Business Consulting firms are better placed to drive the cloud computing space among Enterprises. The article takes a look at the reasons of this trend in Asia and how IT Services companies are faring especially in the cloud computing space.

1. March 19, 2012
19 March 2012
Consulting space for cloud computing getting highly demarcated…………..
During my discussion with (Asian businesses) business decision makers and Technology decision makers
on cloud computing landscape, one tangential theme that emerged was that the consulting space was
getting far more niche and demarcated.
One might ask what has cloud computing got to do with business consulting and how did this theme
emerge. The answer is linked to the way cloud computing market is evolving in the region (for that
matter globally) especially among the Enterprises. In majority of the cases, the driving force in this space
is really the top business consulting organizations. These firms have taken a lead role in helping their
clients carve a roadmap for their technology infrastructure and services on cloud. There are a few
exceptions where businesses themselves have been proactive or have leveraged their IT Services
partners to plan ahead. But these examples are just a handful across the APAC region.
In this article we refer to business consulting firms as those which primarily operate in management
consulting space (Accenture, Deloitte, IBM Global services, McKinsey etc.), IT Services companies are
those which are primarily operating in the Technology consulting and deployment space while
Technology vendors are those who provide underlying technology (hardware, software and allied) for
cloud based solutions.
So the question really is - what has led to these business consulting firms taking a lead role, and why are
IT Services companies getting left behind. The answer lies in three distinct themes that have emerged in
the past one and half decade:
a) Non-Dwindling focus of business consulting firms on “what next – what is the best”. Top
business consulting firms have ensured that there is enough attention, incentivization and
resources committed within their organizations that are looking ahead of the horizon, and not
merely at the horizon. These firms have invested heavily on industry specific domain expertise
and then aligned required technology, financial, regulatory, legal resources around it. On the
other hand IT Services companies have taken a stab at business consulting as an afterthought
rather than a strategy. IT Services companies have been found lacking on domain resources and
organizational structure to drive innovation.
b) Ability to sync with business decision makers and not merely Technology/IT decision makers.
This is one area where business consulting firms have the advantage of having a direct
communications line with the top management and business decision makers. And to their
credit, on most occasions they do not let go of this opportunity. Thinking beyond merely IT
metrics (of hardware utilization and software road map), these business consulting firms have
given innovative solutions in areas such as supply chain optimization, business or web analytical
framework, working capital management, or even human capital management at times. One of
the key challenges in high cost ticket items such as cloud computing, is the buy-in from business
units and their business heads rather than IT decision makers. This is where IT Services
companies have faltered on many occasions.
Amit Phatak, VP Technology and Telecom, APAC region 1
p.amit@marketprobe.com

2. March 19, 2012
19 March 2012
c) Ability to milk the cow at its peak and then move-on: IT Services companies do compete with
business consulting firms for large scale business re-engineering and technology projects. But
unfortunately IT Services companies are a preferred choice when a new solution, system or
process has completed implementation (by the top business consulting firms). This is after the
teething issues of new system or process have been taken care of, and change management has
become a hard issue than a soft issue. Obviously, the criticality and ROI of the project then
nosedives compared to what it was during inception phase (compare a US$ 500 hourly rate
charged by business consultants during deployment versus US$ 200 hourly rate during
management). The top business consulting firms, to their credit know exactly when to exit, and
do not compete aggressively for this pie of managing the deployed solution; it is left to their IT
Services counterparts.
Business decision makers have discussed in length around how IT Services companies try to hold on to
the scope and scale of the project even when its inherent value has depreciated. One business leader
vented - “Instead of giving me an optimal solution, my IT Services partner tried to prove to me why the
team size has to be maintained. This was despite the fact that both of us agreed there was an effective
and innovative solution around the corner.” To be fair to IT Services firms this has been triggered by
their inherent business structure, where business (and revenue) growth is in proportion with human
capital and less in congruence with the intellectual capital.
One area where the IT Services companies have done well in the recent past is a push towards being
seen as a thought leader in the industry by generating good thought leadership content, blogs, case
studies, white papers on solving business issues. Unfortunately, the business consulting firms have been
doing this and beyond. They have provided hand holding during change management which in most
cases is the make or break point for the success of any transition (process, technology or business
strategy).
The third key component of this topic is the Technology vendors (those who provide underlying
technology in cloud). Unfortunately even the Technology vendors are playing second fiddle to the
business consulting firms. Enterprise customers do not see the technology vendors at part with business
consulting firms. As a matter of fact they expect their consulting partner to recommend a few
technology vendors (solutions) and then work with them to create a solution.
Yes, there are examples where IT Services firms and Technology vendors have done phenomenally well
and compete head-on with the business consulting firms. But till the perceived gap in understanding real
business issues, business vertical priorities, and providing tangible solutions remains wide, the battle is
going to be lop-sided.
It is becoming evident that if the Technology companies, and to an even larger extent the IT services
companies, do not up their game, the hot cloud computing show amongst the Enterprise class
customers will be directed by the leading business consulting firms.
Amit Phatak, VP Technology and Telecom, APAC region 2
p.amit@marketprobe.com