Infotech Consultants Navigate Market Dynamics

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Infotech Consultants Navigate Market Dynamics

Rapidly growing technology and shrinking staffs are fueling the need for professional consulting services

By Ed McKenna

Facing exploding data and technology needs, many of the world's largest companies are reaching outside their organizations and tapping the services of information technology management consultants to manage their infotech requirements.

Offered by most of the largest systems integrators, these services often extend well beyond traditional consulting, incorporating technology implementation and management - services usually associated with systems integration and outsourcing.

Companies are seeking more than advice, said Bob Olivier, marketing director for Integrated Business Systems at Computer Sciences Corp., Falls Church, Va. "They are asking the consultants to run with ... [their ideas] and prove them through performance," he added.

The growing complexity of the technology and lack of resources to address it, often due to downsizing, are fueling the growth of these professional consulting services, said Christine Ferrusi Ross, an analyst at Dataquest, Westborough, Mass.

The 1980s were a time of rapid infotech growth, but with all the cutbacks in the '90s, many companies are now finding they took on more than they could handle, added Kathryn Sklenak, principal consultant on business and development for Lexington, Mass.-based Logica Inc., the U.S. subsidiary of Logica plc., London, an international systems integration, consulting and software firm. The result is that their infotech staffs are not delivering services, straining relations between the infotech staff and the company, she added.

While paring back their work forces, companies did not reduce their reliance on data to carry out their businesses. Surging from 8 gigabytes to nearly 28 gigabytes between 1970 and 1990, the electronic database for the typical Fortune 500 company is projected to reach 400 terabytes by the year 2000, according to the International Technology Group, Mountain View, Calif.

"This 'data explosion' is driving fundamental changes in the way corporations operate, as well as altering the rules of market strategy and competitive advantage," according to the group.

At a minimum, companies are being forced to rethink and upgrade their existing systems to cope with this ever-growing volume of mission-critical data.

"Companies seek our services for different reasons," said Walt Wilson, director, marketing and industry business development at Lockheed Martin Information Systems and Technologies, King of Prussia, Pa. "But a common element is the dynamic and increasingly competitive environment with the number of business cycles down and expectations of the customers up," he said. "They have legacy systems that are not sufficient to be competitive in the current environment," he added.

In addition, engaging a technology consultant management firm is "a strategic decision by the company to get access to resources of the other company," said Ross. Prospective customers are looking to leverage both the infotech proficiency and other competencies of the consultants to enhance their business.

The arrangements between the consultants and their clients vary, ranging "from value-based to joint venture or close to it," said Ross.

"We sign fee-based [contracts] ... or enter into venture agreements including equity participation in what we build," said Victor Millar, president of AT&T Solutions, Florham Park, N.J., the AT&T unit offering infotech consulting and outsourcing.

The consultants refer most often to their customers as partners. "We work as part of a team in a complementary relationship with our customers, focusing on enabling technology transfer and reskilling the customer's work force to be ready for the new system," said Wilson.

In general terms, this process can involve services covering business planning, technology application and change management or helping the clients learn new technologies and adapt to them.

"Typically, we do a requirements definition analysis" initially, looking at the needs of the company and reaching a common understanding with the customer on what those needs are, Wilson said. Sometimes this process involves educating the customer, but mostly it entails "bringing in a perspective from outside the company to take a fresh look at their real requirements," he added.

Through this process, the company and consultant identify an infotech strategy, including the appropriate technologies such as intranets or data warehousing. IS&T then helps its client design and implement this strategy and provide extensive training and mentoring services to instruct and acclimate the clients to the system changes.

"Our objective is to hand over the keys and let them take over," said Wilson.

At the heart of the relationship between the consultant and the company is the so-called "knowledge transfer," which allows the customer to benefit from the consultant's basic infotech expertise, as well as the consulting firm's competencies.

In the case of IS&T, the customer gets the added benefit of Lockheed Martin's experience in managing extremely large distributed systems, said Wilson.

Although IS&T has been a corporate entity less than one year, the unit has translated 30 years of corporate experience working with large systems and technologies into its Advanced Concepts Center and mentoring programs. ACC offers several training programs, including client/server reskilling, as well as a curriculum customized to the client's needs either on site or at its field offices in the United States, Canada and Germany. The company, for example, provided training and mentoring to the Federal Home Mortgage Association, Washington, as it automated its loan-origination process for lenders.

AT&T Solutions offers expertise in networks and networking processes to its customers. "The network is in every part of our practice," said Millar. There is a separate group in the unit devoted to network assistance to a client using the technical help from the AT&T Lab, building networks and, if called, managing networks.

Strictly targeting the private market, AT&T Solutions is going after the "Global 2000" - the world's largest companies earning a minimum of $2 billion per year, said Millar, adding that the company is already working with 10 percent of them.

Still less than two years old, the unit has an ambitious growth plan that got off to a good start this year, Millar said, noting the unit expects to generate $1 billion in revenues by year's end. The company anticipates tripling those earnings over the next few years. Employing 11,000 people, the company will have 30 offices worldwide by the end of the year, he said.

Companies enlisting the consulting services of Computer Sciences Corp., El Segundo, Calif., get the benefit of 40,000 infotech professionals, said Olivier. The client will also get the advantage of CSC experience in managing large projects for the federal government and its own proprietary methodology, called Catalyst, which integrates the company's capabilities, according to Olivier.

The Consulting and Professional Services unit of the company generated $1.6 billion in revenues last fiscal year, serving both public sector and private clients. It is also doing work for several federal agencies, including the Federal Aviation Administration and the Department of Defense.

CSC also offers a research advisory program that is available by membership. The program includes business and technology information from the company's research and is a mechanism for new product development, said Olivier.

Subscribers can also use the program as a research and development tool. There are currently 700 subscribers, many from Fortune 500 companies.

Andersen Consulting, Chicago, brings considerable business and marketing expertise to its services.

Seeking to accelerate its underwriting tasks, Allstate Insurance Co., Northbrook, Ill., called Andersen to help it do a cost/benefit analysis, and in turn, create a business architecture for a new decision-making process. Andersen also helped Sega of America Inc., Redwood City, Calif., design a World Wide Web page and a Web marketing program.

Focusing on key market sectors, Andersen joined with SAP, Waldorf, Germany, to produce and develop IS-Oil R/3 Downstream, a financial and operational software package for the oil industry, and has set up separate Centers for Expertise devoted to automotive, electronics, process/chemical, consumer/
packaged goods, utilities and oil and gas industries.

To address general industry practices, clients can use solution centers Andersen has set up throughout the world.

Similarly, Logica is looking to use its experience in its targeted business sectors to expand its consulting services, said Sklenak, who recently joined the company to assist this expansion.

"In the past, we looked to implement a product or process," she noted. "Now we are taking a step back and looking at the bigger picture," she said. The company is looking for a way to address the market and grow the company's practice at the same time by leveraging its experience in its three business core sectors - financial services, communications and utilities, she said.

Logica has worked with international companies in customer care and earlier this year was tapped by Pacific Bell Mobile Services to provide similar services. The company has also been developing a year 2000 software problem analysis strategy and is currently talking to potential customers.

The subsidiary of Logica plc, London, generated about $60 million of the parent company's $441 million in revenues last fiscal year, a 14 percent increase over the last year.