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| | space, Ernst & Young’s
stance is that of
“trusted adviser”:
remaining firmly on the
client side of the table
with a limited palette
of services that
nevertheless bring all
the capabilities of an
international
professional services
firm to bear on the
client’s issues.
The question is, does
this represent a
decisive shift for the
market, or is this just
a case of firms which
can no longer achieve
scale in IT or
outsourcing work making
the best of the
opportunities that are
left?
The second argument
is easily made: the
structure of any
consultancy firm, even
the whole industry, is
usually best explained
as a series of
historical accidents.
Even while accountancy
firms were recruiting
hundreds of SAP
programmers in the
1990s, you never saw an
IT firm buy a firm of
auditors, and the
pressures that saw them
divest those IT assets
were almost entirely
external.
However, the period
in which three of the
Big Four exited the
consultancy market may
well represent a
high-water mark in the
vertical integration of
the industry. At that
point it was fashionable | |
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| | to conceive of
consultancy as a river,
with high-value,
low-volume strategy work
upstream and
high-volume, low margin
implementation and IT
work downstream. Then
the players began to
encroach on each other’s
territory, perhaps best
symbolized by EDS’
purchase of A.T.
Kearney. As that
relationship now
unravels, you have to
ask, are the forces
which pushed EDS and
Kearney in opposite
directions at work in
other consultancies?
Note that this has
very little to do with
the direction any of
these firms want to
pursue—the migration of
individual talent alone
could settle the issue.
Accenture and IBM, for
example, have roomfuls
of strategy consultants,
but how happy are these
people with their
company and personal
branding? Particularly
as the rest of the
industry is assiduously
pressing the claim that
consultancy for these
firms is little more
than pre-sales
outsourcing or systems
integration work.
Client needs have
also shifted. Vertical
integration used to be
justified by constant
references to a mythical
old school of
consultants who wrote
reports which were
inevitably described as | |
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| | “gathering dust on the
shelf”. The new paradigm
of consultancy was to
roll up your sleeves, do
the job or even take
over the process, with
any doubts about
conflicts of interest
resolved by innovative
risk/reward structures.
For a long time this
paradigm worked, because
pretty much everyone on
the global client target
list knew they needed
massive ERP or CRM
systems, and would also
probably have to
outsource and/or
offshore a reasonable
amount of their
operations to stay
cost-competitive. So it
didn’t really matter who
did the downstream work,
and they were happy for
it to go to their
advisers.
Nowadays there’s more
of a focus on
operational issues, and
clients want to explore
a broader variety of
options. Given that a
big SI or offshoring
programme is no longer a
foregone conclusion,
there’s little advantage
in limiting your
advisers to people with
those capabilities—even
though you fully believe
that those firms can
offer objective,
high-quality
consultancy. And it
increasingly makes sense
to have a knowledgeable
third-party involved, in
much the same way as
using an architect can
often end up saving | |
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| | money on even a small
building project,
through clever project
management and tough
negotiating skills.
“Trusted advisers” can
develop a killer one-two
of combining effective
management of
consultancy projects
with greater and
higher-level client
buy-in.
This poses a dilemma
for the big firms. On
the one hand this
“trusted adviser”
segment can represent an
economical route to
market and an entrée to
new clients. They’re not
going to refuse to take
the calls and, in the
short term, this could
prove lucrative for both
parties. Longer term,
however, the “trusted
advisers” will be seen
as gobbling up lucrative
work and taking a
too-dominant role in the
client relationship. Can
they afford to maintain
these increasingly
expensive skillsets
in-house? And if they
begin to lose them do
they face the risk of
being relegated to a
niche, of being seen as
body shops? And finally,
if you’re a young,
would-be consultant at
the hiring fair, whose
stand do you queue up
at?
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| | By Mick James
It’s always nice in
this game when you float
a theory and have it at
least partially
confirmed a short while
later. In a previous
article, I posited that
a new breed of
consultancy firm fuelled
by refugees from the old
Big Four was beginning
to compete head on with
the current market
leaders for high-value
work and talent. This
new tier in the market
would potentially
separate off project
design and management
and relegate the bigger
consultancies for system
building, integration
and outsourcing,
unbundling the “design,
build, run” model that
has dominated
consultancy for years.
The only thing I was
lacking was a suitable
name for this emerging
strand.
A couple of days
later at the Top
Consultant recruitment
fair, Ernst & Young
neatly filled the gap. I
was intrigued to see a
Big Four firm so
blatantly competing head
to head with the likes
of Accenture and
Capgemini, and what
intrigued me was how
different and
deliberately focused
their message was. As it
re-enters the consulting | |
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