System integrators (especially the big ones) are finding the need to reinvent themselves. We’re talking about an industry that last year had revenues estimated to be in excess of $220 billion dollars. Deloitte, Accenture, and others have made their money by focusing on and playing alongside big software names like Oracle and SAP. They’ve been selling the same big business customized (and sometimes predetermined)architecture applications for decades. Here’s what’s changing:
With all the upheaval that the Covid-19 pandemic has caused, companies are far less willing to “sign on” for big dollar complex multi-year ERP initiatives. They are getting smarter and focusing on spending their tech budgets on software that can deliver quicker results. HCM and CRM software are two prime examples. Companies get that there’s a diminishing need to own massive storage capabilities while supporting large IT departments as cloud-based applications and storage have never been more in demand.
Customers also realize that system integrators do not own their own software, thus will have alliances with software companies in hopes of gaining long-term business with the end customer. When an SI provides/suggests a core technology, they hope to make money by not only delivering the system but with ongoing compensation for management and operations.
With business processes upended and supply chains decimated, the business doesn’t look anything like it did at the beginning of 2020. JIT inventory management – while introduced to save money, is more likely to be causing delays during the pandemic (when there’s a lack of availability across the supply chain). Companies are being forced to focus on tech solutions such as employee connectivity to ERP software that can be used remotely by a noncentralized workforce.
Companies are also moving more quickly to access new technology and are seeking the guidance of independent ERP experts. An independent consultancy like Third Stage Consulting has access to, and deep knowledge of, the big software brands - but is not shy about vetting a variety of Tier 2 solutions that may be more cost-effective and quicker to implement. Solutions that can address a variety of issues from supply chain chaos to how to increase virtual communication with employees.
Top-level executives are having to be more involved and educated about ERP - and are seeking ways to do so. Some businesses are exploding with increased business while others seek ways to reinvent and survive. They’re not looking to big system integrators for near-term solutions, innovation, or coaching. They want to know more about technologies such as web-based portals, AI, IoT, AP, and a host of other functions. Rightly so, company leadership wants to understand the costs and the timing. Demand is shifting to smaller consultants and integrators that specialize in cloud computing, mobile computing, organizational change management, etc. Companies see the value of consultants that are quick movers and success boosters while charging a fair price.
Some, like Third Stage Consulting, are independent niche or boutique consultants. We help companies build and adjust their strategies often incorporating existing systems when feasible. We also specialize in areas like organizational Readiness Assessment and organizational Change Management and act as a conduit for Management Alignment. Consultants that effectively know how to implement and unveil new technology on time and within budget are in high demand. Additionally, that means understanding the complexities of how to foster broad acceptance from employees. While the virus has caused panic, one of the positives is how companies have had to invest in and move forward with tech that may have been on the back burner.
The not-so-secret backlash associated with big systems integrators is not going away anytime soon. While they try to reinvent themselves, firms like Accentureis cutting 25,000 jobs both in the US and internationally. Deloitte is in its third round of layoffs since May 2020.
It’s a matter of form following function. Clients will continue to vote with their feet on how to spend their technology dollars wisely.
Have more questions about your system integrators or digital transformation in general? We’d love to hear from you – please contact us.