How IT consulting is reinventing itself

Small firms may be demanding greater flexibility from the SAP “tanker” (SAP founder outlines start-up strategy as small firms call on the ‘tank’ to be agile, but for IT consultants the ride they’ve had on its bow...

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Small firms may be demanding greater flexibility from the SAP “tanker” (SAP founder outlines start-up strategy as small firms call on the ‘tank’ to be agile, but for IT consultants the ride they’ve had on its bow wave has been one they’ve never wanted to end.

The UK’s technology consulting market - excluding systems implementation work - grew by an impressive 7% last year and is now worth more than £2bn. But if the boom in IT consulting that started in the early 1990s was easy to attribute to the surge of interest in Enterprise Resource Planning (ERP), then what’s driving growth in technology consulting today is more multidimensional. And behind the growth figures lies a market that’s reinventing itself.

Let’s not get too carried away: ERP hasn’t gone away as an opportunity for consultants by any means. But ERP isn’t what IT leaders are talking about any more. In fact big enterprise systems of any sort aren’t really what IT leaders are talking about any more - except to tell you that they’re not the future.

What they’re talking about instead is a more fragmented, more democratised future in which IT is less centralised and less about committing to one big system for years and years. They’re talking about digitisation and about the new technologies that promise both to enhance the productivity of their organisation and to allow them to engage with customers in new ways.

In fact - and this may be the key - the people doing the talking aren’t always in IT at all. My company - Source - spends a lot of time interviewing consultants’ clients and one of the hallmarks of the last few years has been the extent to which conversations about technology have moved beyond the IT function. The person talking about what technology can deliver in terms of productivity and efficiency isn’t the CIO, it’s the COO. The person talking about social media and new ways of engaging customers isn’t the CIO either, it’s the CMO.

So what does all this mean for the future of technology consulting? The first thing is largely psychological: consultants need to be weaned away from their attachment to the tankers - to grasp the idea that their clients have moved on and to be prepared to move with them. In part the answer to that is about expertise - clearly they need to have something to offer when it comes to the technologies their clients are now more interested in - but it’s also about the model of consulting itself.

ERP has been served very well by the pyramid model of consulting, in which a small number of partners lead a big team of much more junior people from whom high margins can be made. But as the era of big, centralised, enterprise-wide implementation projects starts to fade, that’s becoming increasingly irrelevant. At the same time clients are becoming smarter, both in terms of how they engage consultants, and in terms of the capability they already have in house.

However, perhaps the genuinely critical success factor for IT consultants in the future will be less about their ability to move on and understand new technologies, and more about their ability to understand, and be understood by, the new people who are talking to them. Based on what we hear from them, clients outside the IT function tend to be unconvinced that traditional IT consulting firms talk their language. That opens the door for the firms with whom they’re more familiar, and for whom the trouble is that they were never attached to the tankers in the first place.

Posted by Edward Haigh, director of Source Information Services.

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