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| | 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 “gathering dust on the | |
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| | 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 money | |
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| | 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
space, Ernst & Young’s | |
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