40 years (R)evolution in Consulting….!

mrt 25, 2016

Introduction

A different blog from usual. This blog covers my personal experiences in consulting over the last 40 years. It originated from relevant developments in ICT consultancy in general, from my consultancy firm’s evolution and from personal experiences. Primarily for my personal use, I charted the developments in a table. On request I’ll make this table available to interested readers and connoisseurs.

The table encompasses 3 era’s. Era I Information Technology (1960 -1995), Era II Information & Communication Technology (1995-2015) and Era III Business Informatics (2015-2025).

For each era specific characteristics on technology, system architecture and business IT solutions are charted. (pillars, based on, emphasis, realization, parties involved, success criteria, approach, pricing, planning methodology, scarcity/abundance)

Based on this foundation I made a projection of my personal experiences and the evolution of the consultancy firms I headed.

This blog (and the table) will provide an answer to the question of type of consultant most likely to be successful in the near future.

Era I: Information Technology (1960-1995)

During my studies in the 70’s I did some programming on scientific issues. Afterwards in 1980 I started in consultancy in system development and was active in the creation of custom software mostly for isolated and fairly static business applications. (solution almost entirely within the IT domain).

These applications (custom software) we were building in the 80’s were mostly determined by the technology and impact from the business was very limited. The work was done under the sole responsibility of the IT department. Our contribution was the delivery of fixed time / fixed price custom software. Offers were based on an in-house sophisticated functional analysis methodology and efficiency ratios for development on suitable platforms. Normally we provided our customers with a one year warranty on the custom software provided.

This approach highly pleased our customers  and resulted in a strong project culture within the firm. Thus IT project management becoming a highly developed form of art within the firm.

More and more business strategy was becoming  the basis for information strategy, preliminary studies, definition studies, information analysis, functional design, technical design and realization. Already at that time we were using a life-cycle cost approach for application software.

Era II: Information & Communication Technology (1995-2015)

In the early 90’s a number of mega projects were started in traditional large hierarchically organized  companies. My experiences were in the Telecommunications business, which was somewhat ahead of other branches.

The Telco’s were hierarchical companies, operating in a stable business environment, mostly used linear planning methodologies. These bureaucratic companies were organized in business lines, predominantly product- and market-oriented, self-centered and pursued efficiency, specialization, distribution of labor and use of standardized processes. Leadership, focusing on operating profit and business cases was not strong and resisted change.

The mega projects (or programs) were extremely risky. There was an overall lack of experienced capable project / program managers. The business applications specs were derived from actual business requirements, most of the work was done under the responsibility of the ICT department. Both process and IT architects were of crucial importance..

Because of our proven track record in the area of fixed price / fixed time custom software development, customers asked us to manage the Information & Communication Technology (ICT) elements in their mega projects.

After the successful completion of a number of these projects, we were also asked to assume responsibility for the business program management.

This resulted in us working together with these clients in defining their vision, strategy and business transformation portfolio. At their request we assumed responsibility for the overall management (project, program) for realizing all of the business transformation portfolio. This included all relevant process-, information-, application and technical infrastructure specification and realization. This was realized under a process commitment. (a process commitment being somewhere in between a best effort and a full commitment on  delivering results). Even in this time and age an unique commitment in the ICT consultancy business.

Era III: Business Informatics (2015-2025)

This will be the decade of disruption and exponential growth. A  world in which agile smaller players will outmaneuver and vanquish the traditional large hierarchical organizations (dinosaurs). If the traditional business cannot quickly adapt to do business in an agile way,  the entrants (challengers) will force them to do so or be exterminated.

It is an era of co-creation, of small agile, highly maneuverable companies, “well-connected & top-networked”, very much into services and individual customers (outside centric– in thinking). The customer almost being part of the primary process. The focus is on creating value for the customer. Gutsy entrepreneurship, accepting risks, experimenting and learning are part of the agile innovation model providing smart services and business models to demanding customers.

Traditionally IT-systems, processes and people within the IT office department were managed separately from the IT operations facility. The IoT puts an end to that. IoT accelerates a development in which operational IT is aligned with the information with the systems in the IT office. And vice versa. Digital technology combines and unites blue- and white-collar workers.

In this era the four main pillars for IT business solutions are: technology (e.g.: information & communication technology, IoT, cloud), Information e.g.: big data, pattern recognition software, algorithms and AI), Social media and Apps. There is an overall abundance in digital information and ICT options thus providing the foundation for exponential growth.

Nowadays it is all about entrepreneurship. Accepting risks, experimenting is becoming more and more important, resulting in agile strategy planning and agile innovation: Business Strategy & Transition Planning, Enterprise (Architecture) Engineering and Enterprise Governance. No more complicated and hard to manage mega projects. Starting points are dedicated teams and smallish software objects. In these teams business, process and IT developers are working in a continuous cycle of scrum / agile development and maintenance of both organization and supportive systems to meet the demands of the ever-changing business environment. The market / business determines the services and supportive IT, including factoring and collection.

IT strategy and the role of the CIO over time

In the 60’s and 70’s it was complicated to get IT to work at all (and to keep it working properly). Through these complexities the IT departments became more dominant. The IT director was the chief of the “engine room”. All data-processing was in and around the mainframe computer systems. And optimizing the mainframes use was key.

In the period of 1980 to 1995 personal computers and other computer paraphernalia allowed for a less centralized operation. Non IT departments and end-users went their merry way to set up their own IT shops. This combined with more decentralized IT budgeting led to proliferation in ICT operations. As an aftermath, even today’s organizations are experiencing problems in this area. Chief Information Officers (CIO’s) were firstly  introduced to regain control on the decentralized IT in large organizations.

When in the period 1995 through to 2015 a number of large complex ICT projects make the headlines by crashing, due to budget overruns, lack of commitment by user organization, and flawed project-management, the CIO is also made responsible for successful managing the larger, more complex ICT projects. The CIO becomes responsible for strategic policy, innovation, governance, project portfolio management (PPM) and business & IT alignment.

It required frameworks to be introduced in several areas, such as architecture and portfolio management. And control mechanisms to be set up for the management control. At last after a period of rationalization the CIO can start working towards the strategic value of ICT.

Most of all the CIO becomes the connector between the Business (Information Manager) en ICT (CTO / ICT manager). Within companies who seriously consider IT to be core-business, the emergence of the CIO makes the presence of more or less permanent in-house consultants from the big consultancy firms or integrators superfluousness, even undesirable.

In the 90’s strategy was straight forward. One could easily extrapolate the existing trend and determine the proper spot in the future. Around the year 2000 demand for consultancy declines, with serious consequences for a number of the big consultancy houses.

Nowadays (in the 2015-2025 time-frame) defining the right strategy has become much more difficult, but still has to be done. Taking into account a longer time-frame a proper business model must be determined. Nowadays the driving force  originates more often from the CIO (digital revolution), Technology, Information, Social Media, Apps or the customers themselves.

A crossover point has now been reached and CIOs must act as objective innovators and prove that, like no other, they understand the disruptive power of technology over the coming decade. Only by fully embracing innovation can CIO’s survive and flourish. Thus the CIO becoming the Chief Innovation Officer. This also holds true for cloud based processes and solutions. The digital revolution (technology, information, social media, Apps) impacts the consultancy landscape in an enormous way.

Consultancy bloodlines

The 80’s and 90’s were a period of intense growth in the consultancy world (especially business process redesign efforts) and the system integrators were very hard at work on the development and implementation of large complex information systems and associated interfaces.

Within the consultancy world two bloodlines may be distinguished. Firstly more technically oriented consultants, mostly organized in smaller firms, operating as technical specialist and enablers of new technology. Secondly more general consultants emerging out of accountancy and management consulting practices such as the big four consulting firms ( EY, Deloitte, PWC, AC). Most often generalists with good project management and communication skills.

Over time the technically oriented consultants have broadened their scope in the areas of project-management, business process redesign and strategical analysis.

The general consultants with their accounting and business consulting origins followed the other route. They started out as generalist, they progressed into business processes and gradually down into the underlying IT support. Nowadays their lack of specialized technical know-how may become a problem.

The large system integrators face a similar situation. The era of the huge mega projects, including a lot of additional modifications en route is over. Their business model has become obsolete. In the business informatics era it’s not about system integration, it is all about being able to come up quickly with fully working business applications.

Both general consultants and system integrators need to reinvent. Only, not all of them will be able to adapt to the era of business informatics. Both the big consulting firms and the system integrators are actively recruiting skilled technical expertise from new entrants fresh out of university and technical colleges to built up the technical expertise required in the business informatics.

The remaining general consulting firms are facing hard times. Only a few will survive, very much trimmed down. (mid-market-segment only).

In present day consulting two disruptions are evident. The impact of Big Data collection and the customer being organized faster the consultants offering their services (through yelp and other internet forums).

The big general consultancy firms have introduced big data collection and the use of automated intelligent analysis tools. The days of the traditional laborious manual data collection and analysis are over. (as it is in accountancy).

In today’s consultancy market the customers are reluctant towards expensive packaged (non-transparent) all-in-one solutions (consultancy combined with in-house application software). This is largely the result of the financial crises, the need to reduce operating costs, and lastly the increased power of the purchasing departments, who are weary of the general consultancy firms. Although the big consultancy firms have invested heavily in up-to-date knowledge built-up and branding to once again become accepted “thought leaders”, their former customers are lacking confidence.

Client Advisory consulting seems to be on the rise. Smaller efforts (cheaper) independent, highly result driven consultancy in the areas of risk management and project / program management for a number of projects. This approach requires different consulting specialist from different firms to work together in a single customer defined project. In this way consultancy is being demystified. Customers want to be in control and certainly not to pay too much. More and more individual consultants are being hired based on their specific knowledge and skill set. Customers are organizing and share their experiences through internet forums (yelpification) also in the area of consultancy. Consultants should therefore publish their accomplishments under their own name on the internet. In this manner customers seeking specialized knowledge or experience can find the right consultant more easily.

The ongoing evolution of business and IT in the business informatics era (2015-2025) hugely impacts the consultancy labor market. All consultancy firms are fishing in the same pond to obtain well skilled, well educated, highly talented personnel fresh out of university or technical college. At the same time these companies employ a large number of people who do not have the right experience, specialized knowledge or proper mind set to work in the new business environment. And quite a lot of them cannot adapt to the new stringent job demands. This results in a significant mismatch between supply and demand and results in serious pressure on the consulting capacity, which may well result in unemployment for some 80% of the sitting IT consultants in 5 years..

However ….…..Up2date specialist will always be in demand! True ICT consultants have a technical background. Nowadays to be called a nerd or geek is becoming a valuable distinction (especially in the USA).

My fresh start.

As a true blood innovator I took the opportunity to sell my old IT consultancy company so as to allow me to focus on my next challenge, the creation of a new next generation consultancy firm. A smallish firm, well equipped with a team of professional specialists, fully geared to cater to needs of business in the business informatics era. I named this firm MABS4.0.

Positioning of MABS4.0, today and future.

To share our knowledge, experiences, success, financial risks with our customers in entrepreneurial cooperation. In partnership with our customers we develop company strategy, determine healthy future proof business models and define the business change portfolio. If the customer so desires we can manage realization and successful implementation of the agreed upon change projects.

Our approach is highly output-driven. The business models (cooperation, creative thinking, co entrepreneur-ship) we use are based on fixed price, margin growth / cost reduction sharing, obtaining equity and / or providing subordinated loans. We provide services with a number of MABS4.0 certified partners.

Our MABS4.0 team consists of 10 experts with all the knowledge and experience essential for our customers business requirements (now and tomorrow). We offer experience and knowledge in the fields of technology (ICT, IoT, cloud), Information (big data, pattern recognition analysis, algorithms, AI), social media and apps.

We make this knowledge and experience available to our customers and to 5 companies in which actively MABS4.0 participates. As a minority shareholder (15% – 20%) keeping the entrepreneur firmly in control to follow his dream. These companies are  predominantly into ICT, Big Data & Data Visualization. Social selling and Apps.

At the time of writing this blog MABS4.0 is participating in “Business Strategy & Transition Plan” projects with 9 customers (2 corporate businesses, 4 Mid-size businesses, 3 Start-Ups) “Business Strategy & Transition Plan” . Our experienced and highly knowledgeable consultants will deliver in technical discussions during project execution. For the “Business Strategy & Transition Plan” projects we use a cafeteria model so as to be able serve them to their specific requirements.

All this in the context of our challenging Mabs4.0 Mission Statement:

“Smiling and Proud Customers, Loyal to our Brand. Because we Think our Customers Business and Create Value. By Providing World Class Business Services”.