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Tectonic Shifts in Consulting Land

The Arthur Anderson's motto of "Think straight, talk straight" summed up what ought to be the essence of the accounting and consulting industry. Whilst I suspect it was not universally adhered to, it helped to build an empire spanning 75 years. Now it and the whole big end of the consulting world are in turmoil.

Derek Young the MD of Accenture believes that the industry will consolidate to two to three global players with a string of struggling mid range firms. Competition in the IT area is emerging from Indian firms such as Bangalore and Tata, together 300 strong in Australia.

The self-prescribed medicine of mergers and downsizing (Deloitte's Consulting has lost over 150 staff in the last 3 months, Accenture 5% of staff over last 12 months) does not come to grips with the shifting approach of business to the engagement of external help. What the industry is failing to come to grips with are:

b1.gif (814 bytes) Clients are more interested in buying individuals and hence the high leverage model of a partner with an army of juniors where clients pay a premium price to train inexperienced staff is under threat.
b1.gif (814 bytes) The ubiquitous availability of theories, methodologies, studies, fact and figures through the net strikes at the heart of knowledge based industries and has meant that others are able to assume the mantle of
leading edge knowledge brokers at a fraction of the cost.
b1.gif (814 bytes) Big consulting companies used to relay upon their own methodologies to implement large scale IT projects. Their advantage was eroded when most technology vendors released their own technology specific methodologies to the wider market at a fraction of the cost.
b1.gif (814 bytes) The mysticism propagated through excruciatingly complex and lengthy methodologies and jargon abundant advices are perceived cynically as aimed at de-powering client and boosting fees.
b1.gif (814 bytes) Long process driven interventions with a mountain of billing hours are viewed more sceptically; Boards are increasingly demanding the use of internal resources to implement change.
b1.gif (814 bytes) The aura of safety and security of engaging the big end of town has evaporated. The media is brimming with reasons but did you know that Cisco and EDS have large stakes in KPMG and AT Kearney
respectively and that audit partners at Deloittes are handsomely rewarded for cross selling other consulting services – yes you guessed it, no conflict of interest.
b1.gif (814 bytes) Finally I bet you didn't know this, a survey released in August by Australasian Professional Services Marketing found that too often consultants have sold clients what they wanted to sell not what the client wanted and "clients don't like this".

The big-end of town is not dead, it has to live its stated ethical principals and more clearly define its niche, which appears to be large scale IT implementation, system design and implementation across borders, international strategy and benchmarking and outsourcing (a growing market).

The mid to smaller end of town is being seen now days as customised, responsive, focused, more personal and reliable. So "Live long and prosper" if you are:

b1.gif (814 bytes) Technically excellent
b1.gif (814 bytes) Ethical
b1.gif (814 bytes) Build great customer relations
b1.gif (814 bytes) Live a service culture, and
b1.gif (814 bytes) If your fee structure represents value

What Next?

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