Dallas, we have a problem: Advisors struggling to deliver Expertise-as-a-Service

January 31, 2015 | Phil Fersht

The IT and business services industry is now navigating unchartered waters, where the common challenge for today's enterprises is simple:

"How can we design our businesses and operations to run more effectively, so we're geared up to get ahead of our markets where technology is increasingly at the center of our business universe. How can we understand data to respond to our market needs, and how can we be smarter and more creative about how we operate and go to market?"

The answer is pretty straightforward, really - go get the help you need to be this effective, whether you hire it, retrain what you have, outsource it, or simply buy on-tap consultative expertise.

We've recently discussed the fact that many service providers are struggling to find this talent, while many buyers also need real help to access business-relevant skills.  So let's now look at the great intermediary which can readily plug those talent gaps for a paltry $500/hour... the consulting firm.  Surely these MBA-qualified guys and gals have these skills in spades for the needy enterprises ready and willing to pay for them?  Let's see what came out of our soon-to-be published study, conducted with KPMG, that covered the views of 492 industry stakeholders, which included 154 advisors discussing their major challenges:

Click to Enlarge

Dallas, we have a problem: Over half of today's advisor shops are struggling to upskill their existing talent

This, to me, is the greatest cause for concern in our industry.  Consultants are supposed to be like doctors - they need to use the latest tools, methodologies, technologies and knowledge at their disposal to help their clients.  They are supposed to be trained to stay ahead of their fields of specialty to push their clients to perform at the peak of their abilities.

However, when two thirds (65%) of consulting firms are struggling to hire in business-relevant talent and 54% of them upskilling what they already have invested in, then, Houston, we have a problem.  Or should that be "Dallas", as that's where most of them seem to stem from these days :)

Unspectacular outsourcing deals have created a negative mindset from enterprises towards advisors

Another area which our recent study fleshed out was the fact that two-thirds (67%) of advisors are tarnished by the fact that enterprises are reeling from feeling let down by their outsourcing experience - the very experience advisors previously developed their reputations selling. Why call the doctor for more help after they offered bad advice the first time around?

Advisors need to address their own talent crises as aggressively as their clients and the service providers need to. Too many entities in our industry are still living in the good old days, where providers and advisors got fat and happy feeding off the old scale beast of global labor arbitrage and cranking transactions. Those days are fast running out and a slimmer, fitter advisor is required which can roll their sleeves up and help their clients get ahead of their markets.

The Bottom-line:  There is a massive opportunity for those advisors which can reinvent themselves to deliver "Expertise-as-a-Service"

Here are some potential steps advisory firms can take to broaden their skillsets and business relevant to enterprise clients:

Stop hiring so many average consultants who "know the process".  The science of running operations at scale is a commodity skill-set these days.

Stop hiring so many consultants who "know Big 4 culture".  The amount of times I have seen the Big 4 shops only wanting to interview candidates who have experience of the Big 4 legacy way of doing things is depressing.  These guys will never change if they don't have the courage to diversify their talent mix beyond the white shoe brigade.

Stop hiring so many white-haired grizzled IBM and EDS veterans.  The outsourcing business will forever be stereotyped by these individuals if we can't break from the old school meeting-room negotiator jockeys, whose focus on number-crunching scale deals is a million miles from any genuine "business transformation".

Start hiring practitioners.  People who really understand process and how to enable it more effectively with better technology are generally found on the buyside - people who live and breathe this stuff. And many of these people are not particularly well paid and may relish the increased salary and alternative career path.

Start hiring more millennials. People who have grown up in social media and mobile technology who can adapt their digital minds to the consumerizing needs of the enterprise.  Yes, a challenge in today's enterprise model, but when you need to be expert on digital transformation and as-a-service technology, you need people who have this embedded into their DNA.

Change (somehow) the old $500/hour legacy consulting model to "Expertise as-a-Service".  Just like the outsourcing FTE model, this needs to change and the focus must shift to outcomes.  Start figuring out how to leverage virtual expertise-on-subscription models for clients, where they can pay for annuity-based relationships that are affordable, scalable and "as-a-service".  Research firms already service most their clients on these types of models, however, many fall short by lacking the right mix of experts to support clients and rely on drive-by consulting to get through the day. Smart consultants can change all that.

In short, this is all about the advisory industry getting ahead of the shift to the As-a-Service Economy, by adopting more "As-a-Service" delivery themselves.  Again, it's about shedding the bad habits picked up on the 90's and 2000's and making the brave changes to invest in skills, more than just scale.

Posted in: Analytics and Big DataBusiness Process Outsourcing (BPO)Buyers' Sourcing Best Practices

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1 Comments

22 Comments

  1. Stan
    Posted Jan 31, 2015 02:20 AM | Permalink Reply

    All the talent has gone elsewhere. The glamour and glory is gone. All the big brains are bragging over big data BPO. The future of the market rests upon the shoulders of boutique research consultancies creating crowdsourced comeuppance to the vested interests and vice of the vested legacy handmaidens.

  2. Deborah Kops
    Posted Jan 31, 2015 03:24 AM | Permalink Reply

    All good comments, Phil, but i think you missed one point. A good consultant is a servant, with an always on lifestyle, leading from behind, doing whatever it takes. Expertise alone is insufficient; good consultants can't always be trained. In short, it's IQ and EQ.

  3. A victim
    Posted Jan 31, 2015 05:45 AM | Permalink Reply

    My favorite: career consultants who talk down to me because they know what's on the 2nd half of the third worksheet in Schedule Q-43 of the world's longest contract they intend to leave me to manage with a vendor account team that never saw the proposal or contract. This of course was after they led my newbie-to-outsourcing CXO through India on a ceremonial dog and pony show to make the decision on vendors because the crap 6-month RFP left us with 7 gigantic piles of bullsh*t copy-and-paste proposals- and we couldn't tell the difference among the mountainous 8" binders sitting at the table during decision time. They all looked the same. Size, location, list of clients, accelerators, pricing, SLAs, etc. The winner was probably picked based on the cleanest Mercedes 600 series that chauffeured my CXO through some Indian city's slums to the best non-Indian restaurant.

    I don't expect my advisors to know anything except how to tell my boss the deal we got is the best thing ever.

    Eh, it probably doesn't matter because the next advisor will tell my future new boss the contract and vendor is cr*p. Or that I mismanaged the whole deal. AKA, "Any idealistic crap that sells a renegotiation"

    Rinse and repeat.

    (Facts changed to protect the guilty)

  4. Srinivasan
    Posted Jan 31, 2015 10:05 AM | Permalink Reply

    Well, you cannot have expertise on business processes with millionail generation. Not blaming the this generation, but the previous ones. Current generation has not seen large scale manufacturing or service as first hand experience as the manufacturing and services jobs have been sent to East and South East.

    Current gray hair from IBM and EDS are fortunately available to help as they were the, perhaps, last generation who have seen not only business processes but also several transformation and adoption of newer technologies.

    The main reason for challenge of not having people with 'Expertise' is because everyone is trying to invent technologies (often pseudo technology) and new business models draining economic resources.

    One really need enterprises like IBM to truly find a way to suitably adopt new technology for business value, which is why enterprises like IBM existing over 100 years, continually adapting to changes and transforming.

  5. Phil Fersht
    Posted Jan 31, 2015 06:50 PM | Permalink Reply

    @deborah - you hit on an interesting point that it's very hard to train consultants - some skills can only be developed through real experience. But that means we don't have enough people getting that experience to fill the needs enterprises have today. IMO this means the model needs to change to "scale the skill" in a different way. I may not have the whole answer, but I do believe it's about looking broader than "traditional" channels for the breed of consultant that can be effective for the complexifying (or, in many cases, simplifying) needs of clients. Clearly the old MBA model isn't pumping out the right talent into the industry fast enough (or traditional MBA programs aren't developing the right skills and approach for the modern business). And many of today's consulting firms are still persisting in developing their talent for the old model, not the emerging one.

    We also need to look at the big picture - many clients today seem to be in the challenging state of not having the right mindset or skillset to change how they operate, and seem to be stuck on a treadmill of inadequacy. This may simply be because their real need is to automate processes better, slim down reliance on manual labor and get to outcomes quicker and less painfully. This ultimately means the pie is shrinking - less jobs for the clients and less of the "easy money" for consultants to milk with operational exercises. The only way forward is for both sides to absorb some pain to get to a position of growth and increased effectiveness - investing in better technology, automation, process transformation on the client side - and the consultants investing in the right talent to help the through this. This happened before the old wave of labor arbitrage in the 90's/00's where clients refused to change, and ultimately they were pushed down the outsourcing path to change the game. Now the next path is automation and as-a-service digitization of the enterprise, and the current mob of enterprises and consultants are falling short with the talent (and burning platform) to get there.

    Sunday thinking =) PF

  6. Phil Fersht
    Posted Feb 01, 2015 04:19 AM | Permalink Reply

    @victim. You nailed it buddy :)

  7. Phil Fersht
    Posted Feb 01, 2015 04:20 AM | Permalink Reply

    @srinivasan - you work for IBM, I assume?

    PF

  8. JD
    Posted Feb 01, 2015 04:36 AM | Permalink Reply

    The first step to address a big problem is to break it down into small challenges. Unfortunately our nascent big data capabilities trick some organizations into thinking they can effect change at ground level using only "systems" investments made at 10,000ft.

    That technology induced myopia is compounded by a presumption of uniformity wherein most organizations "assume" that each VP, Director, Supervisor, and Team leader is equally capable of and willing to introduce change. This creates the double bind of an inflexible solution set that is never fully embraced by variably committed stewards. Worse yet, initiatives beyond those two axes are completely starved because all resources are consumed.

    I agree that "Expertise-as-a-Service" (EaaS) can be part of the solution and I have seen the results first hand when unheralded subject matter experts within a group can get a helping hand.

    Specifically, every organization is sprinkled with some quantity of people who are willing and able to innovate. The curse is that they may not be in slots where innovation is their primary responsibility. Moreover, their insights may also require a "catalyst" of some kind; a non-standard interface, an unusual relationship, software, or other piece part that is not in the default toolkit.

    Delivering that catalyst timely to innovation possibilities as they arise is the challenge that EaaS can address, and one that benefits from it's own 10,000ft "method" investment with executive level sponsorship of autonomous group initiatives.

    I can speak from experience that once this type of resource it made available, the "motivated" will seek it out and compete to get their initiatives on the list. When they do, the end result will be a series of targeted collaborations between the sponsoring initiator and the enabling catalyst with "scale the skill" occurring on multiple fronts. As important, shared services can come to represent a vast pool of proven methods as opposed to a monolithic subset of technologies.

    Thanks for the Sunday drive Phil ;-)

  9. Ankur Mithal
    Posted Feb 01, 2015 02:28 PM | Permalink Reply

    “How can we design our businesses and operations to run more effectively, so we’re geared up to get ahead of our markets where technology is increasingly at the center of our business universe. How can we understand data to respond to our market needs, and how can we be smarter and more creative about how we operate and go to market?” Is this not the existentialist challenge that has existed for all enterprises, since time immemorial? Including the KPMGs. While they go around telling others how to run their business, they are at equal risk of obsolescence. Hire smarter, hire cheaper but with the same impact, move to as-a-service, reduce people reliance, etc. are what, in my view, a business tries to do ALL THE TIME. What ARE you suggesting?

  10. Phil Fersht
    Posted Feb 01, 2015 08:32 PM | Permalink Reply

    @Ankur - there's a big sea-change with how enterprise operations execs need to shift their focus from "scale to skill" (read earlier) - which also trsanslataes into "from inputs to outputs", or "from FTE pricing to outcomes and gain/share". Most of today's consulting firms are still geared up to to earn major billings from their clients by having MBAs drawing up process flows in Vizio, documenting huge SLA binders, managing ridiculously over-engineered vendor down-selection procedures, conducting painful process reviews etc. It's clear they are struggling to bring in talent to help with managing new-tech / analytics tools, investigate RPA and cognitive computing, digital needs and "real" transformation and operation re-design. It's the trajectory of change that is creating this talent pressure-cooker situation that will only exacerbate unless there are fundamental changes to how consulting firms develop and deliver their capabilities to clients. Moving more to an EaaS model is where we need to go with this...

    PF

  11. Anon client
    Posted Feb 01, 2015 08:44 PM | Permalink Reply

    Brilliant. I actually had a (Dallas based) consultant tell me that they knew that the deal that they advised their client on was bad but they also knew that would be around to help fix it.

  12. Bill Huber
    Posted Feb 02, 2015 04:37 AM | Permalink Reply

    Those sourcing process experts? We jokingly refer to them as "transaction jockeys", and there are still a lot of them floating around in the industry. They are absolutely awesome if you want to lock in a tight "lift and shift" contract with a legacy tier one ITO provider, but they hardly "Challenge the Future" (our tag line, but you know that... :-)) The advisory industry, like any industry, won't transform overnight but at Alsbridge, we have been adding the talent that will take us into the future for some time.

    Fundamentally, we believe that greater value can be obtained from sourcing than we often see in current models, and we are having a great time taking sourcing to the next level, built on innovation, collaboration, sustainability and long term value creation. While we happen to be headquartered in Dallas (by the way, which is in the heart of the state that is creating more jobs than the rest of the country) we are not your father's Sourcing Advisor! :-)

  13. Phil Fersht
    Posted Feb 02, 2015 08:34 AM | Permalink Reply

    @Bill - you guys seems to have been on a hiring spree lately... does it help being more nimble and less huge in size to make adaptive changes to your client needs?

    PF

  14. Bill Huber
    Posted Feb 03, 2015 05:24 AM | Permalink Reply

    It's always a challenge to stay nimble once you get big. We'll certainly be focusing on navigating between Scylla and Charybdis as we grow, but the key is always talented leadership, as talented people won't stay working for anything less.

  15. Phil Fersht
    Posted Feb 03, 2015 05:58 AM | Permalink Reply

    @Bill - excited to see your new RPA focus and the range of services you are pushing out there. And always great to see you enjoying yourself =)

    See you at SIG?

  16. Andrew Burgess
    Posted Feb 03, 2015 02:23 PM | Permalink Reply

    Some great points @Phil (although I don't think we are worthy enough to be compared to doctors!). I do agree strongly with @Deborah on the other skills that outsourcing advisors must have. From my own experience, there is too much emphasis on outsourcing 'subject matter expertise' and not on the wider 'management consultant' skills, such as building rapport, empathy, communicating well, and having the ability to understand, deconstruct and formulate solutions quickly and effectively. These skills are required by all management consultants and are just as relevant in the sourcing world as everywhere else. Most of the subject matter knowledge can be stored and accessed from within the firm's DNA, but being able to engage effectively with a client has to come from the advisor's own DNA. That's where the focus on talent should be.

  17. Phil Fersht
    Posted Feb 03, 2015 06:40 PM | Permalink Reply

    @andrew - agree strongly about the 'management consultant' skills, but, from my perspective, there are tons of these people roaming around, with little depth of knowledge beyond being a good corporate politician and great conversationalist. During my consulting days, my senior partner said to me, "Phil, you're a good consultant, but you're a really good analyst. There are thousands of consultants out there, but not many good analysts". He helped me with a very important life decision (without probably even realizing it)

    PF

  18. JD
    Posted Feb 03, 2015 10:56 PM | Permalink Reply

    @Andrew - Your last comment reads like a must take graduate course synopsis instead of a blog post when it posits that organizations are like organisms with a universe of possibilities at the intersection of it's own DNA and that of each participant.

    This seems a meaningful analogy because successful organisms regularly interact without complete knowledge of one another's environment. So a genuine "management consultant" skill is to avoid wasting time assimilating ALL process knowledge and to visualize solutions through the customer's experience. Conversely, a successful customer is willing to forego analysis paralysis with every suggested method before considering application.

    That is what a good analyst does, architect a recombinant DNA solution using their own methods merged with the customer's subject matter expertise such that it invites deployment.

    The major challenge then is one of prior art. If either party is responding to a contemporary challenge with dogma or a tool set limited exclusively to prior art then - correctly - one or both of those parties will resort to "going through the motions". Extending the DNA analogy, many suggested changes are not sufficiently evolutionary to improve survival and so they are resisted.

    Simply stated, resistance to change gets a bad rap. Sometimes it is mistaken for an absolutely defensible rejection of a minor resolution that will nonetheless require a major commitment. Honestly, what organism will not willfully pursue a greater chance of survival through targeted and timely advantage.

    So the necessary "talent" is an ability to visualize and explain these DNA solution strands using EaaS coupled with contemporary tools and methods; and increasingly to actually synthesize them in a real-time union with their customers at comparatively low risk.

  19. Peter Allen
    Posted Feb 06, 2015 12:37 AM | Permalink Reply

    Phil;

    Another appropriately provocative PoV. Nicely done.

    My thoughts in response mirror those also posted here. Advisors/Consultants, like every other profession, are people who are informed by their own life experiences and world view. It's a basic truth. We rely on past experiences as a way to channel our advice and guidance towards the problem of the moment.

    If a 200-page form contract worked last year, it ought to work today. Right?

    Tectonic change of the magnitude that is occurring today will shake many foundations. You've rightly written, as have I, that many of the legacy service providers aren't fit-for-purpose in the new world order. I'd offer that many buy-side companies are similarly afflicted. They hold onto past operating practices for far too long.

    Can the Advisor world be any different?

    It will take an enlightened new breed of buy, provider, and advisor to achieve relevance in the market ahead. And, the people in those roles will have lived through the shaking of their ground in ways that are profound and life-changing. There's nothing like a few near-death experiences to convince you that it's time to move.

    Training is nice, but boundless creativity and imagination are the life skills for the relevant Advisor in the As-A-Service economy. I'm seeing this first-hand and it is invigorating.

    best, Peter

  20. Dallas, we have another problem: Too many Advisors are Buying the Service Provider Hype
    Posted Feb 11, 2015 09:47 AM | Permalink Reply

    [...] as we thought we’d negotiated a safe landing back to earth for our talent-challenged sourcing advisors, that we discover another mismatch between perception and reality – they [...]

  21. Murray
    Posted Feb 17, 2015 12:30 PM | Permalink Reply

    Interesting conversation. Maybe we should look at balance across teams, rather than assuming that "millenials" are special and anyone over forty is past it. A good team is greater than the sum of its parts. I'd be looking for a diverse team of advisors

  22. Dallas, we have a problem: Advisors struggling to deliver “Expertise-as-a-Service” - Enterprise Irregulars
    Posted May 15, 2015 01:22 AM | Permalink Reply

    […] (Cross-posted @ Horses for Sources) […]

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