Why Big Consulting Firms are Headed Towards Extinction

The Five Worst People We’ve Ever Worked For
November 24, 2017

With the emergence of the cloud and Software as a Service, the days of multi-million dollar hardware refreshes and software implementation and upgrades projects for large consulting companies are rapidly dwindling.

The heyday of the big consulting were happy days!  As a reminder, here’s how things have worked for the last 30 years.

Step 1 –  A project was identified by the executives of a large corporation.  Hey, we need a new accounting system…. While we’re at it, let’s buy a multi-million Enterprise Management system.  No ROI analysis needed!  It’s what everyone else is doing.

Step 2 – Budget approved.  Now, it’s up to middle management who has no experience with this software to implement it.  If it goes wrong, it’s their heads.  Certainly not the executive team that approved the expenditure.  Well, no one wants to lose their jobs so what is the answer????  It’s obvious – Hire a consulting firm!  The bigger than brand name, the safer you were.  After all, if the project goes south, it’s McKinsey’s/Ernst and Young’s/Deloitte’s fault; not yours.

Step 3 – The Request for Proposal.  Let’s make all of these vendors write a novel.  The longer the RFP, the better!!!!!  Oh and here’s a little secret, the executive team is likely to give the project to one of their buddies from business school anyways so all of this work for the rest of the vendors is a complete waste of time!  

Oh wait, that’s not entirely true.  You can use the RFP pricing to squeeze the winning vendor.  Hey, you might be buddies but you still have to pretend that you care about saving the company money.  And, because it’s all time and materials anyways, it really doesn’t matter.  It’s just for show.

Step 4 – The Dog Pile.  Now that the business has been awarded to someone, it’s time for consulting firm to start the billing frenzy!  If you have a pulse and you’re on the bench, guess what?  You’re assigned to the project.  No experience needed.  You can learn on the client’s dime.

Step 5 – The Implementation.  Come in at or under budget?  Uhm…  No.  That would be foolish.  Drag it out as long as you can bill.  (After all it’s all time and materials!)  Stay there until they literally are ready to kick you out of the building.  Have people hiding in the storeroom.  It doesn’t matter to the consulting firm as long as people are billable.  

Step 6 – Rinse and repeat.  And just about when they are ready to finally get rid of you, guess what?  The software needs upgrading!  And the cycle repeated.

With the cloud and SAAS there is no step 6 and that’s where these big consulting firms are in trouble.  There is no rinse and repeat.  The days of gauging these enterprises are coming to an end.  

Need some proof?

Look at IBM’s 22 quarters of decline revenue or Hewlett Packard’s combination with Computer Science Corporation.  Slice and dice it…  Buy/Sell/Combine.  It’s all just smoke and mirrors.

If you are just graduating from college, the last place to go work is one of these consulting companies.  They are basically a herd of dinosaurs, heading towards extinction.

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