SMART COOKIES: Who needs consultants? - With e-business changes bringing disruption, outside advisers are now called on more than ever Who are they and what do they know?

SMART COOKIES: Who needs consultants? - With e-business changes bringing disruption, outside advisers are now called on more than ever Who are they and what do they know? - Why do I need consultants? I hate them.

by ANDREW WILEMAN, a strategy and organisation consultant; e-mail:wilemanae@aol.com
Last Updated: 31 Aug 2010

Why do I need consultants? I hate them.

Everybody does. Take your watch and tell you the time etc. Charge you for a three-month Phase I then give you a report telling you how much Phase II will cost. Put in a team of 22-year-olds to advise the CEO. Tie up top management for days in 'culture change' off-sites.

But they just keep on growing, like Topsy. The biggest consultancies employ tens of thousands of staff worldwide (PriceWaterhouseCoopers now has 160,000 on the payroll), and they've been growing at 15%-20% a year since the early '90s. If they're growing, someone is buying more and more of their services - and if you're a senior manager in a big enterprise, that someone is probably you.

It's true. I admit it. But why?

It's the accelerating pace of change, with technology and the internet penetrating and disrupting everybody's businesses. There isn't time to build all the expertise you need in-house. The talent is getting ferociously expensive to hire full-time and is in short supply. The stuff you need to know is way outside your traditional areas of competence - it's about e-commerce platforms and CRM software, or bandwidth and WAP, not brand strategies and just-in-time logistics.

The competitive landscape is changing faster than ever. The number of potential JVs, partnerships and acquisitions you need to look at multiplies.

Your customers or suppliers could become competitors, and vice versa.

And you aren't even sure what market you're competing in today.

Consultants may get it wrong as often as they get it right, but you've got no choice. You have to get some leverage, fast.

Which consultancy does what - all their ads talk about 'empowering e-business visions' etc. Can you give me a road map?

Let's stick with e-commerce, the consulting hot-spot du jour. In the heavy-hitter league, there are two groups from the old economy, and a group that's ridden in on the internet wave.

The first old group is the established IT and operational consultancies and systems integrators, including some with a big IT outsourcing business.

Leaders here are Anderson Consulting, CAPGemini/Ernst & Young, and the remaining consulting bits of the other old accounting firms (PWC, KPMG, Deloittes), plus CSC, EDS and the consulting side of IBM. This bunch do big, multi-stage IT projects. They do e-commerce, but they aren't e-commerce specialists, and are not seen as leading-edge. They don't really do business strategy, or not well - and they don't do much on the creative side of web design.

The other old group consists of general business or strategy consultants like McKinsey, Bain and BCG. They do business strategy, organisation and project management, and they do it now very much in e-commerce, including acting as project managers for setting up dot.com divisions in bricks-and-mortar businesses. They've also all set up their own e-commerce incubators, partly to keep their talent from defecting. They don't really know much about technology or creative design.

How about the New Wave consultancies?

This is a new bunch, set up in the past five years, focusing mainly on e-commerce and new technologies and offering a mix of business strategy, creative design and IT/technology. Hot leaders here are: Sapient (getting the best market and customer ratings), Scient, Razorfish (a 'creative'), Proxicom and Viant. Others are not as hot but have equally strong revenues and client bases: MarchFirst (formerly USWeb/CKS), iXL and agency.com (another creative).

Most of these firms are US-based, now with global coverage, but there are strong contenders in Europe, like PixelPark and IconMediaLab. Their revenues are small compared to the other groups, but they are all growing at 100%+ year-on-year. In new-economy style, they have all IPO'd and now trade publicly - unlike many players in the other groups, which remain private partnerships.

How much are they going to charge me?

Let's assume an average charge per professional day (which averages out staff from junior analysts up to senior partners). A strategy firm like McKinsey might work out at dollars 3,000-dollars 4,000 a day; a hot e-business firm like Sapient or Scient, dollars 1,500-dollars 2,000; and an established IT firm like Anderson around dollars 1,200.

I'm in shock. That's it, I'm going cold turkey.

You're in denial. Learn to love your addiction - and search for the consultant inside yourself.

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