 |  |  |  |  |  |  |  |  |  |  |  |
Should consulting be a separate business ?
'Consulting'. Sorry, did I type in an expletive? 
I have met more than a few smart and sane people, highly educated and mostly technology savvy, who would puke at the word. Emotions encountered range from a dismissive 'consultants are just gas' ridicule to a more left brained dissection of the lack of value in consulting. At the other end of the spectrum are die hard consultants who laugh equally hard at "execution" and often scoff at the lack of thought leadership in the folks who execute. The truth is probably somewhere in the middle. The last decade or so has seen tumultuous change in the industry. While the IBM's and the Accenture's of the world have focused on re-engineering their back end towards global delivery, India based vendors have focused on getting their front end up to speed. This has lead in turn to multiple flavors of 'consulting' with different organization structures to support and enable. Some companies have gone ahead with creating a separate organization while others have chosen to create consulting divisions within themselves. While there are pros and cons to both approaches, there are two important questions that come to mind while deciding on the organization structure:
-What is your core business and where do you see it going in the future?
-How do you think consulting can help you in getting there?
There are two schools of thought when it comes to these two questions. a). Offshoring is the core business, but this is getting increasingly commoditized. The only way to counter this is by investing in branding and by changing the go to market strategy for my offshoring solutions. Consulting can help change customer perception and give me the relationships that I need to drive and shape offshoring demand at the top management level. b). Offshoring is the core business, and the backend is getting increasingly commoditized. The way to counter this is by differentiating using innovation in the backend and by using consulting to drive a level of backend efficiency that my competitors cannot match. Consulting can also be used to drive the same efficiencies in the customer's IT organization that the vendor has managed to achieve.
Companies that have sought to use consulting to innovate at the backend or help clients drive IT efficiencies have adopted what I would call a "salt and pepper" strategy. A Salt and pepper strategy seeks to use consulting to augment the existing bread and butter application development and maintenance business. Consultants would get embedded into development teams and would participate in upstream activities in the development cycle; activities like requirements gathering and user experience design where a consulting approach would add value. Also certain aspects of the classic IT offshore services mix, like quality assurance have always been traditional strengths. As the industry has matured, better and more sophisticated techniques have emerged to strengthen and differentiate the core offering. Agile consulting is one such example. Vinnie brings out process consulting on both horizontal and vertical lines. Clients are showing a desire to embrace the best of these techniques to improve their own IT shops, spewing consulting opportunities around operational efficiencies and delivery processes. Sadagopan brings out the TCS point of view -"We are strong in assurance services, quality consulting, and in many other areas. We see where and when operational efficiencies come in."
Firms that have chosen to use consulting to further branding and relationships have gone for what I would call a loss leader approach. Consulting is used to expand relationship reach horizontally, beyond the IT organization and into the business side and also vertically, from the middle and senior IT management into the CIO level. The consulting business itself is not expected to produce the kind of profits that offshoring produces, but is expected to change the brand identity of the business from 'offshoring partner' to 'influencer / thought leader' and help sell the core business of offshoring at higher levels in the organization. With globalization and offshoring becoming a business driver in it's own right (as opposed to just an IT imperative), offshoring is becoming a more integral part of the corporate strategy and firms need guidance to get there. A loss leader approach also seeks to provide this level of business consulting expertise. The message seems to be 'I have a successful global IT delivery model, I can help you get to a successful Global business delivery model'. Such an approach also seeks to be a killer of the traditional business consulting model where $3000/day consultants rule the roost.
The core question of whether to keep consulting in house or as a separate business would depend largely on the extent of market and delivery synergies. The loss leader strategy would have relatively minimal synergies on both the market and the delivery side and would call for a separate organization, while the salt and pepper strategy would entail a strong dovetailing of consulting with the core business of offshoring and would demand a single organization.
I have met more than a few smart and sane people, highly educated and mostly technology savvy, who would puke at the word. Emotions encountered range from a dismissive 'consultants are just gas' ridicule to a more left brained dissection of the lack of value in consulting. At the other end of the spectrum are die hard consultants who laugh equally hard at "execution" and often scoff at the lack of thought leadership in the folks who execute. The truth is probably somewhere in the middle. The last decade or so has seen tumultuous change in the industry. While the IBM's and the Accenture's of the world have focused on re-engineering their back end towards global delivery, India based vendors have focused on getting their front end up to speed. This has lead in turn to multiple flavors of 'consulting' with different organization structures to support and enable. Some companies have gone ahead with creating a separate organization while others have chosen to create consulting divisions within themselves. While there are pros and cons to both approaches, there are two important questions that come to mind while deciding on the organization structure:-What is your core business and where do you see it going in the future?
-How do you think consulting can help you in getting there?
There are two schools of thought when it comes to these two questions. a). Offshoring is the core business, but this is getting increasingly commoditized. The only way to counter this is by investing in branding and by changing the go to market strategy for my offshoring solutions. Consulting can help change customer perception and give me the relationships that I need to drive and shape offshoring demand at the top management level. b). Offshoring is the core business, and the backend is getting increasingly commoditized. The way to counter this is by differentiating using innovation in the backend and by using consulting to drive a level of backend efficiency that my competitors cannot match. Consulting can also be used to drive the same efficiencies in the customer's IT organization that the vendor has managed to achieve.
Companies that have sought to use consulting to innovate at the backend or help clients drive IT efficiencies have adopted what I would call a "salt and pepper" strategy. A Salt and pepper strategy seeks to use consulting to augment the existing bread and butter application development and maintenance business. Consultants would get embedded into development teams and would participate in upstream activities in the development cycle; activities like requirements gathering and user experience design where a consulting approach would add value. Also certain aspects of the classic IT offshore services mix, like quality assurance have always been traditional strengths. As the industry has matured, better and more sophisticated techniques have emerged to strengthen and differentiate the core offering. Agile consulting is one such example. Vinnie brings out process consulting on both horizontal and vertical lines. Clients are showing a desire to embrace the best of these techniques to improve their own IT shops, spewing consulting opportunities around operational efficiencies and delivery processes. Sadagopan brings out the TCS point of view -"We are strong in assurance services, quality consulting, and in many other areas. We see where and when operational efficiencies come in."
Firms that have chosen to use consulting to further branding and relationships have gone for what I would call a loss leader approach. Consulting is used to expand relationship reach horizontally, beyond the IT organization and into the business side and also vertically, from the middle and senior IT management into the CIO level. The consulting business itself is not expected to produce the kind of profits that offshoring produces, but is expected to change the brand identity of the business from 'offshoring partner' to 'influencer / thought leader' and help sell the core business of offshoring at higher levels in the organization. With globalization and offshoring becoming a business driver in it's own right (as opposed to just an IT imperative), offshoring is becoming a more integral part of the corporate strategy and firms need guidance to get there. A loss leader approach also seeks to provide this level of business consulting expertise. The message seems to be 'I have a successful global IT delivery model, I can help you get to a successful Global business delivery model'. Such an approach also seeks to be a killer of the traditional business consulting model where $3000/day consultants rule the roost.
The core question of whether to keep consulting in house or as a separate business would depend largely on the extent of market and delivery synergies. The loss leader strategy would have relatively minimal synergies on both the market and the delivery side and would call for a separate organization, while the salt and pepper strategy would entail a strong dovetailing of consulting with the core business of offshoring and would demand a single organization.
Indian Business IT strategy
Linking and Sharing
If you found this page useful, consider linking to it.
Simply copy and paste the code below into your web site (Ctrl+C to copy)
It will look like this: Should consulting be a separate business ?
Trackback
Tell a friend
Prakash,
Let me begin by saying that what a great blog this is !.
First, your definition of consulting is little murky. I use offshore heavily. I have anywhere between 30 to 50 consultants
working in my group at given point of time. In most cases, they are “contractors”, not consultants. I dont consider
one thing to be superior than other. But just to get the definition right, in most cases, Indian companies are still
trying to find their ways in training their people to think like consultants. There are exceptions !. I usually rely on
the following two to consider something as consulting
1. You add some unique value that the client him/herself can not add.
2. Your boundries are somewhat broad. In the sense that it is task driven.
I think by design, in most cases offshore companies play a massive staff augmentation roles. This works against them to
play a consulting role as well.
With regards to in-house consulting vs. using external consulting, I was a huge fan of developing a team of internal
consultants who can be deployed in projects during initial strategy sessions. But I think there are two problems with
creating an internal consultanting teams:
1. Over the period of time, they become actually your core team and they may not be able to think outside the box.
2. Second, the skillset become limited. This kills the whole idea of utilizing consultants.
Keep up the good job ! (by the way, how do you find time to keep up this blog with great information)
- Selvam
Comment by Selvam Ratinasabapati — July 2, 2008 @ 3:34 am
Nice hearing from you Selvam and thanks for stopping by. Good to know you are running a
large offshore operation. I am sure we will all benefit from your perspectives. I agree that
staff aug hurts when trying to provide thought leadership through consulting.
It’s hard for a vendor to claim he can fly, when the customer is seeing him crawling
all day. I work on the blog during weekends and push out the posts during the week
when people are more likely to read. :-) Do stay in touch and do share your insights!
Comment by Prakash — July 2, 2008 @ 11:35 am