Many centuries ago, one of the great Greek philosophers offered a profound thought - “there is nothing permanent except change”. The same can be said for most every industry including information technology – particularly BIG tech consulting. Across many industries, BIG tech has been one of the driving forces of corporate change over the past 20 years. But how will BIG tech consulting itself likely change over the coming years? What will instigate change inside BIG tech? That’s the unbiased topic of this blog.
How do I define BIG tech consulting? My definition of BIG tech is consulting and outsourcing corporations with 75,000+ employees which includes organizations like IBM, CGI, HP, Accenture, ATOS, Cap Gemini, BT, CSC, HCL, Wipro, and TCS. The aforementioned list of BIG tech consulting companies is only meant to be a representative list.
A Brief History Of BIG Tech Consulting
Indeed, the concept of the BIG tech consulting company was relevant and revered in an era when hardware and software was purposely distributed to remote devices and complex customization was seen as a business differentiator – not a detriment. Deploying distributed applications, particularly for large multi-national organizations, literally required small legions of geographically dispersed consultants. To further complement their offerings and achieve a predictable growth rate, many BIG tech consulting companies added outsourcing to their menu of services which also required a substantial workforce. Thus, not only could BIG tech consulting companies design, develop and deploy customized systems with its vast workforce, but they could also manage and operate the same systems. The end-to-end solution seemed ideal for many global enterprises.
Changing Market Dynamics And Demographics
What are the market dynamics that are likely to change BIG tech consulting? Undoubtedly there are many. I have chosen to highlight four key trends that most industry insiders do not like to discuss.
First, it’s generally more economical and/or faster for clients to buy ready-made hardware and software solutions (with some customization) than it is to design, develop and implement from scratch. The aforementioned is particularly true for back-end systems such as human resources and financial applications. Practically speaking, enterprises require fewer resources (and less BIG tech consulting) to implement commercial-off-the-shelf (COTS) solutions, especially SaaS which can be available after a few clicks and a credit card. For example, most enterprise organizations who need a customer relationship management (CRM) solution would likely evaluate a COTS solution such as Salesforce or Microsoft Dynamics before considering a ground-up development effort themselves. While enterprises may enlist the help of consultants to customize and deploy COTS solutions, the time and expense to design and develop such a solution is avoided. CRM is but one example.
Third, the age of consumer technology have given rise to the idea of service integration. For most of us who have smartphones, we have become quickly accustomed to downloading apps from the Apple’s iTunes or Google Play without giving much thought to the developer – albeit a 99 cent app. In a simplistic sort of way, smartphone users integrate their own set of apps to achieve a personalized result. On a much broader scale, the same will be true in the future for enterprise technology. Going forward, both public and private enterprises will pick and choose from a wide variety of specialized technology systems giving little thought to a proprietary vendor as was the case in the past 20 years. Like consumers, enterprise organizations will find a way to aggregate viable market choices in a systematic and aggregated approach. The change inside BIG tech companies and their entire value chains will be dramatic and swift.
Fourth and finally, workforce demographics together with rapidly improving consumer technology access will drastically change the BIG tech consulting services over time. Today’s college graduates were typically born after 1990 when access to the internet and computers were plentiful. Technology literacy is a prerequisite for receiving a degree from a credible college or university; similarly, organizations like Coursera are educating tens of thousands of technology students in a virtual classroom across the globe. Access to knowledge and information insight is proliferating at warp speed. Smartphone and tablet access have saturated the general public with over 1.1 billion 3G subscribers worldwide. In the United States alone, over 79% of the population has access to the internet; while that same percentage is much lower in China and India, the double digit growth rates will soon allow those, and other BRIC countries, to attain significant market penetration. BIG tech consulting originated at a time when everyone was NOT tech savvy – executives were required to rely on specialize expertise inside their IT departments. In the future, enterprise colleagues in the human resource department along with the sales department are likely to understand and manage technical requirements as well as those in their corresponding IT departments.
BIG Changes Ahead
Is there a future for BIG tech consulting? I believe the answer is yes. What do the changing market dynamics mean for BIG tech consulting? I offer three predictions.
First, the industry will consolidate. There are too many BIG tech companies with anemic growth chasing too few opportunities. Anemic growth is reflected in many of the stock prices of publically traded BIG tech consulting companies. Look for consolidation primarily across service lines (e.g. infrastructure services, BPO). BIG tech will be more accurately described as “BIG tech specialization”. I believe that a very small subset of existing BIG tech consulting organizations will survive in their current forms – the reason being is that large multi-national corporations will still need help with world-wide systems implementations.
Second, service integrators will slowly replace legacy “BIG” tech systems integrators. Tomorrow’s service integrators, whether internal or external, will select from an entire market array of specialized technology organizations in order to deliver the best solutions for their clients. The previously accepted practice of buying from a single BIG tech supplier will soon be, if not already, regarded as “old school”.
Third and finally, existing recipients (clients) of “BIG” tech consulting and outsourcing are likely to feel the “winds of change” in the coming years. Some of the winds will be no more than a passing storm; however for some clients, the “winds” will be hurricane force. The reason is straightforward, some of the existing BIG tech companies will slowly, or not, respond to the aforementioned changing market dynamics and demographics. The end results for BIG tech companies failing to change are likely to be unpleasant at best, especially for their clients. Clients can begin to mitigate risk by adapting a service integration approach that embraces multiple market choices with a well architected diversified portfolio of technology products and services.
Undoubtedly, BIG changes are in store for BIG tech. Most smooth talking BIG tech consulting executives selectively choose to dismiss some of these obvious trends due to self-preservation. My advice, existing and future clients of BIG tech consulting should proceed with caution. As you consider the topics that I briefly covered in this blog please consider the advice of Jack Welch, the legendary business leader of GE, “Change before you have to”.
Sourcing IT Supplier Independence
Attaining information technology (IT) supplier independence – it’s an often unstated, but much desired goal of most every enterprise organization. Surprisingly, this strategic and business-oriented goal gets little attention inside most organizations, until an unwelcomed, and often unforeseen, restraint occurs impeding organizational progress. Realizing freedom and independence is not easy, whether you are a country, or company. I offer three (3) suggested guiding principles for organizations seeking to declare their IT supplier independence.
Revolution Is Required
Wikipedia describes revolution as “a fundamental change in power or organizational structures that takes place in a relatively short period of time”. The key point is “fundamental change” – a break from past practices. In the case of corporate culture, I am not suggesting an overnight overthrow to usher in “fundamental change” to your IT supplier arrangements. I am suggesting that IT buyers carefully design and execute a business plan that places themselves in charge of their future(s). One of the first steps in this “revolution” is getting organized which includes identifying current IT contractual commitments. Before revolution begins, buyers must thoroughly understand and acknowledge their present circumstances. Only then, can buyers develop a viable plan to achieve their revolutionary goal(s).
Independence Must Be Defined
Buyers must define what IT supplier independence means to them. This definition will most likely be different for every organization, whether IT is a centralized or de-centralized function. Everyone throughout the organization (Business Units, IT, Human Resources, Finance, Legal) must understand the guiding principles that will help navigate their organization’s journey to IT supplier independence. For some buyers, IT supplier independence is defined as short-term commitments; for other buyers it may mean limiting IT supplier spend; for still other buyers, it may be a combination of the aforementioned. Whatever, your objectives, it is wise for buyers to outline their expectations in a master agreement that governs all supplier relationships to ensure future consistency and continuity.
Choice Is Key To Freedom
If independence and freedom are to thrive, choices must exist. The good news –supplier choices and solutions are plentiful across the IT industry. Today, buyers have choices that span the spectrum - from IT insourcing to outsourcing, and everything in between. As cloud and mobile applications mature, new sources of business services will continue to emerge and further expand choices. For buyers to achieve and maintain IT supplier independence, buyers must commit themselves to spending a portion of their busy days to market research and knowledge acquisition. It is not enough to have a choice – buyers must have insight and understanding of the choice(s).
Successfully achieving supplier independence is hard work and requires unwavering commitment. Today’s business challenges are unprecedented and demand organizations adapt and then quickly respond to ever-changing economic, political and social circumstances. Organizations can no longer afford to be saddled with IT supplier dependencies that impede progress and innovation. Let today be the start of your IT supplier independence!
IT Advisory - Be Aware Of The Facts
The business world is filled with companies offering IT sourcing advice for buyers. What’s missing in this crowded segment of the IT industry? A candid assessment of how this niche of the IT industry is being influenced by market realities. Undoubtedly, using talented IT sourcing advisors in short-term project durations can offer buyers welcomed advantages to include significant cost-savings and market-changing innovations. However, buyers need to be aware of “the facts” before engaging an IT sourcing advisor. In the next series of blogs, I offer insights that can assist buyers to seek and select credible and valued IT sourcing advisors. It seems fitting and appropriate to deal with “the facts” as an opening topic in this series.
Fact 1: Buyer Choices Are Finite – Not Infinite
The IT supplier industry is very well defined across software, hardware, and services. Thus, there is some effort – but not a great deal – required of IT sourcing advisors to identify potential IT supplier candidates. In our highly-connected digital world (supplier corporate websites, LinkedIn, Twitter, Facebook, etc…), IT supplier information is readily available to anyone willing to allocate time to basic research. IT sourcing advisors should focus their billable efforts on matching client requirements with viable IT supplier capability, which includes cloud solutions. To save both time and money, buyers should identify many of their business requirements prior to engaging an IT sourcing advisor; then, buyers should unleash their IT sourcing advisor to source flexible solutions using those requirements.
Fact 2: IT Suppliers Have Well-Defined Services And SLAs
Contrary to conventional wisdom, buyers, particularly small and mid-market cap, should see a red flag when IT sourcing advisors demand a wholesale substitution of IT supplier contractual documents describing services and SLAs. Today, most IT suppliers have productized their solution offerings which include well documented services and well-defined service level agreements (SLAs). As organizations continue to adopt cloud services, IT sourcing advisors will have fewer opportunities to radically modify service descriptions and corresponding SLAs. Industry consolidations have rendered many IT suppliers “too big to change”, unless a service can be effectively automated. That’s not a message most IT sourcing advisors like to tout, especially for IT sourcing advisors who feel the need to justify overextended stays at the expense of buyers.
Fact 3: IT Suppliers Need To Make Money – To Be Your Viable Provider
IT suppliers must be profitable to supply products and services to buyers. IT suppliers, whether public or private, can no longer rely on endless rounds of funding to backstop unprofitable operations. IT suppliers who suffer financial constraints do not invest in their products or service, and do not invest in the talent who develop and support their products or services. Traditional IT sourcing advisors who encourage lengthy and contentious RFPs set the stage for buyers in the eyes of their IT suppliers as high-maintenance and high-cost which taints perceptions of buyers inside the IT supplier organization. Unrelenting negotiations which extinguishes supplier margin and sanctions price points below market value serve only as false wins for traditional IT sourcing advisors; both buyers and IT suppliers are left to deal with the unintended, but often negative, consequences. To use a dated cliché, sourcing engagements have to be win-win. Both buyers and IT suppliers must be financially viable.
If you suspect by now that I think the IT sourcing advisory industry has become largely industrialized or commoditized, you’re right. Unfortunately, most sourcing advisors have not yet received “the memo”. These aforementioned three facts remove some of the “smartest guy in the room” syndrome that afflicts the traditional IT sourcing advisory community. When engaging IT sourcing advisors, buyers would do well to recall the quote made famous by the pragmatic Joe Friday, the detective so famously portrayed in the classic police drama Dragnet, “all we want are the facts”. The IT sourcing advisory industry is undergoing significant change – buyer be aware of “the facts”.
What's An IT Service Broker?
Let’s begin with a basic definition. Brokers are generally defined as trusted advisors or intermediaries who facilitate commercial transactions. Brokers provide professional services that allow buyers to free themselves from tactical time consuming tasks to focus on strategic goals and objectives.
The concept of brokering services has existed for many years in industries apart from information technology (“IT”). For example, real estate buyers often enlist the help of brokers to market property, qualify interested parties, negotiate agreements, coordinate inspections, and complete a property transition. Buyers incent real estate brokers to provide rapid results by engaging in short-term agreements.
Not unlike the real estate profession, private and public sector organizations are demanding quick results from IT experts with tangible benefits – not multi-year plans loaded with promised potential. Maintaining the status quo of traditional IT sourcing and management is no longer an option for many. The growing demand for change is giving rise to the concept of an IT Service Broker – an entity that can deliver an accessible, integrated, secure and market-differentiating IT solution which solves a business problem in a short period of time.
Industry pundits have given much hype to the concept of an IT Service Broker, especially the closely aligned cloud service broker, but have failed to explain how the role would work in practice. This blog offers my own explanation as to why the role of an IT Service Broker is needed, and how the role can be implemented. I also discuss the benefits of adopting this paradigm shift in IT organizational strategy.
IT Service Broker Role
It is news to no one that change is accelerating in the IT industry. The adoption of mobile access and cloud computing has forever altered IT delivery models. Social media platforms have re-defined communications and collaboration expectations. Short-term pay-by-use service agreements are the new norm of business and contract models. In yesterday’s world where IT product and service choices were limited and slow to evolve, it was possible for fully staffed IT departments to be “all things to all people”. Today and tomorrow, austere IT departments must selectively decide where their time and efforts are best directed to keep pace with the change that is overwhelming most every area of the IT industry.
It’s my personal belief that the primary and retained role of IT leadership inside private and public sectors organizations will be that of an architect whose objectives will be business focused, and not technology oriented. The role of the architect will include strategy, design and governance services. To implement their strategies and designs, architects will call upon the role of the IT Service Broker. An IT Service Broker will serve as a general contractor sourcing services, internal or external, based on the architect’s requirements and specifications. The functions of an IT Service Broker may vary, but can include research, planning, recommendations, sourcing, negotiation, integration, transition and ongoing management of any IT service.
So what’s the benefit of the IT Service Broker role? Professional IT Service Brokers will quickly and objectively source an optimal IT solution that delivers differentiating, flexible and high-quality services at competitive market rates. The role of the IT Service Broker is designed to remove mundane and tedious tasks so that executives can focus valuable time and efforts on strategic and business-oriented programs. Unlike traditional management consulting, the goal of an IT Service Broker is to deliver high-quality results in short periods of time to minimize expense. To use a real-world example, many organizations evaluate market choices with regards to e-mail administration and support. An IT Service Broker can evaluate both internal and external e-mail support options, and recommend a tailored solution based upon architect-supplied business requirements. A professional IT Service Broker will assess and provide recommendations for services in a fraction of the time at significantly less cost than traditional IT sourcing processes. Moreover, by relying on free market principals, IT Service Brokers have the latitude to select solutions that will fast-forward technology adoption along with implementing flexible and favorable business terms.
While the qualitative benefits are intriguing, it’s the quantitative benefits that garner business leader’s attention. Organizations can lower their IT operations costs by a minimum of 10% simply by expanding the competitive base of potential service providers via IT Service Brokers. Typically, IT operational costs are 70% to 80% of an organization’s IT budget, so the potential cost-savings are significant. Once the IT Service Broker role has been implemented along with the architect role, the benefits continue to compound. The IT function can begin to organize more closely with business units and consolidate overlapping roles, thereby realizing additional overhead savings. Should organizations choose external IT Service Brokers, they can further manage their cost by employing IT Service Brokers when needed for the duration of time that is needed – this approach is particularly intriguing for small and medium sized businesses.
The IT Service Broker role will play a crucial role in sourcing IT and business services. The IT architect will also play a pivotal role in defining the specifications and business requirements that will provide the blueprint for the IT Service Broker. These roles will revolutionize how organizations design, source and deliver IT services. Organizations would do well to remember a quote that has been attributed to both Alan Kay and Peter Drucker who together blend both a technology and business perspective – “the best way to predict the future is to create it”.