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Insights / Blog / Agility & Organisation

Internet Agencies – please show more initiative in digital transformation!

September 30, 2015
Alain VeuveAlain VeuveManaging Director, AOE Switzerland

The billboard above recently piqued my interest. Reflexively, I posted this rather cynical tweet on Twitter. Far too often, I experience traditional corporate consultancies as mills that grind slowly. Support the customer in his idleness. Transformational doing? How paradoxical to advertise with that concept, when most of the work is theoretical and hypothetical. And to then leave the project ship, when one has to make a decision, when one must decide between 1 and 0. Decide, code, develop.

Spontaneously, one wants to call out, “Go to SAP and find out how to get this airport ad thingy right.” (The Best-Run Businesses Run SAP)

Perhaps more than just a meaningless slogan

Later, I began to have misgivings; maybe they really mean it that way. Isn’t there actually a movement to be observed, especially with larger corporate consultancies, toward “implementing”, rather than just thinking about it. In my mind’s eye I went through experiences and market trends of the past few months just to arrive at the conclusion: Yes, this is the case. A few examples?

KPMG Crimsonwing

In February of this year, KPMG acquired the digital service provider Crimsonwing, a company that has established itself in the Enterprise sector with Magento and other well-known systems such as MS Dynamics. The synergies are obvious; whereas KPMG already owns the customer relationship, it’s usually a simple matter to ensure that an affiliate company within the group is given the task of implemenation. This is legitimate. Here’s KPGM‘s take on the acquisition, as expressed in a press release:

“The acquisition is consistent with KPMG’s strategy of building an advisory practice which combines business expertise with the underlying technology capabilities required to implement business solutions.”

My conversations with representatives of other medium-sized corporate consultancies has shown me that this is definitely a much-discussed issue internally: How can one tap a larger share of the entire digital value chain? To enter the market for implementing projects is not only obvious, it’s also the right way to go.

Agile methods hamper the traditional consulting business

This trend is also driven by the increasing use of agile project methodologies. Due to market pressure, customers want to implement faster; this means that conceptual planning and consulting play a smaller role in the process, as most detail concepts are “built” in sprints, depending on the situation. And usually with the technical service provider and not the corporate consultant. I experience this with almost all of our projects – which are not strictly about implementation anymore – especially in the really big projects.

Naturally, this impacts corporate consultants substantially, as exactly these solution concepts traditionally were and remain good business. Not only that: For these kinds of projects, companies can hire cost-efficient young guns directly from the university, who will pay for themselves in the long run.

People who live in glass houses . . .

Recently, I had the privilege of giving a keynote on “Digital transformation: What concern is it to us?” at the TYPO3camp in Munich, where I addressed precisely this issue. And one of the core messages I wanted the audience to take with them was that we (the agencies) shouldn’t let anyone get the better of us. In other words: We shouldn’t recklessly give away our implementation know-how to corporate consultants.

After the presentation a member of the audience approached me and said that we Internet service providers did exactly that a few years ago with the consulting business of ad agencies, which of course is true. Caught on the wrong foot, I could only reply with the less-than-objective answer that I, as someone representing agencies, was biased and partial and actually thought this was a good idea. Ouch.

It's a jungle out there!

Anyway, it is a market. And everything is allowed within the legal and moral boundaries. Therefore, I find that the efforts of large corporate consultancies are legitimate, at least for now. I expect, however, that such a path is filled with obstacles. Simple reason: the reputation of consultants beyond strategic consulting is too poor with many mid-level managers.

Opportunity for agencies

What remains are basically two options for agencies. They can either sell the majority of the agency to a corporate consultancy at a premium price or – my personal preference – focus on garnering more of the consulting side of the project business from the large companies. For the former, it is necessary that agencies do their entrepreneurial homework; for the latter, I think the chances are good to get a piece of the pie, especially from medium-sized businesses.

If the agencies succeed at making inroads on the consultancy side of the equation, they don’t necessarily have to call themselves full-service agencies (BTW: Most customers have come to realize by now that it isn’t possible to provide a full-service range with less than 200 employees). No, it is entirely sufficient to deliver results as quickly as possible using Agile methodologies and technical expertise. In the end, that is what customers really want.