1 year 9 months ago
When I started out as a consultant in the late 1990s the ‘dot com’ was in full swing. Life was simple. All you needed to be successful was the knowledge of a couple of methodologies, some programming languages, some frameworks, a couple of design patterns, a good dose of motivation and the company of like-minded people to bounce ideas off. And if you wore a suit you could charge double!
Then came the crash. Then came the off-shore model.
You had to become an expert. You had to go niche. You had to go global. You had to deliver real tangible value with an ROI.
Now the offshore teams are catching up: they are becoming more expert, more niche, reaching further afield and delivering real value. And when I say offshore I mean any country that is less expensive to live in than the UK!
So why choose us? Why choose a UK software consultancy when Mr White sitting at the North Pole says he can do it for a fraction of the cost? It is true that the question of quality (and therefore the cost of change) is very important, but Mr White’s team is catching up. They are beginning to develop the in-house engineering techniques that give him better quality. His people are becoming more experienced. His teams are evolving. And inflation at the North Pole has nowhere to go but south!
At the moment, I can still argue (and demonstrate) quality over cost, but it won’t last long.
I could use ‘offshore’ to support my ‘near-shore’ people and therefore reduce cost, but this adds risk to my quality argument, not to mention a significant overhead in management.
I could go for volume of orders, diversifying in the process, and working with a tiny margin that I try to increase through internal efficiencies.
I could mix my teams with the customer’s internal teams for delivery and therefore share the resource/cost burden.
Depending on circumstances these are all very viable approaches, but there are many ways of getting a competitive edge aside from reducing costs.
For me the question I ask is: “Would you pay more for something that is delivered twice as quickly?”
I would say the answer is a very loud ‘YES’!
Especially if, as a buyer, I could start seeing a return from the software earlier, I could use the generated revenue to offset the cost difference between fast and slow. I may even pay 50% more.
It’s an even louder ‘YES’ if the return on investment could be shown to be quicker and cheaper to run than Mr White’s, because the software is a better match to the requirements and easier to maintain.
I am not going to even go into the time-to-market benefits.
So how does a consultancy deliver this promise?
Products! Consultancies need to start adding products to their portfolio. Products that help them deliver faster, better and more accurately. We need to productize the re-usable bits of our engineering practice and software solutions.
These products can then be a licensed part of a solution. They can then also, potentially, provide a maintenance revenue to the consultancy. Products also enable a consultancy to explore cap-ex vs. op-ex models with customers, thereby aligning themselves better with the customer’s practical needs.
It is important to remain a ‘consultancy with products’ as opposed to a ‘consultancy of a product company’, however. Simply because consultancy is the core business and the products are there to help parts of it. You are not a pure product company and you still need to be applying the best technology and advice for the problem-space and not shoe-horning in products just because they are yours!
So, just as you’d employ a carpenter with (his own) tools over a carpenter without tools, a consultancy needs to have products to deliver real value to its customers at the right price.
Consultancies need brains, brawn and levers.