Are the advantages of hiring consultants or outsourcing processes for large businesses only, or can smaller businesses also benefit?
ZDNet Australia looks at consultancies in Australia: Does size make a difference?; How can you choose the 'good ones'?;What are service level agreements, and why are they so important?
But first of all, what are the benefits or hiring a consultant? There must be something to it since, according to Scott Petty, chief operating officer of Dimension Data, consulting is still a growing market. In fact, the current spate of financial belt-tightening has been a boon for consultants.
"Capital expenditure is in trouble, but the services market is quite strong. Organisations saying 'we don't want to refresh all our technology, but we want to get more out of it.'," says Petty.
"People are looking at their resources and finding they're better off developing good skills." What you're paying for when hiring a consultant is essentially their skills and knowledge."
"I think almost all organisations go to an external party of some sort. Some very large companies use large accounting firms or big organisations like Dimension Data, but they also use small firms for big chunks of their work," Petty says. "People who can offer the right service for the right money will always be able to do well."
"You need someone that understands your industry, and can bring to the table the intellectual property, which is what you're paying for. By using an outside company you can do it faster with less risk."
Oh yeah, prove it!
Because many customers find themselves in more difficult financial circumstances, consultants need to do a lot more to prove their value.
Part of this trend is a hangover from the heady spending spree of the last few years, according to Steve Lennon, managing partner at IT services firm Logica.
"Many companies have acted like capital was almost free; they put capital into a lot of IT projects without understanding how it would create value. It never made any sense," says Lennon. "Taking the technology as unproven until we can demonstrate to the client how it will create value, I think is just a common sense and practical way of looking at how to extract value from IT investments."
"In a lot of companies, capex and operating expenditure are frozen from above. A lot of companies still don't know what to achieve in this coming year. Consultants must adapt to that."
Lennon believes that this environment makes customers less willing to trust big brand names, and more stringent in their requirements. "In the past a large firm would have been able to tell some stories about work they'd done before, and talk about their toolkit. The client had to make a leap of faith that those tools would deliver value," he explains.
"All this Enron and HIH stuff doesn't help in terms of big professional services brands being bashed about. Clients now recognise their own careers are on the line and hiring Big Blue or whoever is no guarantee that they'll be able to deliver the outcomes. You can't treat the consulting process as a black box."
On the other hand, brand names offer an impression of stability and reliability. Particularly in uncertain times, doesn't this work in the other direction?
"Every now and again we might lose work to Accenture or PWC; companies that are more well-known," says Lennon. "The flight to familiarity doesn't guarantee a flight to quality. People are looking for an alternative, but they demand that it's going to work in their unique circumstances."
