As consultants we all know (and enjoy trotting out to our clients) the old adages about the state of the taps in a plumber’s house and the state of the shoes on a cobbler’s child. It allows us consultants to open up transformational conversations with our clients based on their nagging fear that they may be missing a trick and be falling behind the competition. However, as part of a global industry that has enjoyed almost continual growth for the last 50 years and is now busy helping the world adapt to the new “digital realities” the irony that our own core business model has not changed for 50 years is seemingly lost on us.
Yes in some cases we’ve lengthened our “value chains”, moving away from advice and process reengineering to providing deep IT system integration skills and capabilities and in some cases provided outsourced capabilities to our clients too, and yes it is true that in the last 20 years we have had to source those capabilities globally, but, the actual consulting part of the value chain – advice and process change – has seemingly remained unchanged. Or has it? Surely our own consulting business models are virtually untouched by Web 2.0 and our businesses continue to survive and thrive?
My belief is that actually a quiet revolution is taking place in the world of management consultancy and the last people to realise it are, of course, the consultants themselves. So what exactly is this revolution?
Imagine a typical challenge given to say an HRD from the CEO at any time over the last 50 years. “We are not delivering on our promises to manage the performance of our people – fix the performance management system”. 20 years ago the HRD sets up a team to explore the challenge and may well have ended up buying support from a management consultancy to map and reengineer the performance management process. Today the HRD’s first instinct is to look at what pre built software packages are available as either additions to their ERPs or as standalone web hosted solutions. The role of the management consultant as process reengineer is gone. The process is already optimally engineered based on global best practice – all that remains is to configure it to that client. The consultant may provide some minimal procurement advice on which package to buy and maybe a bit of configuration support but that is all.
So is HR typical – absolutely - all across the back office (HR, Finance, IT, Procurement) the process reengineering is now the domain of the software providers. And now the really scary bit for consultants – now the back office has been “owned” by the software providers they are now looking to make in-roads into the middle and front offices – picking off process after process and offering it all to the client via a Web 2.0 solution. This effectively removes the need for management consultancies as engineers of process. So is the solution to head back to the heartland of “advice givers” – ironically if there is one thing we know that Web 2.0 can deliver it’s the experiences of others at speed – and we are now seeing new model consulting websites springing up to “crowd source” real solutions to very real business problems at a very interesting price point.
So why are the consultancies not collapsing faster when their heartlands are eroding – ostensibly two key reasons – firstly organisations are still undergoing huge amounts of organisational change and are still looking for large quantities of flexible and bright, capable resources to augment their own staff teams at a price point that only large quantities can render profitable and secondly the Web 2.0 capabilities are still not seen as honed enough by the baby boomer CEOs to replace sage experience and advice. However, as the X’ers and Y’ers take over in the boardroom and Web 3.0 (the Semantic Web) takes hold then expect the cost of sage advice to plummet too.
So what is the future for management consulting – in my opinion – it is an industry that needs to have a serious look at its own taps or shoes and invent a new business model or very, very quickly it will be rendered obsolescent by the very same technological tsunami it seeks to advise its clients on.
