Reducing Services Costs

Vinnie Mirchandani posts on IBM’s strategy to productize services.

Almost a year ago, Vinnie posed this challenge: “IBM’s SI/outsourcing groups do not think like its software group. They want to sell more bodies, not automation. If they allowed the same software team which is working on self-healing systems management to work on SI automation, I would be willing to bet they could develop significant labor saving tools.”

When I saw this quote, I had to respond.

First, Vinnie absolutely right in asserting the tension between the stated goal of reducing services costs and the way consultants are incentivized. This is a big deal, and productized services can only work in the context of a more fundamental shift in service delivery strategy, which includes adjusting the consultant compensation model.

Second, Vinnie mentions consulting automation tools. I say YES YES YES to that! Recently, I gave a presentation on exactly this subject; here are several approaches to consulting automation from that talk:

1. Implementation toolkits. Document the process, including roles and activities, and package it into a sharable tool. (Blatant self-promotion note: Cambridge Publications has worked with SAP, IBM, and others to create such toolkits. There is no one in the world better at it than we are.)

2. Reusable content. For example, developing pre-configured systems, along the lines of what SAP and Oracle have done.

3. Automation tools. Well-designed tools reduce hours spent on routine consulting tasks. For example (another blatant self-promotion note follows), Asuret has created a consulting tool to perform rapid pre-implementation risk assessments. We quickly gather data and then automate the reporting. There are also a variety of tools on the market to automate such things as data conversion and system configuration.

Consulting organizations that develop such tools will reduce their cost to customers, thereby improving their competitive position in the market. However, as a developer of such tools, I can say with certainty that consulting automation requires an investment that many services organizations will be reluctant to make.

If you are a services group, either standalone or part of a software company, then beware: now is the time to start thinking about automating your routine activities. Rest assured, your smartest competitors have already begun this process for themselves.