Of course, I am somewhat over-dramatizing the situation. It is not that they will waste away like an extinct language. Instead, the traditional role these firms have played in helping companies bolt together technologies will evolve into something new and exciting. However, those that don’t move with the times today will gradually shed employees until there is no one to offer advice.
The evolution is already taking place – and faster than most people realise. Driven by a combination of market forces such as the take up of cloud-based solutions by companies, a handful of professional services firms are looking beyond, and have started to change their stripes to become data integrators.
One of the fastest growing areas of SAP's business is cloud computing and, more specifically, SuccessFactors. To reinforce the importance of cloud to SAP’s future, the German company started its transformation by announcing last week its intention to lay off thousands of employees. Simply put, running a cloud company, you don’t need a large workforce.
SAP’s move will have a growing and dramatic effect on the thousands of mid to small sized partners that have relied on the software giant to provide new business. This will continue as SAP customers need to support existing on-premise investments and start to plan and implement a hybrid approach to adopting cloud solutions.
To ensure they are in control of their own destiny, system integrators should accelerate the development of their knowledge and capabilities in cloud computing. The ones that are successful will, as result, create value-added services such as helping companies migrate data between on premise and hosted systems. However, in the mid to long-term, it won’t be based on integrating systems because in five to 10 years at most IT, will be run in the cloud.
According to industry analyst firm PAC, the cloud "will negatively impact the application services market. However, SaaS is also expected to boost the consulting market. In the medium term, SaaS will generate substantial opportunities for integration, as the ‘new’ applications need to be integrated both with each other and with the ‘legacy’ backbone."
I would say that the big four accounting firms have a leg up over system integrators. They have invested in either building or acquiring companies that give them the technologies, talent and intellectual property to create new and exciting propositions for clients. Most recently, Deloitte opened an office in London’s Silicon Roundabout to support these objectives.
What I expect to see later this year is a flurry of activity including consolidation SAP SIs as firms buy customers. This is only a short-term fix.
Like clients, they need to invest to grow. It means doing things differently, and looking beyond traditional sources of revenue. In a way, it means thinking more like a cloud software company which is typically agile, responsive and scalable to ever-changing market dynamics.
“How can I secure recurring revenue whist providing clients with strategic advisory services?” is a question management at struggling professional services firms are asking themselves. Don’t be surprised to see SIs start to buy technology companies in order to gain the necessary expertise required to bring to market new solutions.
I believe professional services firms should follow the data. Only then will they move up the value chain, generating more client satisfaction, sales and differentiation by offering compelling services at a higher fee than what is being witnessed in an increasingly commoditized SI/consulting market.
Here are a few areas where firms can create business value for clients by focusing the data:
Until system integrators make the inevitable move to becoming data integrators, it’s going to be a bumpy ride for them and their consultants.