The market prospers but IT services consulting must still continue to evolve - productized services look set to shape the future. Lisa Hammond, CEO, Centrix writes.
A recent study by IDC (Worldwide IT consulting 2006-2010 Forecast: IDC), shows that spending on IT consulting is set to become an area of increasing vendor focus and innovation with spending expected to increase at a rate of 5.4 per cent over the next four years. By 2009, the EMEA region will host the largest market for IT consultancy spending, a position currently occupied by the Americas.
While the anticipated growth is promising, the industry's re-emergence from what IDC describes as: 'a somewhat prolonged period of stagnation', does not mean consultants can relax and enjoy the steadily increasing growth rates predicted over the next four years.
Consulting companies have to evolve their services to meet the changing requirements of organisations.
Within every market sector, businesses are facing the pressures of ongoing market uncertainties and the need to comply with changing government regulations.
Aging infrastructures, higher customer expectation and finding innovative methods of cost control while still improving services have become the motivating factors to spending decisions concerning IT consultancy services.
Reducing operational and capital expenditure, mitigating risks and installing IT infrastructures that enhance core business have become increasingly important to organisations as budgets are forced to provide faster and greater return on investment.
In the 24x7 on-demand business world, the ability to respond dynamically to opportunities is no longer a luxury but a necessary requirement.
Mergers, industry regulations, unanticipated customer demands and new competitors mean computing resources and consultancy have to be deployed in a flexible and scalable manner.
The growing popularity of smaller, specialist independent consultancies is evident as companies are attracted to the more flexible contracts and the greater guarantee of returns often delivered by such providers.
Larger service providers have been criticized for not being wholly independent – would a large consultancy with an outsourcing division recommend a client does not outsource?
Or would they even advise only a small project was required? Inefficient and inflexible consulting contracts will not meet the needs of today's IT organisation, and as such, smaller players have forged a niche in the market, providing flexible and bespoke solutions to companies' project goals.
Aligning IT with business is vital for organisations to succeed in today's business climate. Investments must be justified in terms of enhanced business performance and CIOs are under increasing pressure to ensure their decisions are in synergy with the overall corporate strategy and culture.
Once relegated to a subsidiary role in the organisation, IT professionals are now politically involved in the development of strategic initiatives and must acquire an understanding of their business’s mission and goals to ensure IT is aligned with the corporate direction.
At the same time, organisations have to maintain control of IT systems to ensure they are getting real value for money and it is often necessary to make specific systems or processes deliver ROI very quickly.
For example, an organisation may need to increase the security of its application delivery, launch new products or services, provide partner and customer access, enable workforce mobility, consolidate servers and applications, utilize offshore processes or create a shared service platform in a relatively short period of time
IT consultants have to deliver services that allow companies to respond to external change and enable them to shape their IT organisations to accommodate business direction. At the same time organisations need IT systems with the flexibility to adjust to global and economic market shifts, incorporate the latest technology and deliver personalized services – but on a manageable scale.
Alliances, mergers and partnerships have to be accommodated more quickly to keep up with the speed of business growth. With this in mind, organisations will also require a more flexible way of engaging with external consulting.
The Financial Times recently reported on a move by IBM to 'productize' its IT services offerings, outlining the company's plans to bring traditional product disciplines to its services business and overhaul the way its IT services are designed and sold.
This move signals a current change that is happening in IT consulting. Centrix earlier this year launched the first pay-as-you-go consulting service, designed to provide organisations with more flexibility and guaranteed return on their consulting investments.
Such an approach goes against the grain of traditional IT services consulting, which often involves drawn out contracts that customers are locked into and has resulted in many high profile project failures.
For IT services, pay-as-you-go consultancy provides a solution that allows companies to deliver business services faster while maintaining maximum control over IT infrastructures. Productized services with the ability to deliver rapid return on technology investments will shape the future of IT consultancy.
Consultancy services that are delivered a project at a time are more successful and more measurable than large contracts and can even become self-funding. Furthermore, adopting a pay-as-you-go subscription model for IT services consulting will allow companies to develop their IT infrastructure in line with budgets and internal plans while providing a guaranteed return on investment.
Subscription-based IT consultancy packages offer a completely scalable, low-risk approach to technology provision allowing companies to access the applications and information as and when it is needed. This methodology will reduce costs through tried and tested, repeatable solutions that can be tailored to individual requirements but which avoid the need for a costly, custom built solution.
Further benefits include mitigating risks and increased revenue as a result of reducing time to market of new products and services, accelerating the revenue stream and creating competitive advantage.
Using this approach, organisations can utilize specific areas of IT consultancy, such as service delivery, application processes or business engagement when required, responding to real-time business problems rapidly instead being restricted by long and inflexible contractual obligations.
These services could be scaled even further so companies not only pay for a specific area of consultancy, but to how many employees they wish to have access to these services at any given time.
Financial services provider Scottish Widows recently used this type of subscription-based consultancy model to provide remote office service to a third party organisation. Within six weeks of commencing the programme a pilot was launched and the service is now live.
Using secure access for everyone (SAFE), a pay-as-you-go consultancy service from Centrix, the financial services provider was able to utilize a number of key best practices to install an off-site office as well as saving money in the process.
Scottish Widows has recently partnered with Virgin to provide insurance services under the Virgin brand and also used the service to support the deployment of key applications and infrastructure assets to Virgin in rapid time.
As the business world evolves, size and scale have made way for speed as the new wealth indicator. Success is measured by how quickly you can adapt to the ever-changing environment rather than the size or stature of your company.
IT is playing a key role in this evolution and it is vital for service providers to tailor their products to this changing market. Lengthy consulting agreements where ROI is difficult to calculate and development is hard to manage will need to be replaced with more compliant systems. Offering CIO's the chance to utilize the specific type and amount of IT service consultancy they need is vital.
This article first appeared in ITNOWextra in September 2006.