references (Attractiveness of industry vs new entrants: 6/10 moderately attractive as entrants cant easily capture large market share quickly). Bargaining Power of Suppliers Low . In this context, suppliers for a services firm are mainly its talent (skilled consultants) and possibly data/tool providers. Experienced IT negotiation consultants and analysts are in demand talent war exists especially for those with deep vendor knowledge or FinOps certifications. However, the supplier power of employees is moderated by the fact that many specialized consultants might just start their own firm (so they are more like potential entrants than suppliers). Generally, consulting businesses have high reliance on human capital, but since most providers are relatively small, an individual star consultant leaving can impact them. Still, the industry is attractive in that theres a broad pool of IT procurement and FinOps experts emerging (some from vendor side, some from IT departments). Another supplier could be data or software providers e.g. subscription to a benchmarking database or a tool like Apptio but there are several options and firms can even develop their own spreadsheets, so not a major locking factor. The major tech vendors (Microsoft, etc.) might be seen as an upstream factor in that they supply the prices and terms that consultants have to work with but they arent suppliers to the consultants directly, they are the objects of the negotiation. If anything, the vendors dont collaborate with cost consultants (they may even dislike them), but that doesnt directly control the consultants business except by continuing complexity (which ironically sustains the need for the consultant). Given that labor is the primary input, and skilled labor is competitive but available (especially with remote work, a firm like RTC can tap global talent or subcontractors), the supplier power is relatively low in this industry. Consulting firms can hire and train new analysts relatively quickly, and often use a mix of junior analysts and senior experts to manage costs. Force assessment: Low supplier power industry players are not heavily beholden to any single supplier; talent is crucial but no single employee or tool has an outsized leverage (Attractiveness: 8/10). Bargaining Power of Buyers Moderate to High . The buyers are the client companies (CIOs/CFOs engaging the service). They tend to have significant say because: Clients are often large enterprises who can pick among multiple consulting options (Big Four, boutiques, or do nothing). Price sensitivity: While the whole point is saving money, clients often scrutinize the fees closely and will demand pricing structures that share risk (e.g. success-based fees). If a consultants proposal isnt compelling in ROI, the client can walk. Many cost consulting deals are thus priced in a client- friendly way (e.g. contingency or not-to-exceed limits). Switching costs are moderate a client could try one firm for one project and switch to another for the next vendor negotiation if not satisfied. Theres not a huge lock-in, except if a firm is on a managed service retainer with embedded processes. However, buyer power is mitigated by the specialized value provided. If a client truly lacks the in- house capability, they need these services and the alternative (not doing it or doing in-house) might mean missed savings. So if a consulting firm can credibly show potential savings of say $10M, the client will be motivated to work with them (the engagement cost pales in comparison). Some large clients run competitive RFPs for these services, especially for multi-year engagements, which increases their power to push pricing down. Also, if results arent delivered, the client may refuse to continue or pay (especially under success fee arrangements essentially a form of buyer power ensuring they pay only upon satisfaction). 12