Management consulting, a services industry that has become more and more commoditized due to its dynamics. From value-added to time and materials, consultant timesheets where people talk and talk about what to do. There’s a huge potential in the industry where companies as end-clients seek third-party support providing input in strategic matters to transform any organization: the bigger the company, the more reliance on outsiders.
State of Management Consulting
In the management consulting space, quality has always been related to high premiums — ironically, technology reduces the cost of building or owning solutions in many industries. Alongside, the cost of creating technology is being distributed leveraging economies of scale, recognizing that qualified talent is available everywhere in the world at multiple price points.
Last decades, the practice was deteriorated due to an expansion in technology requirements and tools available for any CxO member to autonomously decide what to use and conduct the tool within their department. The consulting approach of designing a playbook and sharing it with the client is less valuable than before. The uncertainty and lack of clarity in a changing world, besides the increasing competition in every industry, demand companies to continuously evolve towards new solutions and value propositions. From a plan in paper serving as a guide to clients, today's companies’ needs rely on the execution and the complex ongoing exploration of new business models relating the concept of ‘modern organizations’ with their high efficiencies. A plan becomes irrelevant if those who are defining the strategy cannot execute and deploy those ideas to confirm the veracity, potential, and real impact of the verbally agreed plans.
More and more companies need support in tech implementations and execution to pursue optimization and continuously be relevant to their markets.
The real struggle from the management consulting side is:
- An abundant engineering scarcity making them competing with digitally native companies to attract talent,
- Embedding an engineering culture strong enough to retain talent and permeate all over the company,
- Accelerate their build practice to stay relevant among competitors, market conversations, and their demands, and
- Earning the first case studies and credentials to expand their tech business opportunities; the chicken-and-egg problem.
Why consider a software arm in Management Consulting?
The opportunity to integrate software and technology practices into the management consulting world is imperative in modern days. Any company (a potential client in this case) willing to thrive and succeed will require optimizations and diversify from a business model standpoint. That’s where the management consulting practice, beyond understanding and discussing potential plans, is required to extend to a point where technology and its implementation need to be discussed and even more deployed.
Management consultants are required to understand the business, strategy, and now, technology. If you don’t understand the basics of product development, build vs. buy situations, SaaS offerings, and others, the management consulting practice's offering will become irrelevant to many companies' ears needing strategic and transformational support.
Integrating that expertise becomes a bridge between the plan and the execution. Translated into a management consulting firm, it will allow the business to extend the services spectrum and add value to current and new clients.
Opportunities with distributed software teams
When we talk about distributed software teams, we might refer to different approaches. In the case of this context, we are talking about the opportunity of either including a software development unit within the management consulting premises or exploring collaboration with a software development firm to build long-lasting relationships and drive more business.
The more decentralized the team, the better from a pricing and competitive standpoint, taking advantage of multiple regions and, therefore, the economies of scale. Concentrating a team in a single region will only allow a company to serve that single market. Having teams in multiple locations can help the business serve the same region but at different pricing points, or even better, expanding the business into other market regions.
Without any order or prioritization, the next list might serve as a reference of the opportunities once a distributed software practice is integrated into a management consulting business:
Win more deals
A company becomes more competitive without sacrificing any quality while partnering or building the software development unit. The company will present a new set of tech services, with a flexible price point depending on team members' location.
Integrate a build capability
Starting a technology and development line of business is not an easy task. Partnering with a company might accelerate access to mirror a proven experience in multiple industries building software products. However, with multiple deals flowing, the business should show success stories from its own portfolio.
Expand your capacity on-demand
Using development partners, you can adapt your operation to your client needs and your pipeline cycle. When you have your unit, it needs to be monitored due to all costs involved, so a capacity plan needs to be in place, whether with clients or internal tools for internal innovation purposes.
Access to Intellectual Capital (& business expansion)
Bring world-class talent from regions you haven’t explored and leverage economies of scale as your competitive edge, maintaining your quality and service above the rest of the market. Again, if you concentrate on one region, you might be only serving that specific region.
Extension of lifetime value in the portfolio
Extend lifetime value in your client portfolio and your company, create value-added with additional tech services that will fortify your current offering and will help your customers in the long run. Being there will provide a better sense of potential up and cross-selling opportunities. Despite this increases engagement risk, it comes to a better output for both organizations involved in the process.
Decentralized unfair advantage
Maintain your standard of quality and take advantage of the proximity, cultural affinity, and alignment that you can find with specific regions, whether to partner with software companies or to build your development unit.
How to implement this?
Any management consulting firm will require a software and technology unit. Not necessarily internally operating, but at least a plan to collaborate with companies that might extend their current offering. Similar cultures, similar philosophies, and collaboratively go to market together.
There’s a variety of connections that can be made between management consulting frameworks with technology practices, and making the right tights will allow the consultant group to retain their current client portfolio, continuously add value, allow their clients to redefine themselves, be relevant, and at the end, be a favorable dependency to their continuity of success.
Combined value-added of Consulting and Software Dev
One of the multiple advantages of making this conjunction is the commoditized conversations in the consultancy and software spaces if those practices are combined. Engineers are perceived as a commoditization due to the Time & Materials conversations and how you can find engineers practically everywhere. The same happens with consultants. The big difference is finding the right person for the job to be done.
In this scenario, combining a group of business experts with tech knowledge, working closely with engineers that understand a specific industry, their challenges, and solutions available out there is the best combination to thrive in the current transformational world of business.
The distributed strategy becomes relevant when a company has a defined size at a scalability phase, and wants to compete with bigger organizations, already with resources and tested strategies, allowing them to increase their operations and tech capacity, and at the same time, optimizing costs and being more efficient with multiple offices and employees from different backgrounds.
This world-class practice can be taken as a reference, and an implementation can be done on a smaller scale. Whether you want to hire first engineers on your premises, hire people overseas to reduce the exuberant cost of consultancy, or maybe, partnering with an international partner to serve as a proxy and facilitate those interactions, the transition to an execution mindset from the consultancy world is happening.
If you want to explore the possibility of building an internal software development unit for your management consulting practice, please send an email to firstname.lastname@example.org.