enterprise IT

Rise of the Mammal: the existential threat facing traditional consultancies

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Read Angus’s thoughts on traditional consultancies below (or read on TechDay here):

Business transformations are a challenging time for any organisation. During this time of relative vulnerability, many organisations turn to the major players for help – typically one of the big five consultancies.  

Very quickly, however, many businesses experience a disconnect between what they were promised and what is delivered. Common threads in these engagements are that the large firms over-promised, overcharged, underperformed, and often did so after agreed upon deadlines. 

Since starting Kablamo, a significant portion of our business has come from being called in to clean things up in the wake of these failed projects. In fact, these engagements happen so frequently we have our own internal name for them: “Rescue Missions”.

We recently partnered with UNSW Business School to investigate why this was happening so often. The initial qualitative research, in which we sought insights from some of Australia’s leading C-level executives, uncovered three key factors that contributed to failed transformation projects.

The first insight was that the traditionally dominant players, the big five consultancies, had struggled to adapt their business models for a changing technology landscape. In decades past, these consultancies had been engaged with primarily one outcome in mind – keeping costs down. In order to do so, they standardised their offerings around a limited number of services, essentially boiling down to variations of “lift and shift” outsourcing models. 

Today, however, businesses are looking for far more from their partners. They’re seeking innovative solutions that provide business differentiation, allow them to compete against industry disruptors, and future-proof their organisations. 

Critically, these solutions must be tailored to the specific needs and vision of the client. The big five consultancies struggle with the necessary customisation, the research found, because of their focus on standardised offerings. 

While this is a significant hurdle to overcome, and is a large contributor to failed transformation initiatives, the second factor the research identified was a lack of clear communication between partners and clients. Part of this breakdown in communication was attributed to the traditional view of IT as a cost centre. After engaging one of the large consultancies in an outsource project, rather than redeploy talent to more strategic initiatives, these staff members were often made redundant. The result of this, is a deficit in the technical and institutional knowledge required on the client side to effectively oversee and manage the partnership. This is particularly problematic during the initial stages of an engagement when contracts are being negotiated. 

By setting clear standards and expectations from the start, both parties have an interest in the relationship’s success because if the provider drops the ball, the client is empowered to move on to another partner. 

The final finding from the research was that a lack of clearly defined goals and metrics against which to measure the success of transformational projects hamstrung initiatives from the outset. 

With business today expecting more innovative solutions, measuring end-user experience or business performance is much more beneficial than the antiquated 99.XX% availability scores traditionally used to measure service provider relationships.

While proper measurement is important, clearly defined goals are perhaps most critical to the success of a project. Because the large consultancies have standardised their offerings, they struggle to investigate solutions outside of their standard services. 

This is where the new breed of smaller, more nimble consultancies thrive. Because they have the freedom and technical ability to consider all possible solutions, these newer players can take the time to intimately understand the client’s vision and find the best way to deliver exactly what they need. 

Part of the problem is that the large players are unwieldy and legacy-bound enterprises themselves. Generally speaking, enterprises are inefficient, so you end up in a position where an inefficient enterprise is trying to help another enterprise increase efficiency – it’s not going to end well.

As technology evolves, and business needs with them, the traditionally dominant consultancies face an existential crisis. Unless they learn to adapt, they risk sharing the fate of the dinosaurs. In their place, the smaller specialist players will thrive – their adaptable and nimble nature will see them mirror the rise of the mammals.