GSB STUDENTS EXPLORE TECHNOLOGY'S IMPACT ON CONSULTING


It’s 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-Lyon’s 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.

Stimulating solutions

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 consultant’s 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 as usual.

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 PricewaterhouseCoopers’s 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, ‘that’s 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. It’s 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. Battelle’s 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.

“What’s 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, “it’s 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 wouldn’t 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 don’t 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. “It’s less of the situation where the consultant comes in telling you what to do; you’re 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; they’ve decided something,” Dunbar said.

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 aren’t 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? “That’s the million dollar question,” Thayer said. “Andersen’s [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.

Long-term engagements
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 can’t 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 wouldn’t spend additional consulting fees on a strategy that would undo the work of the ERP project. This isn’t the case, they found. “Strategy and software are interdependent,” the team reported. “Clients are always interested in strategy, and that’s something that can’t 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 doesn’t 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, “It’s how you use enterprise systems that might help you get ahead. The analogy is that it’s 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 don’t have a clear sense of strategy and a framework to analyze the business information they have. This project showed me that it wasn’t just my imagination.”

The ERP team agreed that their research gave them a clear understanding of ERP’s 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.

–Toni Shears


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