In a comment to my recent blog post Belgium: An example of Cloud changing the SAP HCM consulting market, Steve Hunt, Senior Director, Customer Value Research at SuccessFactors mentioned Consulting-as-a-Service as a consulting delivery model. Of course, consulting is all about delivering services, but as technology and the related consulting market transitions to the Cloud, the way in which services are delivered and consumed will also change.
Steve’s description of Consulting-as-a-Service – which I will abbreviate to CONaaS from hereon – was simply of consultancies delivering small chunks of services over a prolonged period of time, rather than high-volume services into large projects and then ending the engagement once Go Live is reached (with exception of standardized enterprise support contracts). I don’t believe that we will see the end of this type of consulting as it is a necessity for getting new technology and practices implemented into organizations, but we may see services consumed by customers in a different way than we do today. There are some consultancies that deliver regular services and some that already deliver services on a CONaaS basis, so this is not something new. However, we may see this become more of the norm as customers get more used to the on-demand delivery model for technology and require partners that can offer them consulting services on a similar basis.
Ultimately as technology delivery and markets change, and as businesses adapt, so too will the suppliers of these companies. Invariably those that can and are willing to adapt will no doubt survive the transition, and it might mean adopting a business model and strategy that seems much less lucrative. Synonymous with the transition to the Cloud, it will be those companies that are adaptable and willing to take risks that will be the survivors. Trying to hold onto the consulting gravy train will ensure short-term survival, but in the long-term this will only serve to mask the necessity to transform into an organization that has to survive with lower revenue.
Another interesting facet of a CONaaS model is billability/chargeability, either as a subscription or in the form of units. Currently consulting is billed by the hour or day and even fixed-price proposals are based on a number of days. In a CONaaS model it would be more likely that a fixed subscription gives x number of hours to the customer – a sort of retainer, as you like. This would provide value when it comes to working with customers on explaining new features and benefits of a quarterly SaaS release. Another option is that units are based on a business outcome or specific delivery and that will have a fixed cost associated to it. The revenue would most likely vary from unit to unit and would be based on the exact deliverable and/or perceived value of the outcome of the deliverable. Customers want business outcomes and the CONaaS model allows them either to have work on demand or to buy specific outcomes when they want it.
It is worth noting that some consultancies and vendors have tried this in the past… and failed. That may be because of the infancy of Cloud in some areas or just the fact that these organizations have struggled to win enough business in their respective market to prove the business model. It certainly does not constitute a failure with the model itself. In addition, there are also issues with the middle men – or layers – within consulting that cannot proposer with this type of model. In his blog Full time culture and the non-value-adding middle man, Sven Ringling makes some excellent points about this and also about the full-time culture that has developed in consulting. It is definitely worth a read.
As Cloud becomes more prevalent and the consulting markets being to change it is inevitable that new models will arrive. Of course, the usual disclaimers about quality versus price apply and vigilance by customers should not change. A bit of research and reference-checking goes a long way to achieving those business outcomes, albeit indirectly. Whatever happens in the market, there will almost certainly be changes to how consulting services are delivered and it might be the most innovative methods that drive success.