market. It provides data on sector trends and individual consulting practices to develop competitive analyses and measure the value created by companies in terms of turnover, use of intellectual resources, impact on the economy and modernisation of the country.

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