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Xerox Copy of Dell

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Sorry, couldn't resist that pun! Some background:



2008: HP buys EDS, Ross Perot's original IT firm for $13.9B, making them 2nd to IBM in total revenue. Why? Hardware is becoming a commodity, hard to make double-digit profits for stockholders, so HP joins IBM in stressing "service" over hardware sales. You

can easily make double-digit profits in "service" (read, "consulting"), by charging over a hundred dollars an hour for employes you pay less than $50 an hour.



Last Week: Dell buys Perot for $3.9B, per my previous post. Why? (cut and paste the last 2 sentences above). Perot had just bought JJ WIld to buy into the HIT niche, and promised clients the stability and security only a large firm can bring to the table. Just imagine how secure and stable they will be now!



This Week: Xerox is buying ACS for $6.4B, Why? (cut and paste same 2 sentences from above). This only a week after ACS announced a mandatory "furlough" (week off

without pay) for all employees, due to slumping profit margin: only $98M on $1.6B in their 4th quarter, about a 6% profit margin. ACS gained fame in HIT circles when they bought Superior Consulting a few years back, promising clients the stability and security only a large firm can bring...


So the trend is clear:


1. (cut and paste same 2 sentences from above)


2. All 3 firms will start advertising how they are the only safe, stable, large, secure firms to buy for your IT consulting needs, with "X" decades of experience (that they just recently bought).


3. All 3 firms will struggle with trying to manage talented professionals, instead of hardware widgets. Or maybe they are right: their type of IT consulting

is just another commodity: hire cheap, and sell dear?




Sorry, couldn't resist that pun!  Some background: 2008: HP buys EDS, Ross Perot's original IT firm for $13.9B, making them 2nd to IBM in

Comments

Vince,
I love your title!

A couple of weeks ago, I was privileged to attend an outstanding, "break the code" lecture explaining consulting to a smart but ignorant audience. See my Epic Career Changes series if you need context.

I don't want to betray the identity of the speaker who shared this, but, in explaining Consulting to the audience he started with with slide (from despair.com):


The speaker went on to clarify what consultants do.  He was not speaking about specific types of consulting, including implementation services, vendor selection or other types of focused services where the desired outcome, timeframe and constraints are relatively clear.  He did make reference to the strategy consulting engagements, popular with McKinsey, Baine, and friends. 
 
He said that consulting is the art of finding a non-obvious perspective on the clients problem, and presenting it convincingly.  It has to be understandable and intelligent, but sufficiently non-obvious that further consulting is necessary to execute against the recommendations.
 
How does that sound to you, Vince?

Joe,

Consulting used to be hiring an outside expert who to give valuable advice. If the consultant truly has expertise and advises what's best for your organization (not theirs!), then it's good for both parties. What's worrying me with these mega-deals is the type of "consulting" they are providing is more of a commodity: "X" bodies for "Y" years to implement a system, often one they recommended. I liked the good old days: old men and ladies with many scars who would help you create a plan, pick a system or negotiate a contract, then leave their projects would take a few months and cost in the thousands. These mage-firms like projects that take years and cost millions...

Maybe what we need are TRUE consultants (who work in months/thousands) to help hospitals pick from these mega-firms (who work in years/millions)!?

Vince

Thanks Vince.

Seems to me there is a language issue. We're all using the same term, "Consulting" to mean very different things:

a. High intimacy, customized insight, truly factoring in local people, culture, capabilities, and budget realities

b. Applying a proprietary methodology as a dispassionate, third-party, objective party

- this can be done niche/boutique style, achieving the intimacy of (a)

or

- an army of people for millions of dollars over years to implement a complex system requiring change mgmt, governance, and an organizational performance monitoring and reporting component.

c. bringing in a small number of people to high leverage work, like setting up and running a vital PMO as the focus.

Have you done a proper industry presentation on the dimensions of consulting competencies and engagements in HCIT that's "out there" for us? (presumably stratified by months/thousands on the LHS, and years/millions on the RHS)