Blog: Craig Schiff

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The Consulting Pendulum

When you purchase software, who do you get to assist with the implementation? The vendor? A third-party? The choices available to you are fairly well controlled by the vendor. If they don't have many partners, you have little choice but to use their own consultants. If they have lots of partners the vendor salesperson will probably steer you to a preferred partner in your area. There are benefits to the vendor and the customer in each approach. In the BPM world today we are seeing the beginning of a shift away from the reliance on partners approach which has dominated the space for the past few years

Typically when a vendor is just starting out they do their own implementation consulting. There are several reasons for this, not the least of which is that until they build a market for their products few consulting firms would be interested in making the investment required to hire and train staff to implement those products. In addition, with those first few references being so critical the vendor wants to make sure they build a direct relationship with their initial clients and ensure a successful implementation. This model usually works and produces some initial stellar references. However, it is not very scalable. In addition, Wall St. or VCs pressure the firm to focus on the 'higher margin' product business and leave the consulting to others. At this point most firms look to sign on as many partners as they can find. That is the stage many BPM vendors have been in for quite some time. However, we are now seeing the pendulum swing back. A number of the firms are once again staffing up their in-house professional services groups. Vendor sales people are recommending their own staff over partners for implementation. Why is this happening? Quality and dollars. As can be expected when you bring on dozens, if not hundreds of partners - some will not be very good. When an implementation goes awry, its usually the reputation of the product and the vendor that suffers most. In addition, those same VCs and Wall St. types that were earlier pushing for margins are now looking for top line revenue growth. There is only so far you can push the product license business in a competitive market like BPM, so with at least one service dollar spent on average for every software dollar, it is a logical place for the vendor to look for revenue growth. What does it mean for customers? When the vendor does the implementation work, since they know their product best and have a strong vested interest in its success, you can usually count on a good outcome. When there are lots of partners you increase the likelihood of finding someone local and maybe someone that understands your industry. In addition, the competitive consulting market will create more competitive pricing. The ideal is the mid-point - the local partner does the bulk of the work at a fair price while the vendor is involved to quality ensure the implementation. Unfortunately, for most vendors that point usually exists for only a short time as the pendulum swings from one extreme to the other and back again.

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