RSS feedsThe dark, mysterious days of high-brow consultancy at strategy houses such as McKinsey and Arthur D Little have long since gone for accountants and IT experts.
Accounting firms have moved on from simply providing advice, and now help customers implement vast IT systems with mixed results.
IT professionals, on the other hand, morphed into IT consultants, whose employers sought to convince clients they were not just there to whack in some IT kit and disappear. And while they were right about being there for the long term, many outstayed their welcome, with six-month projects stretching into 18-month developments, smashing budgets in the process.
With all parties chastened by the experience, things began to change. The IT giants took on business advisory expertise from accountants, implementers made more effort to maintain service levels, and project management specialists have had a whale of a time mediating between client and IT consultants.
Despite these changes, many businesses have looked further than the usual consultancy-turned IT implementation provider for IT advice. Different types of company, with different types of business expertise, are all calling themselves business advisers, and proving popular.
Smaller software resellers with expertise in a particular sector are sticking around long after clients have rolled out the new applications. Even the big consultancies are leaning on the little guys when customers really want some specialist advice. Many such small firms are known as boutiques essentially a catch-all term for business advisers outside the big IT experts, who are not tied to a particular software company. Some don’t even advise on IT at all.
SOFTWARE-AGNOSTIC
Xantus Consulting is one such boutique. An established IT business, Xantus is software-agnostic, and its most valuable work comes from dealing with clients on an ongoing often ad hoc basis.
Xantus director Heath Jackson believes that one of the catalysts for changing attitudes towards IT boutiques is that even the largest businesses no longer have vast swathes of their own IT experts, having outsourced much of the IT function. As a result, businesses looking to change their IT require outside help.
‘Many of the IT consultancies have seen this and looked to move into service provision over the last few years,’ explains Jackson. ‘When clients want an assignment undertaken, they turn to organisations like us. Lots of clients see us as part of their extended team.’
Jackson says that businesses may not see the larger consultancies as ‘trusted advisers’, resulting in problems arising with project expectations. At its worst, both parties end up poring over contracts and service level agreements, and the relationship breaks down entirely.
Providing independent IT advice is a key selling point for Xantus, but
keeping up to speed with IT developments requires good relationships with IT
providers.
‘We maintain our software independence,’ says Jackson. ‘It can be tricky to do
so but not as difficult as you’d think.’
He says the software companies soon understand a consultancy’s vendor-agnostic position.
‘Clients don’t know what they’ll get with large organisations,’ he says.
‘They come to a boutique like us for a specific thing. They know what we’ll
deliver.’
Jackson says a boutique consultancy needs to have a particular area of expertise
and is often involved in long-term relationships with clients.
A GRANDER SCALE
From a completely different business background to Xantus, Hackett Group has moved from being a back-office benchmarking expert to the type of trusted adviser that Jackson speaks of, albeit on a grander scale. The focus on close client relationship and very specific advice places Hackett firmly in the boutique market.
‘We position ourselves as a global strategic advisory firm,’ says its Europe VP, Michael Campbell. He says the firm can define ‘world-class performance’ in back-office functions for clients, and the core of this is focused on ‘facilitating relationships’ as clients like to have ‘someone they can call’.
Hackett makes the most of its benchmarking tools not only to show clients how they compare to others, but to help them manage change using best practice that Hackett itself has witnessed in the field.
‘We’re trying to provide insight based on empirical data,’ says Campbell. ‘By having an ongoing dialogue we’re able to have a better channel for advice.’
While Hackett looks to differentiate itself, Campbell believes the ‘whole panorama’ of rivals the Big Four accounting firms, boutiques, IT research analysts such as Gartner, strategic houses such as McKinsey are looking to win the firm’s clients.
FORGET ABOUT THE PRODUCT AND HELP US WITH OUR GOALS
Touchstone used to be known as a traditional IT reseller, but a new managing director has rebranded the firm as a mid-market business software and consulting services provider.
The firm now focuses on a number of key vertical markets, and keeps a range of software choices on hand for clients. Not completely agnostic then, but the facilitator of the company’s new strategy, MD Adrian McNay, is certain that the move away from what commentators often refer to as a ‘cowboy’ market has worked wonders for clients.
‘As a reseller, service work drags through from that, but what has happened is that clients said they wanted us a trusted adviser: “Forget about the product; come and sit down with us and look at helping us achieve our business goals.” They want us to look at their processes, then look at what software applications are appropriate.’
McNay says that clients take their business to Touchstone because all they get from strategists is a theoretical document about how to change their businesses, which is not deliverable in the real world.
The latest Management Consultancy league table of the top 75 UK firms contains a ‘longtail’ of smaller advisers that are performing well. Many have followed the same ‘expert advisory boutique’ route as Xantus, Hackett and Touchstone. Jackson sees an inevitable shift in the marketplace, with consultancies swallowing each other up, but those that can recruit well and keep their ‘boutique’ style of work ethic will continue to prosper.
‘I don’t see why there can’t be more firms in the £10m-£100m revenue bracket,’ says Jackson. ‘There’s still lots to spare in the market.’
BATTLING FOR RECRUITS
With many consulting firms looking to expand to meet the steadily growing demand for consultancy and advice, hiring the right people has never been more difficult.
Xantus director Heath Jackson says his firm wins recruiting battles against the big IT consultancies by offering salaries as good as, ‘if not better’ than, theirs. ‘As we get bigger and maintain quality, we’ll get larger clients and more breadth,’ Jackson says.
To complicate matters, the three Big Four firms (PwC, Ernst &Young and KPMG) that have kept out of business advisory over the past few years because of non-compete agreements taken out when they sold their consulting arms, are now back in the frame. But while they can build up business process advisory through their old boy networks and their own high standing as businesses, it looks all but impossible in the current market for them to push back into IT consulting and implementation. While they claim not to be interested in such work, the suspicion is that this refusal to engage is due principally to market and recruitment conditions.
