Insights & Ideas

How Advisory Firms Can Survive The Stormy Clouds

Advisory firms including system integrators, management consultants and professional services companies that have made money by selling, implementing and supporting the deployment of technology, are in for a tough ride. 

The days of big ticket fees are fewer and fewer as business and technology leaders move to the cloud.  The most common consumption model for technology is software-as-a-service (SaaS), which many have talked about for years but did not implement at an early stage.  It’s only in the past couple of years, during tough economic times when budgets are tight, that companies have actively embraced SaaS. It’s now the predominant way  for enterprises to access and utilize the best business applications.

According to Gartner’s estimation, $149.9 billion will be spent on enterprise application software in 2015 with "the majority" of it going towards modernizing, replacing or extending existing business software using SaaS. Why? Because it’s affordable and easier to use than traditional, on premise application acquisition and management models which often required a lot of deployment time.

What does this trend mean for advisory firms? It requires quick action.  It also requires new thinking that usually only come as a result of life or death decisions. 

If you have lived off the complexity of technology, helping enterprises select, deploy and maintain a plethora of enterprise resource systems and other mission critical business applications, then it’s time to have a reality check.

Don’t get me wrong. There will always be a need for building and integrating technology.  It’s just that these deals are increasingly fewer and smaller in size.  So, what are leaders like you to do?  Look for other ways to make money – and it starts by changing your traditional, transactional models to one that is based on recurring revenue.  This won’t be easy, but it’s possible. It’s also exciting because 90% of business leaders are not doing what you’re preparing to do here. 

Here are a few ways that cloud computing, delivered as a service, can help, not hinder, your future growth.   

  • Seek efficiencies. Everyone is rightly talking about the value and importance of analytics. However, most data, if it’s not in the source system, is typically in an Excel document used by analysts to investigate on behalf of consultants. This is often a manual and slow process that can be improved on especially when your customers want more insight that can’t be captured in Excel.
  • Monetize data. You’re probably sitting on data that isn’t be used to its full potential. Have you collected KPIs, benchmark information or other interesting data that could be used by a decision-maker sitting in the finance, procurement or marketing departments? If so, why not license this data and offer it as part of a subscription?
  • Create intellectual property. No doubt, you have created IP. It could be in the development of a dashboard or solution. Why not go for scale and bring your knowledge to a bigger market such as through a ready to use business app?  In doing so, you’ll not just create more brand awareness by showing the world you’re innovative, but you’ll also create recurring revenue by selling your app on a subscription model. 
  • New value added services.  Every organization, big and small, is affected by technological change rippling through industries.  This opens up a number of opportunities for you to offer soft skill services, from advising on the creation of new business models, developing technology roadmaps through to change management.   Underpinning these services should be an analytics layer that guides your consultants. 

In my next blog post, I will go into greater depth on each bullet point, providing more helpful examples. 

 

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