Business Consultancy in IT Services: Strategies for Success: Industry Report

Business Consultancy in IT Services: Strategies for Success

Product Type: Market Research Report
Published by: Ovum Plc
Published: March 2007
Product Code: R464-498

Description

In the 1990s, the business consultancy practices of the majority of the Big Five accountancy firms (Ernst & Young, PwC Consulting and KPMG) were sold off and snapped up by IT services companies, all eager to add business acumen to their IT portfolios; or in the case of Arthur Andersen spun off to form a new consulting and technology services organisation (now called Accenture). Since then, Capgemini (Ernst & Young), IBM (PwC Consulting) and Atos Origin (KPMG) have endeavoured to get the most value from their acquisitions. In response, their IT services company peers, such as LogicaCMG and EDS, have sought to build up business consultancy capability from the ground up. In parallel, the pure-play business consultancies have continued to offer standalone advice, often in competition with the IT services players, while also seeking to gain some revenue stability from longer-term engagements. This market activity has resulted in business consultancy playing an increasingly important role in the IT services market.

This report analyses the role of business consultancy in IT services and answers key questions such as:

What is business consultancy? And what is the relationship between business consultancy and IT services? Can IT services companies offer advice of the same quality as the pure-play business consultancies? What type of business consultancy should IT services players undertake? Should IT services players with consultancy capabilities effect enterprise-wide business change amongst their clients? How should IT services firms manage their business consultancy organisations? Should they claim to be neutral? Should business consultants be rewarded for pulling through revenues for the core IT services organisation?

The report draws on interviews with representatives from the client community, both commercial and public sector, and the supplier community, both IT services companies with ‘captive’ business consultancy capability and pure-play business consultancies. These interviews were undertaken during February 2007.

Table of Contents

Executive summary: The role of business consultancy in IT services; Recommendations for IT services suppliers; Recommendations for consultancy buyers
What is business consultancy?: Business consultancy versus IT consultancy; The hierarchy of business consultancy
The competitive landscape: Pure-play consultancies: search for revenue stability; Captive consultancies (owned by IT services companies): building business consultancy capability
The role of business consultancy in IT services: Tactical business consultancy: the norm for IT services; Enterprise business consultancy: unusual in IT services firms; Pure versus bundled business consultancy
The limits of business consultancy in IT services: Restricted by skills and expertise; Restricted by ‘brand permission’
IT services companies and neutrality: Is integrity a substitute for neutrality?; Should technology neutrality be an issue?; To reward or not to reward?; The importance of reporting lines
The future of business consultancy in IT services: Business consultancy will remain an important part of the IT services landscape; The heritage of companies will remain an issue for clients; The brand revival won’t make much difference; IT services companies should ‘specialise, specialise, specialise…’; ’Second tier’ pure-plays will struggle; IT services companies must prepare their consultancy practices for the downturn; Big Five ‘inheritors’ will struggle to get back upmarket
Recommendations for IT services companies: Tactical and enterprise business consulting; Organisation and governance issues; Branding and marketing; Preparing for the future
Recommendations for consultancy buyers
Table of figures: Figure 1 Supplier and user views on the relationship between business consultancy and IT consultancy; Figure 2
Ovum view: Figure 3 Operational consultancy: the use of business and IT consultants; Figure 4 Business consultancy: the competitive landscape; Figure 5 Characteristics of tactical consultants versus enterprise consultants

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