CRM Consulting or Insulting?
A few weeks ago some 50 executives from a cross section of businesses got together in the City of London to chew the fat over technology implementations and the role of consultancies in them. Whenever mention was made of the Big Five management consultancies--or "Fat Five", as one delegate preferred to call them--it was often accompanied by a personal anecdote followed by ripples of laughter. But however lighthearted the manner in which the tales were told, more often than not they were apocalyptic in nature and referred to as "war stories", underscoring the scepticism that many businesses with prior experience of large management consultancies feel towards them.
One delegate at the London gathering related the story of how one of the large consultancies, on being asked to leave a job, refused to hand over documents that would enable system support, rendering the implementation virtually unworkable. Another delegate told of a major insurer which had asked a consultancy to leave because it was tired of paying for its site to be used as a training ground for the consultancy's bright young things. And on yet another project, the client became increasingly frustrated when, over a period of 12 months, it only ever saw three consultants, of a total of 25, actually doing any work.
Delegates also voiced concerns over consultancies' habit of expanding the original remit to a client. The consultancy would then swamp the project with people working evenings and weekends, at a minimum rate of £1,000 a day, without affording the client a clear view of what was going on. And stories about disaffected staff leaving a company after conflicts with the consultants were legion.
While some of these stories are perhaps embellished, and undoubtedly refer to worst case scenarios, it is clear that many businesses that have worked with the larger consultancies have been shocked by their intractability. Much of this comes down to their legacy in the back office, where fixed implementation templates have been used to speed up roll-outs and enable inexperienced consultants to oversee complex projects. However, while the larger consultancies have, in recent months, been making moves to change both their structure and traditional approach, in the skills-starved front-office area it is often the client which loses out.
Pete Sherrill, vice-president of European operations for e-business consultancy eForce, offers his take on why the Big Five have built up such a negative reputation among so many businesses. In the mid-90s, Sherrill left Sun Microsystems to join KPMG in the US to set up its customer value management group, ostensibly its CRM operation. He then moved on to Gemini Consulting with a similar remit. He suggests that the conflicts with clients arise mainly because the consultants have a "fairly inflexible" approach to implementations, a modus operandi that has been likened by smaller rivals to a tidal wave crashing over a business and which inevitably threatens the client's existing culture.
Consultancies tune in
The groundswell of opinion indicates that the consultancies' methods are out of tune with what is happening today, and that clients are becoming increasingly dissatisfied. "Clients want autonomy and are no longer prepared to suborn skills to consultants," says Simon Boon, a business intelligence management consultant.
But it is difficult for elephants to dance on tiptoe, and the inflexibility the consultancies are accused of is becoming a burden. This arises chiefly from their use of a big bang implementation template approach, which sees the technology roll-out taking place simultaneously across the enterprise, according to pre-determined standards designed for specific industries such as finance, pharmaceuticals and manufacturing.
While in theory this works well, the consultants' approach, which sometimes disregards the nature of the project or the company, is often experienced by clients in a negative way. This is exacerbated by management techniques designed to isolate people within the organisation who, in the consultancy's eyes, are obstructing the roll-out. The consultancies argue that this is necessary, particularly where there is a strong resistance to change within an organisation, and insist that such moves are usually sanctioned by senior management who are willing to bear the pain.
Who's in the driving seat?
To a business that wants to implement CRM technologies, but knows little about them, the attraction of using one of the large consultancies is obvious. Here are companies that have thousands of employees, worldwide practices and kudos-enhancing reputations as experts within their fields. However, the structure of the consultancies is based around the partner model, which is essentially a fiefdom within the organisation, presided over by the partner, who is an expert in his field. Any dealings with the chosen consultancy are, in effect, dealings with the partner in charge of the client's project, who has his or her own independent revenue targets and profit and loss accounts. This partner holds sway and is ultimately responsible for the "apprentices" who do the hands-on work for their client.
The use of graduate "apprentices" fresh out of university is a serious criticism levelled at the consultancies in their failure to get to grips with CRM. Their recruitment policies focus on attracting the top universities' bright graduates and sending them to boot camps or in-house training for company inductions and the necessary educational input.
A former trainee at one of the large consultancies, who now works at a small Internet consultancy, spoke of receiving six weeks' training as an introduction to the company, learning basic analysis of the client server model and then getting involved in coding work.
Another former trainee says: "Large consultancies are very good at institutionalising systems implementation by turning it into a standard process, so people without much experience can undertake implementation." But as management consultant Bob Shaw puts it: "It is still a case of the apprentices driving the bus."
These fresh-faced trainees are also reputed to be taught techniques for isolating middle managers who obstruct their work. The former trainee adds: "Sometimes there is a conflict with the client. Middle management doesn't like it, so the consultants adopt a take-no-prisoners attitude, which results in a failure to build capability into the implementation, and leaves the organisation with a shortage of skills as people leave because of what they see as a takeover. The consultancies have their own culture, plain and simple, and they shove it down people's throats."
Boon is particularly scathing about the big consultancies' approach, though he adds that some are worse than others. He points to a current implementation taking place within a European telco, in which the company project manager wanted to use his own staff rather than the consultancy's. "They employed management techniques to leave the manager exposed and tried to discredit him by showing up his ineptitudes. Everybody has ineptitudes and they should be closing the gaps, not exploiting them."
Most of the problems have arisen from the fact that consultancies have approached CRM implementations in the same way that they handled enterprise resource planning (ERP) implementations in the past. That is to say that the approach to automating back-office functions has been carried over to automating front-office functions, when the two require distinct approaches. There is a vast difference between the two markets.
ERP services have matured to such a degree that many differences no longer exist between vendors, and the methodologies, levels of experience, quality of resources and industry knowledge are virtually indistinguishable. CRM, in contrast, is still in its infancy and a successful CRM strategy requires that new business processes are addressed, while retaining a large degree of flexibility in order to keep abreast of evolving technologies.
A friend in the business
As a case in point, Dave Thompson, Northern Europe marketing manager at call centre CRM vendor, Aspect Communications, says the company will now only work with systems integrators such as Cap Gemini and Unisys, because they have the necessary experience in working with call centres. "The large consultancies just don't have the experience," he sighs.
Judy Andaloro of AMR Research points out that the large consultancies must tackle two distinct problems if they are to reposition themselves successfully as CRM experts. The first hurdle is to overcome their identity crisis because they are no longer viewed as "the keepers of new ideas and the coveted new skills". The second is that they are losing the war for talent, which is linked directly to the perception that they are no longer at the cutting edge. "The partnership model is no longer perceived to be as competitive, whereas the potential pot of gold promised by start-up technology and small consulting companies is competitive," she adds.
Attempts are being made to address this, and the hunt is on for seasoned consultants who have expertise in different industries across sales, marketing and services. As regards the Big Five, the new dynamics have kick-started a whole series of internal changes, as they attempt to reposition themselves in the burgeoning CRM and e-business arena through internal spin-offs dedicated to these areas.
Meanwhile, they have been quick off the mark in buying into technology companies. Andersen Consulting took a 16 per cent stake in Siebel before it went public, and George Shaheen, who at the time headed up Andersen, took a seat on the Siebel board. It now claims roughly 20 percent of all Siebel consulting work, according to AMR Research. Similarly, the company has investments in marketing automation vendors Blue Martini and Prime Response and e-commerce vendor Calico. KPMG has stakes in E.piphany, Pivotal and Silknet/Kana, and PricewaterhouseCoopers has a stake in marketing automation vendor Aprimo. Ernst & Young invests in companies through its relationship with Red Rock Ventures.
Those companies which don't take a stake directly still have a vested interest in implementing software from vendors for whom they have trained consultants, itself raising the question of just how independent the consultancies are when recommending products.
Andaloro points out that while these companies can help to develop a high level strategic road map, the CRM space is about so much more than just products. A lot of integration work is required, and consultancies building their practices around a specific vendor's products "will not be strong partners for helping a company devise a holistic CRM strategy."