GROW FROM CORE OR OFFER MORE (part 2)

Readers' comments would be much appreciated and replied to!!!

A lot of the problems for IT service providers wanting to ‘move up the value chain’ in the consolidated solutions space might come from within, while some might be the result of aftershocks that the client world has experienced because of bad consulting practices. A look at a few possible issues might allow IT service providers to avoid them

Why am I doing this? - Strategic intent

Great organizations have clear precise vision and mission statements outlining their strategic intent. IT service providers that have their intent too tightly defined to operate only within the IT space might have some identity issues that will reflect on its consulting engagements. For translating top management’s vision for a future in which the company expands its consulting practice, strategic intent must reflect value added business solutions to client problems rather than just robust IT solutions

For example if an IT firm’s

•  Mission is to be first choice in the IT services industry
• Vision is to have a technology footprint in every industry within the next 10 years

getting clients/customers to believe that you can envision the solution from their industry’s perspective is difficult.

It’s better to have a strategic intent decoupled from the IT specifics. This is a long term perspective and might pose issues in short term operational clarity.

Reputation, reputation, reputation - Brand value

Fees and revenue in the consulting industry (if I may call it that….) are reflective of the Consulting firm’s brand. Client organizations hire consultants for one or more of 3 chief reasons: brand, bodies and brains. The problem is that many times clients do not know or explicitly verbalize their intentions and are dissatisfied when their implicit/unstated needs are not met.

(Please do give your inputs on the figure above. This is how I visualize it and would appreciate the readers’ thoughts on this)

This or that - Business focus and Resource Allocation

Resource allocation comes from a business focus that may be lost in the quest for moving up the solutions value chain.

Resource allocation or appropriate hiring will arise from

1. Projects/Assignments/Engagement Pipeline and nature of work
2. Percentage focus away from current core business i.e. IT solutions

This area will be covered in greater detail in a subsequent article.

Who am I? – Positioning 

(Source: Pg 91, Czerniawska, Fiona and Toppin, Gilbert, Business Consulting)

It pays to position yourself within the revenue/delivery matrix  since, customers have at least some idea of your delivery capabilities. However, this does not mean that you can’t or should not move across the boundary to delivery higher value and have a higher margin consulting service.

Most pure-play strategy firms position themselves in the Relationship quadrant where senior partners and the nature of their relationships with top management of existing clients determine the frequency and volume of business generated. On the other hand most IT firms find themselves placed in the Transaction quadrant.

Moving from the Transaction into the Relationship quadrant can take a substantial amount of time and effort.  In my opinion a continued sustained effort in either one of the 2 directions will allow IT service providers to do this

• Option 1 (Path with Green arrows): Extreme standardization – This means that all its products and processes will follow industry standards and specification that clients can understand and trust. A successful movement along this does not mean no innovation but a quick 'componentization' of successful products or methodologies

• Option 2 (Path with Red arrows): Continuous innovation – This is not an easy path and requires a great team to begin with. Most IT service firms are full of analysts who are mostly executioners and not innovators. A successful movement along this path requires the right hiring and retention policies

How much are my services worth? – Pricing

Consulting being one of the most abused words in business today, many strategy firms have moved to using the alternative business advisory. However, this in itself is not the reason client spend big money on them. It’s got a lot to do with reputation. The traditional IT project pricing is based on KLOC (Kilo Lines of Code) whereas the traditional business consulting engagement has been on a 'time-and-materials' basis. In my opinion clients will now want outcome-based pricing contracts like Atos during the London Olympics and pre-empting this will yield rich dividends

The next part of this series will explore how IT companies may be able to mitigate some of these issues