I’ve been asked over and over again which firms will survive the e-consulting shakeout. Rather than speculate on the survivors, it’s much more productive to chronicle the thrivers—those companies that will dominate consulting services as true end-to-end solutions become the norm.

IBM Global Services is the world’s largest business and technology services provider, with 1999 revenues of more than $32 billion. Business Innovation Services (BIS), the “consulting” arm, constitutes about 30 percent of that total, or $9.7 billion. For those keeping score, Big Blue BIS is roughly the size of Accenture. In fact, one could make a mildly convincing argument that IBM has the world’s largest consulting operation.

With expertise across 21 industries, BIS is hiring roughly 1,000 consultants per month. Frank Roney is Business Innovation’s general manager. A former Price Waterhouse consultant, Roney has worked his way up the IBM ladder over the last eight years.

When comparing BIS with other e-consulting start-ups, you have to toss out the fruit basket. This isn’t apples and oranges. Practically speaking, IBM flat-out squashes most of the competitors when it comes to R&D and innovation.

In e-commerce, for instance, IBM research has generated more than 40 patents for e-market technologies. IBM also has developed technologies, software, and services to capitalize on the coming wave of wireless e-business. For all the babble about accelerators and incubators from competitors, IBM has been fostering innovations before many founders at competing firms were even born.

Lest I sound too much like a cheerleader, BIS does face some obstacles. Anything this big can easily trip over itself. To battle the bloat, BIS has streamlined its 21 industry groups into five major sectors with a three-region geographic overlay. And BIS consultants must constantly face market perceptions that they exist to push IBM products. Roney strenuously denies such claims, and the company pushes its many partnerships and alliances as evidence of platform neutrality.

When the Internet really started gaining steam four years ago, IBM spent an enormous amount of time trying to develop a catch phrase for “e-business” to use in its ad campaign. After countless focus groups, the company discovered that nothing describes e-business better than e-business. Thus was born a highly successful positioning statement that put IBM at the forefront of the revolution.

The folks at Big Blue have yet to relinquish that position.

Heard on the street
The Association of Management Consulting Firms’ Operating Ratios for Management Consulting Firms (2000) indicates that while some sectors of the industry grew at far greater or less rapid rates, the industry in aggregated sectors experienced 7.9 percent growth last year, lower than the 13.8 percent growth in 1998.
Inside Consulting is written by Tom Rodenhauser as a free weekly supplement to The Rodenhauser Report. The report informs senior advisors and business executives of consulting trends and best practices. Subscription cost is $295 per year for 10 issues. Copyright 2001, Consulting Information Services, LLC. Reproduction is prohibited. Quotation with attribution is encouraged.