System integrators (especially the big ones like Deloitte, Accenture, and Capgemini) may have to reinvent themselves. Oh my, that could be scary.

We’re talking about an industry that’s been a cash cow estimated to be in excess of $220 billion dollars. They’ve been selling the same big business customized architecture applications for decades. Yet, they have also been key contributors to some of the biggest ERP failures in history.

Here’s what seems to be changing:

Companies are more budget conscious

They are getting smarter and paying more attention on how they spend their technology budgets. Part of this may be due to increasing accountability to shareholders, boards and employees. Today’s business leaders (think CEOs) are also far more educated about IT services, structure and costs than in the past. They get that there’s a diminishing need to own massive storage capabilities while supporting large IT departments. Let’s just say that it’s less common to have a CIO calling the shots and top brass not involved in the conversation.

Company leaders are looking for alternative and technology-agnostic IT ideas and thought leadership

Top level executives are choosing to be more involved and educated – and are seeking ways to do so. We’ve seen this trend evolve as leaders (CEOs, Human Resource Heads, etc.) join their IT counterparts at our annual digital transformation educational conferences called Digital Stratosphere, where education is the main goal (okay, maybe networking too). They come to learn about everything – from the pitfalls of selecting enterprise software, to what causes implementation failure, to how to select the right partner.

We are often pressed to explain how large system integrators have rebranded themselves into comprehensive IT system providers. Our answers are often not pretty. Many of the big systems integrators with their bigger billings no longer pass the sniff test. For a glimpse into the dark underbelly of ERP systems integrators – as well as how to select the right one for you – you might want to read this guide to selecting the best ERP systems integrator

Cloud ERP solutions are here to stay

This is not a positive thing for big systems integrators who thrive on analysis paralysis (far more common when on-premise applications dominated). Big ERP systems integrators have a keen penchant for customizing the heck out of software because they are talented at pointing out gaps in software, and companies think they are getting a superior product via over-customization.

The cloud is throwing a lot of shade on this type of behavior simply because evolving cloud products typically have superior functionality using a SaaS model which doesn’t need the same level of involvement from a big systems integrator. While cloud ERP has reached the tipping point of market adoption, systems integrators thrive on customization.

Another data point: Oracle is planning to hire an additional 2,000 employees to dedicate to its cloud computing efforts which began with a slow start in 2012. A light bulb may have gone off in 2016 with the purchase of their smaller crown jewel – NetSuite. Oracle NetSuite is widely recognized as the first software company focused on cloud computing, and it also fared well in our ranking of top 10 ERP systems of 2020. But have no doubt, all software developers are heading in this direction.

Show me the tangible benefits

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 success boosters and charge a fair price.

Some, like Third Stage Consulting are niche or boutique consultants, that don’t as much design digital transformations as ensure that they are successful. In other words, consultants that specialize in areas like Organizational Readiness Assessment and Organizational Change Management. Consultants that effectively know how to help unveil new technology that will gain broad acceptance from employees. Hint: it is not training.

In Conclusion

The not so secret backlash associated with big systems integrators is not a matter of crisis management. It is a matter of form following function. Potential clients’ will continue to vote with their feet on how to spend their technology dollars. Why this took so long is perhaps the $220 billion dollar question.

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