GSB STUDENTS EXPLORE TECHNOLOGY'S IMPACT ON CONSULTING
Its no secret that the consulting industry is embracing technological
solutions as it evolves.
For example, one in every eight consultants in Big Five firms
is working on the implementation of enterprise systems such as
PeopleSoft and SAP that Fortune 500 companies are adopting to
capture huge amounts of business data.
A team of students working on a research project for Associate
Professor Sally Blount-Lyons Consulting to Organizations course
went behind the scenes to explore this trend. Another group examined
a lesser-known, nontraditional approach to consulting: brief,
intense, top-level strategy sessions held in off-site solution
centers. Both approaches rely heavily on new technology and both,
students found, have a role to play in consulting. Their findings
were so intriguing that both groups plan to publish their results.
Solution centers are a razzle-dazzle, resource-intensive approach
to consulting. Clients send their top executives to the sites,
where they are immersed in intensive, real-world simulations of
their business environments with teams of consultants, artists,
engineers, researchers, and information technology staff. Moveable
walls, instant space redesign, computer programmers, and even
musicians might be part of the effort to spark creativity that
will lead to solutions for major business issues.
The team of David Thayer, Tami Caplan, Vilma Chan, Patrick Dunbar,
and Christopher Gloede investigated four centers, operated by
Andersen Consulting, Ernst & Young, PricewaterhouseCoopers, and
Battelle & Battelle L.L.P. of Ohio. The centers had different
styles and focus, but similar aims.
In each case, centers are physically separate from the consultants
headquarters, or at least carefully designed to provide a fresh,
stimulating environment. Some feature stunning modern architecture;
others are stocked with toys and games. The idea is to remove
both the consultants and clients from their normal environment,
thereby freeing them to think outside the boundaries of business
The centers take a SWAT team approach to a major problem or issue,
bringing together all the key players from the client company
with as many as 25 consultants, mountains of data, and a supporting
cast to help create and refine solutions on the fly. Before the
session, consultants put in anywhere from 500 to 1,000 hours researching
every aspect of the problem or issue at stake. They have to have
all the relevant information at their fingertips to eliminate
all barriers to buy-in or to making decisions, said Caplan. The
goal is to walk out at the end of the day with 80 percent of a
strategy in hand; the remaining 20 percent of the solution lies
in implementation, and the client comes away with a plan for that.
The sites are usually bristling with technology that can model
problems, test solutions, or gather necessary data almost instantly.
For instance, at PricewaterhouseCooperss War Room, consultants
pull up research or summaries of discussions on computer screens
around the room as needed. If the client looks at it and says,
thats not the data we want, staff in the back room rework it
and 5 or 10 minutes later it reappears on the screen exactly as
they asked for it. Its pretty impressive, Gloede explained.
The War Room, launched in June, runs its sessions using professional
facilitators wearing microphone headsets. Observers behind the
scenes feed directions through the headsets to the facilitators,
who change their approach in real time to fit the group.
Andersen Consulting pioneered the solution center concept in 1988
when it opened the Smart Store, configured as a mock supermarket
to demonstrate the impact of new UPC coding technology on retail
processes. Andersen now has 18 centers that take different forms
depending on the industry and issue. Battelles Breakthrough Center,
by contrast, provides an environment tailored for creativity,
where clients can brainstorm product innovation and technological
breakthroughs. Whatever the focus, solution centers are so resource
intensive, with price tags that can exceed six figures, that they
are used for major, discrete issues such as merger implementations.
Whats consistent among these centers is that each is trying
to accelerate learning by bringing people together in an environment
that will help them break out of their established paradigm,
Gloede said. Because the centers bring together all the key decision
makers at one time or place, its been suggested that these sessions
can accelerate decision making by six months, Chan added.
Beneath all the technology and the theatricality, the point is
to communicate, Chan explained. The creative elements are aimed
at getting down to basics and breaking down barriers. What seems
like fancy high tech is really a way of getting people to talk
to each other and share ideas.
But, Caplan stressed, I wouldnt sweep the technology under the
rug. It is a mechanism to foster communication, but it also shows
clients the power of technology and how it can be used to support
both production and corporate strategy.
Centers are positioning tools
Consulting firms seem to be using solution centers to leverage
their relationships to a higher level within client companies,
Dunbar said. Consultants normally dont work with the highest
levels of management, but these centers address problems at that
level and give the consultants access to decision makers, which
is especially important for firms who want to showcase their strategy
skills. Some are so eager to build a bond with the client firm
that they have provided a solution session free of charge.
Clients, in turn, feel better about the results when they have
participated in the solution center process. Its less of the
situation where the consultant comes in telling you what to do;
youre players in the process, with a sense of ownership in the
solution, Chan said. When top level managers clear their calendars
and step away from the office to participate, they come away
with a sense of accomplishment; theyve decided something, Dunbar
One of the most surprising things students discovered about solution
centers is that there is little competitor intelligence on them.
The team learned more about this niche of the industry than any
of the individual players know. Each firm reports that they see
themselves as unique, said Blount-Lyon, associate professor of
behavioral science. The sites remain low profile because most
firms arent marketing them externally but pitching them as a
new option for established clients. In fact, some firms have found
the concept difficult to sell internally, let alone to clients,
the team learned.
What part will these centers play in the future of consulting?
Thats the million dollar question, Thayer said. Andersens
[version] has been around so long that they have proved the viability
of the concept. Each of the four firms studied said they would
expand or improve their operations, and they may have the client
buy-in to do so. One Ernst & Young client has come back for 12
sessions. Given the hefty fees involved, the client must feel
pleased with the results, the team agreed.
These centers are most developed among implementation-oriented
firms such as the Big Five. They are providing a genuine means
of differentiation among somewhat generic Big Five brands, said
Thayer. They are one avenue for such firms to move upstream from
the implementation business into strategy work.
As the concept is adopted more widely, firms will be challenged
to maintain a sense of excitement about their centers. However,
traditional strategy firms would do well to monitor this trend
as clients warm to the idea and as operations consultants invade
the strategy turf, the team concluded in its report.
Meanwhile, enterprise systems, also known as Enterprise Resource
Planning (ERP) projects, are already fueling a great deal of long-term
consulting work, according to the team of Jennifer Ewing, Luminita
Voinescu, Rohit Reddy, Connie Vaughn, and Athanasios Surutzidis.
Enterprise systems are basically giant software packages that
promise to standardize and integrate business processes and warehouse
vast amounts of business data that has never been in one place
before, explained Ewing. For instance, they can provide real-time
profitability data by geographic market, by product, or by customer.
Implementing such systems involves reengineering that results
in efficiencies and potential cost savings; it also resolves Year
2000 software problems.
Four or five software companies develop and sell these systems,
which are so complex that the end users usually hire management
consultants to handle implementation. The software companies are
so busy developing and improving the product that they cant handle
installation; some are starting to develop formal relationships
with consultants, who are building expertise of how the systems
work within organizations. Implementation can take two years or
more, depending on how many modules are implemented and how broadly
a firm decides to use it.
The systems are so powerful that they produce an almost overwhelming
flood of business data. Companies faced with information they
have never had before often need to call on consultants to make
sense of the data and put it to the best use. Industry projections
are that ERPs will account for $15 billion to $20 billion in 1999.
One in every eight consultants in the Big Five firms is working
on implementing one of these systems.
The price tags are huge. Companies can spend $300 million or
more and still not be up and running. Consulting fees are 10 times
the software fees at large companies, said Ewing.
One hypothesis the team set out to prove or disprove with their
project was that the popularity of ERPs would translate into less
consulting work on strategy and efficiency projects. With such
huge investments in standardization, it was likely that companies
wouldnt spend additional consulting fees on a strategy that would
undo the work of the ERP project. This isnt the case, they found.
Strategy and software are interdependent, the team reported.
Clients are always interested in strategy, and thats something
that cant be automated.
The data produced by enterprise systems do not necessarily translate
into a competitive advantage. One of the things we found out
is that ERP doesnt work for everybody, Surutzidis said. Finding
information is easier with ERP, but the need for solid analysis
of that data is as strong as ever. Ewing added, Its how you
use enterprise systems that might help you get ahead. The analogy
is that its like Excel. There are people who are shallow users
who use Excel as a word processor to make tables. There are others
who use it to run complex models.
For Connie Vaughn, a part-time student who works as a consultant,
the research project confirmed something she had sensed on the
job. Often people dont have a clear sense of strategy and a
framework to analyze the business information they have. This
project showed me that it wasnt just my imagination.
The ERP team agreed that their research gave them a clear understanding
of ERPs value, which in turn gives them a competitive advantage
when they enter their consulting careers.
One of our conclusions was that all kinds of consultants need
to have some understanding of what an ERP organization is and
what it should look like. When coming in to work with a client,
they need to be able to diagnose where the company stands from
an ERP viewpoint, Ewing said. How standardized is the firm?
Is the company a shallow user of information or is it making more
complex use of information?
As for the long-term impact of these systems, History has the
answer, the team concluded. This will be just like Total Quality
was and reengineering was. These trends had an impact on consulting;
this will be just like them.
The ERP team is hoping to publish its results in the Journal of Management Consulting.
The solution center team was mentioned in the August issue of
Global IT Consulting Report and is working with Consulting News to publish their findings.