Growing areas of SaaS consulting

The SaaS revolution is starting to take on an air of inevitability.

Oracle’s online business currently brings in a surprisingly large percentage in revenues, and Charles Fisher has recently signaled that the new Fusion technology will also be available in a SaaS framework. SAP has entered the BusinessByDesign product line amid little fanfare, and Microsoft recently started to champion their Microsoft Dynamics toolset.

When added to the already impressive list of Tier 1 SaaS providers, such as WorkDay, NetSuite and Salesforce.com we can see how opportunity draws competition. An interesting recent development is a global contract awarded to Salesforce.com, the sector pioneer, by Citibank; totally debunking the myth that SaaS is for SME’s only.

So what other changes are in the offing for the world of management consultants? Where are the big opportunities within this area?

As we pointed out in a previous article, VAR’s and channel companies are already starting to embrace this change by focusing on Business Process work and the work of implementing, rather than relying on license fees for their revenue. Charles Prince has also underlined this by recent claims that after the first 2.5 years the SaaS model can be even more profitable through sales of value add services, rather then the old technology models.

Salesforce.com is again setting the pace in this area starting another wave of tremendous change and tremendous opportunity. Force.com is just one of the waves of emerging platforms that companies and consultants alike can use to create their own online systems. Coghead, SuccessFactors, the coming Microsoft platform, are all examples of how companies can be able to take the next step in software on demand.

One possible hook for consultants is to use these platforms to generate their own niche tools, driving into areas where there is still little or no SaaS coverage. Thus providing them with a grab bag of niche applications to deploy at will. Exchanges like AppExchange are already bristling with niche tools that consultants can draw from to suit client needs. Coupled with the implementation services above it can provide a range of niche areas for consultants to build on through partnerships and other mechanisms.

However, all of this does beg the question; if companies can easily build and deploy small niche business applications globally, why would they rent them from a SaaS provider?

This, I feel, is one of the real growth areas for consulting professionals at the dawn of the SaaS age. The case for SaaS is established, most IT managers are coming, kicking and screaming, to embrace this advance in technology, and the platforms and tools now exist to develop these applications quickly, easily and economically.

There is a need for specialist companies to provide the development skills, post deployment implementation experience, and the culture change techniques to make these systems permanent. Specialists who can work with HTML, Ajax, Flex and any number of emerging programming languages to take advantage of the online tools now available.

Why would companies dedicate their own resources to this? It is niche work, given the size of the systems in use it is often not gigantic systems, and the consultant can and should also bring additional experience for developing and embedding work processes, providing training, and providing an external point of view. Allowing everybody else to focus on their line roles, this is why they are there in the first place.

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MicroStrategy and the Remaining BI market Space

The world of Business Intelligence is shrinking and growing both at the same time. With the recent purchases of Hyperion by Oracle, Business Objects by SAP, and Cognos by IBM, the top three players, the number of independent vendors has shrunk significantly.

So why have they bought into these companies? Obviously, the sector is growing exceptionally fast, booming in fact. Regardless of what else has happened technologically the dashboard remains the Killer app of the early 21^st century, particularly for senior leaders.

The three purchasing companies anticipate buying market share, a developed and mature technological solution for integration with their own products, and purchasing some of the talent that has developed the products and sales pipelines for these companies.

Sounds like a good plan, particularly the first two; but holding onto the talent in these companies could prove incredibly difficult. In fact, MicroStrategy, the remaining leader in the sector, is relying on it.

Within a day of the IBM announcement, this company was setting out its stall for disgruntled employees of the three recently purchased companies. Why not, Aberdeen Group noted in their recent report “Delivering Actionable Information to the Enterprise”, “BI skills are in limited supply”.

So there is a pool of talented people, experts in their area and knowledgeable of their markets, suddenly drafted into much larger companies, finding that their goals and ambitions are now not aligned with those of their new parent company, and quickly starting to feel like small fish in a very large pond.

MicroStrategy sees the whole acquisition phase as a great time of opportunity, possibly the greatest one they have had as a company to date. There overt statements and approaches to employees of recently acquired BI companies is one area where they can snap up disaffected talent and possibly buy their way into some long term relationships within this sector.

Other advantages come from the acts of acquisition itself. All three companies will have to focus on maintaining their client base, integrating their offerings with those of their new parent companies, and aligning their messaging and sales efforts.

MicroStrategy, on the other hand, is free to poach disaffected clients, unhappy with the change in suppliers, and they will be free to continue to develop their products and technologies, while other companies focus on integration.

This will also be a time for them to look at extending partnerships and growing their distribution channels. Why would Accenture, or CapGemini, dominant management consultancies that offer Cognos to their clients, want to represent the products of IBM, One of their direct competitors?

BI is very safe as a separate sector despite the removal of the top three players as independent companies. It will of course get tighter for the existing players, but the MicroStrategy approach shows that with a bit of innovation, and the right level of determination, this could be their best opportunity for breakaway growth.

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Do you really want to be a consultant?

When somebody asks you if you are happy doing what you are doing what do you say? If you are anything like me, you probably tell them that you love it. I get to advise the leaders of industry, I am at the heart of change, and I can see the world revolve from where I sit. Along with that people pay me well and I get to travel around the world at other people’s expense.

Fantastic job, what I always wanted to do when I was growing up in the remote Australian Outback. Yes, sounds great doesn’t it, well be careful what you wish for.

Consulting is a great managerial discipline to be working in, and it does have all of the advantages above, as well as a few others. However, it also has a great deal of sacrifice, hard work, and strain associated with it.

I travel a lot; in fact, I have traveled just about every week this year away from my family. I get to see my two small kids every weekend (sort of like prison really) and the strain of raising our family has fallen squarely on the shoulders of my wife.

Like you, I work long hours. 8-hour days exist only in my distant memory. During the day, I am often client facing, and in the evenings, I have to catch up with everything else we are supposed to be dealing with, for all the other clients, the prospects and our own internal processes.

Then there is the continual self-promotion and networking activities. If you are a consultant, you need to be doing this sort of thing. Alan Weiss recommends a book, or a product of some sort, every year. Why? Credibility, notoriety,, being recognized as an obvious expert within your field, and to create gravity towards you in the marketplace.

The networking for me is a lot of fun. I have been doing this my entire career now so it is more of a hobby than a duty. Nevertheless, it is still there, meet, connect, share experiences, and find common ground, drive opportunities their way, etc, all part of the great game of building a network.

Does that sound like fun? Sometimes, at other times it is just a string of empty hotel rooms with my life on the end of a cell phone.

Jack Welch, put it clearly in his book titled “Winning”. Very few people in the world actually get to have it all. The Life/Balance thing is wonderful for consultants to talk to others about, but in reality, it does not exist. Either you can choose to be on the fast track, or you choose to be on the slow track.

That is the balance – you get to choose. Spend all the time with your family that you want to, and make sacrifices relating to your career. Alternatively, spend most of your time promoting your career or your business, with the sacrifice being on the side of the family.

Consultants don’t often get to choose this really. Our lives are ones of continually striving to keep clients happy, continually trying to justify the size of the fees that are paid, continually looking for the next purchase order – and so on.

For me right now, it is okay. I like it, I really like it actually, I miss my kids, but I have chosen things to be like this so that later I can spend all the time I need to with my wife and my kids.

The day I don’t want to do this anymore, then I need to find a way to make the work come to me rather than travel all over the world going to the work.

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Breakthrough Cultural Change

Once initiatives are off and running companies need to make sure that they are going to stick, and that they are going to become a permanent part of the day-to-day activities of the organization. This means changing the way that the company does business, and it is one of the key areas where reliability initiatives continue to fall over! This means changing the workforce culture! Great! Got it! The last five consultants I spoke to told me the same thing.

So… what’s culture?

Culture can be identified as the way that a company, as an entity, thinks thus driving how it acts. Lets look at that in some more detail. When one person thinks a certain way this is referred to as a mindset, his or her way of looking at things and of interpreting the world. When a group of people think in the same way then it becomes a paradigm, and the culture of any organization is made up of the paradigms of its people.

One of John Moubrays’ more regular quotes was “if you want to change the way that people act, you have to change the way that they think.” If we tie this in with the paragraph above then it becomes a powerful tool for changing workplace culture. So, to put this into practice we need to change the mindsets that make up the paradigms of an organization. You are probably thinking, that’s easy for you to say, harder for us to implement! And I would agree with you 100% on that!

How then can you go about implementing some advanced technique, method or tool, and ensure that it is both effective and permanent? The rest of this short article focuses on some of the techniques that I have used a lot in my working life every day.

As a consultant, managing through change is what I have been doing for the last 12 – 15 years and I would like to share with you some of the lessons that I have learned in a way that makes them a lot more painless for you to learn, than they were for me to discover. This is not what I think this is what I do! So these are road tested to the extreme!

Breakthrough cultural change tip #1: Create a new belief system

As we have looked at earlier, changing culture requires a change in thinking. So we need to begin at the beginning. What are the new paradigms that your organization needs to have? How do they differ from what “we” think today? And most importantly, how can we introduce these to the workforce in a way that will get them to understand and buy into them?

These are the first questions you need to ask yourself. Define what it is you ultimately want to achieve then look at the thinking that will be needed to support that. Adult learning is different from learning in infancy. Adults are smarter, (mostly), more experienced, more cynical, and generally less willing to believe things that they are told.

So you don’t tell them, you show them! Adult learning needs to be delivered in such a way so as to ensure that the people on the course, seminar, or training event, build their own conclusions supported by logic, fact and their inherent ability to reason. In all my time consulting I have yet to come across a single person who did not respond positively to something that agreed with their internal logic!

Sub-tip: Elements of adult learning

To be effective, any adult learning program, whether it be developed in house or delivered by an external provider, needs to contain the following elements in order to be effective in challenging long held belief systems:

Socratic teaching. This is often referred to as teaching through questioning. As the title suggests it comes from methods Socrates used to teach his students. (As opposed to didactic teaching) So it has stood the test of time I would say! Socratic teaching is about being inclusive, continually getting the course participants to respond to questions and to drive the lesson forward.

The trick, and it is a practiced technique, is to get them to arrive at a point where the limits of what they know, or the errors of how they think, becomes immediately obvious to them.

This sounds difficult and the first couple of times that you deliver this sort of a lesson it will need to be very carefully structured and focussed. After a while it becomes an almost instinctive method of teaching key learning points.

Why is this so powerful a technique? Because they participants arrive at the conclusions themselves, through their own reasoning abilities. You didn’t tell them anything just pointed them at something! And if they thought of it, rather than you telling them, then they are more likely to believe it and remember it. (Don’t ask me why, I don’t know why. I just know it works)

Participative learning. If you do something you are far more likely to remember it than if you are told it. Think about it in your own life, if you learned a craft, the theory side of things was only interesting once you got into the field and did it for real. If you learned an engineering discipline, then it was only once you got into the real world and put it into practice that the reality of it became obvious.

Most modern training courses have an element of interactive exercises and practice sessions. However, sometimes these are unrelated to what’s actually being taught and can often just be something to fill the time. In worst case scenarios exercises are the unimaginative kind that say “Now make a list of the high priority items in your plant”. Wow! What’s to learn here?

If exercises are going to be effective they need to challenge those doing them. Argument, in these situations, is not a bad thing at all. In fact it is a good thing and shows that people are thinking, being challenged, and are going through the pain of changing the way that they think.
Participative learning can be group driven, or individual. It can be focussed on an adult learning game, a set exercise, a group discussion, or any other range of variables. In designing your exercises, don’t make the mistake of revealing everything at the beginning. Structure it so that they reveal things to themselves, or with your guidance, during the process.

Apply the techniques to their day-to-day activities. This is a key element that is often overlooked. It is overlooked because it can often throw up things that are weird, out of the ordinary, extremely difficult to deal with and sometimes controversial. Why? Because no matter who you are, it is likely that they know their plant a lot better than you will ever be able to!
So, if you are going to include a session where they apply the techniques to their own equipment then you need to be 100% sure that you understand your subject matter thoroughly. If so then you can deal with the curve balls that will come at you once people start to apply it to their own situation. Thinking on your feet is not a nice-to-have ability for asset management trainers it is a must-have!

Why is this so powerful? Because it combines the elements of the other two steps. Socratic learning through questioning current practices and using their new found logic and understanding to solve them, and doing rather than hearing about, so they can learn from the results.

As a quick warning, unless you are looking at something very simple, don’t think that you are going to get a fantastic result that you can use in the plant immediately. Take the pressure off everybody and let him or her learn through making mistakes.

So this is the basis of changing culture. Why do we need to do anything else? We have changed the way they think. Right? Wrong! We have only just begun. After the workshop or training session they are going to go out into the workforce with a range of people who think nothing like the way that they now do. And these people are not going to “get it” just from a passing conversation.

If you don’t follow up immediately then the results will be, changes to thinking 0% – 20%, changes to the way they do work 0%-15%, changes to the way the company works 0%!

Breakthrough tip #2: Prove it!

This is key to success. As a consultant it is my job to continually be backed up by a successful track record. In my business, having a scorched earth policy will only lead to reducing levels of business and ultimately a forced career change! If you are going to put in place a successful change program you need to think like a consultant. Think end of life, not end of project. How will this go on to be a fantastic reference for you within your company and beyond? Through its success!

So, to prove it you need to get the course participants to apply it to their areas of activity almost immediately after the training! Get them to apply the principles of what they have learned, under your expert guidance, to an area of their daily work.

Using their logic and new understanding of a particular area, get them to reason through a problem or issue Arrive at a result, and then go about putting the result into practice. Through it all, make sure you remind them, and yourself, of what you have achieved. This means tracking the benefits. Make sure that they are aware of how their efforts translate into an impact on the corporation. Either through increased productivity, profitability, reduced risk or any of the other key areas that your company is focussing on.

Why is this a powerful cultural change tool? Because they see that what you have taught them actually works! It is not just theory, whiteboard magic or “slide-ware”. It is a real, practical method that they can apply to change their situation.

At this point we start to get into some of the myths surrounding cultural change. Most people are afraid of changing their current situation. This much is true. But, people do want to contribute, they do want to make things better, and they do want to improve the way that their company works. (And often want to better themselves personally in the process. Nothing wrong with that!) Despite what you may hear, it has been my experience that this is the “what’s in it for me” factor.

Breakthrough tip #3: Check it!

Put in place a monitoring regime to ensure that what we said we would do, we actually did. Place some form of scorecard or performance monitoring regime around the asset, department or whatever it was that you applied the techniques to.

Learning about new ways of doing things will challenge their belief system and allow them to look at accept that there are better ways of doing things. Putting it into practice will enable them to see that it really does work and is not just some theoretical program of the month! But, seeing for real that it did work, monitoring the metrics in place to watch the benefits they said would appear become reality. That’s a sealer! And it drives home all of the things that they have learned, in a number of different ways, up to this point.

Breakthrough tip #4: Re-apply it!

As things go on, changes to the way that the company operates, changes to the quality of data available, changes to the way that the workforce is structured and any number of other variables could mean that what you wanted to achieve didn’t come about. Or what you wanted to achieve has been affected by changes in the environment. At this point there is a need to revisit the exercise, re-apply the techniques with the benefit of new knowledge and hindsight, and begin the process of monitoring it all over again.

This is the essence of continual improvement. A workforce, now thinking along the lines that we set out to achieve at the beginning, monitoring and adjusting processes and other tools to ensure maximum performance to what the company requires at all times. Steps three and four become the core of the day-to-day application of the new culture, and the company has successfully changed an element of the workforce culture in a way that will drive it further along the road to breakthrough performance.

8 "lies" companies tell before starting a consulting engagement

(Format shamelessly stolen from Guy Kawasaki’s Blog “How to Change the World”, check it out!)

Okay, so they’re not dirty big “lies”, more like the white untruths, miscalculations, obfuscations and poor judgments that companies (we’ll call them “clients”) generally say just before starting on a large scale initiative.

If you have ever been involved in an ERP system implementation or any other sort of project with a big organizational impact (As a consultant or a client) then it is likely that you have either heard or used these at one time or another.

1. Yes, we will make sure that all of the documents are ready for when you arrive

Like most of these “lies” this one is very well intentioned; just wrong. The people making these statements have often never seen the technical documents, nor do they have any idea if they even exist, neither would they know where to find them if they needed to.

The people who do know where they are often would not make these claims because they were lost years ago, or they are spread out in several peoples desks and offices or they have never been seen since Noah was a boy!

Sometimes companies do have good technical libraries, but this is beside the point. Don’t take any assumptions about this one. If the project is planning to have these and doesn’t, it can upset the entire time line!

2. Providing office space and administrative resources for the team will be no problem at all.

Correction, this will probably be the hardest thing you will have to do!

There is almost never any free space, or if there is it is in an isolated part of the company’s estates that nobody has seen since the entire division was downsized. (And even then it will be a fight!)

This is a good example of how project sponsors or managers tend to over estimate the importance of their project. (The operations, plant and maintenance managers)
And when admin assistance is needed it is often some poor overworked clerical assistant or secretary who cannot possibly meet all the demands of the project and her day job!

Get commitment first, and then work out how to deal with this one! It is easier to deal with this problem before you get a room filled with egotistical consultants and megalomaniacal project managers.

3. We will take care of the communications issues.

Well intentioned and probably something that you thought you could do. My experience has been that when this is run wholly internally, meaning by the client alone without assistance from the consultancy, it often ends in tears.

Why? Because of one small miscalculation, the people carrying out the communications and trying to change the culture of the company’s employees are often the same people that they have been working alongside for many years.

So they have the same workplace culture anyway, they are familiar with each other and know each others faults and histories (not always great).

Also there is a need to get very serious about this. The project is often in the millions, sometimes even in the tens of millions, and you want to entrust the change of workplace culture (and communications of these changes) to an ex-division manager who worked through a couple of big projects like this before.

Okay, sometimes it works but we should be realistic. This can’t be amateur week if you are spending that kind of money. Cultural change is the bedrock that will ensure the success or failure of the initiative over the long term.

Understand what the challenges are (really understand it) check out your options and if necessary spend the money to get it right the first time!

4. Don’t worry, if we tell them to be there for training they will be there!

Um…no, they probably won’t.

This is a standard sort of line that project sponsors and managers give. Why? Several reasons, they overestimate their ability to get things done (this is after all probably a big step both for the company and for this person specifically) or they have underestimated the workload that the sites and departments that have to implement this are already facing.

Organizing training is a pretty intensive and difficult thing to do! What about:

• Turnaround schedules and when people are likely to be busy doing other things?
• Heavy vacation periods? (August and December for example?)
• Other initiatives that are on the go at present?
• Work rosters?
• Current workloads and the ability or otherwise of the department to spare that person for one to three days of training?
• Resources for training and their availability? (Rooms, projectors, flip charts etc)
• Are they even interested? (The people or the plants / departments?)

Face it, they probably won’t be there unless you organize for them to be there beforehand. (Project pre-planning) Doing it after making the commitment (as in 99.9% of projects) means some of the best resources or a large number of ordinary ones, will not get to be involved.

5. This is important to us; we will make sure you have a dedicated team of top level resources to implement this.

The guy making this statement often doesn’t “know” this, but he does believe it! Again, do we really believe this project is so important that the key resources that should be “at the coal face” are going to be taken off line to do it for an extended period?

The reality is often somewhere between a range of possible outcomes.

One, this has happened to me sadly, the guys you get are the people that the company is intending to elbow out once the project is over. Great motivational symbol that one!

Two, you do get a small core of disciplined and seasoned professionals who are overwhelmed by the workload they have to do to get this done for the entire corporation, often leading to frustration and resignations.

Three, you get the people who can be spared. More likely than not this will be the guy who is often quoted as a “hard worker” but everyone realizes they are not really very sharp. But, “he deserves a break!”, so they give him to you to ruin your project.

Four, they give you good core resources, supported by a good network of satellite resources, and once the project ends they go back to what they were originally doing. Conclusion, some small gains followed by business as usual.

Five, you get nobody, but have to get the work done anyway.

This last alternative is sadly the way that many projects are done today in our field believe it or not. Meaning that there is absolutely no chance of realistic knowledge transfer or of the entire thing becoming permanent in any way at all.

6. We want this to be a knowledge transfer process so that we take over the implementation during the handover period.

He is right, he does want this, his company wants this, and sometimes they actually get it. But most times the time allowed for transferring a lifetimes worth of knowledge to somebody who has been running operationally for their entire career is nowhere near enough.

More to the point often the program for realistic knowledge transfer, including post training mentoring, skill audits, reviews and updates of training as well as the role support mechanisms are often not even considered.

Sometimes there will be one or two “knock-em-down-drag-em-out” types who will get the bit between their teeth and take this on as a personal mission, regardless of the support they do or don’t have. But these people are the exceptions, those who will get the most out of the training and then embark on their own personal self improvement to get the rest of the information they believe they need.

But most times it all ends in tears with the client being left with a half implemented initiative, moderate to useless resources to continue the implementation, and a rapid downward spiral of interest once the baton has been handed to their own people.

7. We will make sure you get full access to our existing system for any data you need.

Unless the guy telling you this is the head of IT and can change their policies regarding information, data and its manipulation then this step will be like pulling teeth!

Data, its management, storage and use is the realm of the all seeing, all powerful IT department. And they see themselves as the guardians of the company’s future in many cases. If you want to get access to something as privileged as asset data in an asset-intensive company; then prepare to be met with restrictions, difficulties and outright refusal.

While this can be done through diplomacy, horse-trading and other not-so-enjoyable activities; it is far easier to include them in the project planning and execution from the very initial stages.

8. We have full management support for this

Wrong, wrong, wrong! You don’t have management support; you have their authorization to spend money!

Management support is a whole different thing. Thinking that you can crowbar this into the organization just because you have “the big guy” standing behind you giving out threatening looks is never going to work in the long run.

What it will do is get you compliance, but not acceptance. Think about what you are doing here. Taking something from the center of the company and pushing it out into all of the departments, sites, plants or companies that are associated with it.

What do you think they were doing before you and your project turned up? Waiting for you?

No! They were making do, building their own systems, finding their own solutions and applying hard-earned experience to take care of the headaches of their day to day operations. Sometimes they have done a great job at this, oftentimes it could be better. But it’s theirs! It wasn’t imposed on them by somebody they have never even seen (but have read their names on fliers).

So they are going to view the project with suspicion. Worse, if you haven’t got the communications right at the beginning they will be hearing rumbles in the distance, feel threatened, and raise the defenses.

If management really supports what you are planning then “the big guy” will be out there selling (not pushing) the project to the department heads, plant managers or company presidents. There will be financial linkages for them to the success or failure of the project, and once they are convinced they will also start to evangelize their senior management and decision makers.

If you are going to spend several millions of dollars changing the way that the company works, then platitudes, strongarm tactics and sheer bloody-mindedness is not going to cut it. There needs to be a sense of mission and everybody needs be on it!

Leveraging off new technologies

Consulting is about change, always about change. In fact, more than any other managerial discipline, consultants need to be the ambassadors of new technologies, new ways of working and thinking, and new ways of getting even greater performance.

SaaS is a change that most consultants didn’t see coming to be frank, and those that did are now offering products as part of the continual barrage of emerging online applications.

Regardless of whether you are championing changes to work processes, new technologies, a different configuration to SAP or Oracle (say), or even different strategies and corporate structures; at all times we need to be the most up to date with the changes in our area of expertise, and know how our clients could benefit from them.

So how can consultants tap into this growing trend, by joining in the game of course!

Today’s technological offerings allow consultants to be even more productive than ever before in delivering their solutions. The Force.com visual programming language premiered by Salesforce.com this year gives everybody the ability to rapidly develop online programs, and they will also host it for you on their market-tested servers.

But wait – there’s more, Adobe Flex is a free programming tool that can be learned easily and is able to deliver very smart looking products quickly. Or if you are in a hurry to deliver a turnkey product for your clients then just plough through some of the commodity-priced programs already on offer through AppExchange.com, you don’t have to reinvent the wheel.

If you are not able to provide coding services yourself, then there is already a burgeoning market in outsourced independent coders for you to work with. Check out Rent-a-Coder.com if you like, a meeting place for freelance technical consultants and product developers. Auctioning is the name of the game here and you can pick up a good deal quickly. I have used it twice and it has served me well. Today I have ongoing relationships with a couple of coders I met online there and they often deliver small services for me.

WordPress, Blogger, Microsoft Dynamics, WebScribble.com, and so on, the list grows every time you look. All these products are out there for you to use in delivering productivity improvement to your clients. A fascinating time for consultants, particularly those that are keen to tie small technological offerings into their overall service portfolios.

What is consulting worth?

An intriguing question? What are consultants worth? For different industries the rates can vary widely, Henri Vanroelen, a VP for Estee Lauder Companies believes the following are general guidelines for pricing IT consultants:

• Help desk / PC support / IS Operators: around 40$/hr
• VB / RPG / Cobol programmers: around 65$/hr
• Oracle SQL / ABAP prgrammers: around 95$/hr
• business analysts / ERP consultants: 120 $/hr
• Program mgrs / projects leads: upward of 120/hr, depends on experience level

Sounds fair doesnt it? In many sectors consultants do indeed charge by the hour, in others they charge by the day or week.

The maths is simple; find out what you are really worth a year. (Salary plus costs) divide it either by the number of expected billable days, or by the number of expected billable hours, then add a percentage. Remember taxes and overheads and make sure to capture all expenses that you normally agree to recharge to the client.

Some common approaches to this type of rate setting include:

- Double or triple your cost per hour/day
- Setting consulting fees based on each particular project
- Setting fees based on actual data
- Or just charging market prices

The last option is the most common. Within a short time in your industry you will become very aware of what your competitors are charging.

Often, when they are confident in their space, they charge by value; meaning that they charge a portion of the value it would represent to their client company regardless of the time they spend executing it.

Alan Weiss has always been one of the more vocal advocates for value based fees, a method he has used and publicized as the best means of earning what your services are worth. As always, he makes a very good case for the practice.

These include:

• capping investment at a specific level
• never having a meter running so clients can feel free to call or email on any issue without additional authorizations
• and no debates over what constitutes billable time and what does not

Ultimately many consultants end up choosing a range of methods for pricing their services, including some that may not be here. Your ability to generate consistent high yield fees will end up being determined by:

• Your relationship with your client
• Your track record
• The uniqueness, or perceived uniqueness, of the services you offer
• Your ability to keep your overheads under control, and
• Your familiarity with your clients industry or business

Rick Schultz, Founder and Software Architect of 100Watt Solutions, ties the concept of fees to overall consultancy effectiveness and paints the picture this way ” The other part of the question, though, is “which clients do you want”? You don’t have to be in any consulting role long before you meet “the client from hell” and need to fire them. If you charge top dollar, you have a smaller pool of clients to choose from, and they’re often pickier (because, hey, they’re paying you so darn much, right?). The lower your price, the greater your pool of potential clients. “

SaaS and the new VAR landscape

As Internet Access becomes faster and more widespread SaaS is starting to gain some real traction as the next evolution of business software.

This is forcing radical change throughout the IT community, with impacts on technology providers as well as VAR’s and Channel companies. How will this dramatic shift in technology impact on this area of consulting activity?

A map of the internet published by Technology Review

Under the old-technology architecture of SAP and Oracle value added resellers were a viable part of the distribution landscape. Their income streams were largely generated from margins on hardware and technology sales, and the high yield consulting rates due to their particular specialty.

SaaS is emerging as a large scale disrupter in this area. While the large E.R.P vendors are playing it down and trying desperately to relegate it to the Small and medium Enterprise level, there is growing evidence that globally, industries of all sizes are tapping into the benefits that SaaS offers.

And why wouldn’t they? Reduced cost of ownership, infrastructure as a browser, access throughout the world, commodity pricing and increasingly functional platforms is a very enticing proposition. Particularly where data security and transactional speed can also be guaranteed.

And the big players are sitting to attention, on one hand talking down the technology as something for Mid market companies, while on the other hand making sure they have a position on the playing field.

Oracle chief Larry Ellison is currently having a bet each-way with his investment in NetSuite, the company that launched its IPO recently. SAP has also launched into the space with its Business ByDesign offering, but has stopped short of driving this product into its existing Enterprise Software marketplace.

Channel distributorship will continue to exist, and maybe become even more profitable. The Enterprise market is still strong and it will take some years for this change to become universal one would assume.

However, as always it will be the first-movers that benefit the most, while those trying to hang onto recognizable business models will see their sectors becoming increasingly threatened by improving online offerings.

So how can VAR’s adapt? Experts seem to be divided on this, and even divided over whether they will all need to change their business models.

Jim Collins, CEO of Affinity Internet Inc, sees this as a positive for VAR’s “By removing the more mundane aspects of application installation, the alternative delivery models allow the VAR to focus on what will most please the client, and that is the successful implementation of applications that clarify, secure and simplify business processes.”

In his view those VARs who have focused on building the resources for implementation, adaptation and training will be well positioned for renewed growth.

This is an interesting point and one worth considering further. When the technology has become a commodity in terms of price, other perspectives also change. A client could easily decide to switch between (say) Salesforce.com to Microsoft Dynamics based solely on the ongoing price of ownership.

Why wouldn’t consultants look at representing several SaaS applications? There are more and more springing into this space everyday, and there are even platforms for generating online applications.

Joe Bevk, a Partner at ServiceVantage Corporation sees it this way “In the transition, partners will have to protect current “resale” revenues and grow new revenues throught a combination of referral fees (the new resale revenue base) and changing the service model to business process re-engineering (BPR).”

But what about new business opportunities? And if everybody is focusing on services then who will be able to tell the difference? Jim Holt actually saw things a little differently, with a belief that those companies who “get it” will will “create unique bolt-on application adders and and use the application exchanges that are becoming popular with the leading SaaS and HaaS players. (Such as Appexchange)

Their are changes on the horizon. No doubt about it. The extent of these changes is yet to be fully understood. Will they do to SAP-style architecture models what Google did to Yahoo? Or will it ultimately be more of what Skype failed to do to landlines and mobile phones (Despite the early promise)

regardless of the scale of change, there is definitely an opportunity within this space. Emerging service delivery options within this redefined landscape will definitely include sharper and more developed focus on pre and post implementation services, business process engineering and providing a one-stop shop for add ons, additional packages and extent ions.

It will also force a dramatic change in the way that VAR’s and vendors form agreements. Finders fees, ongoing revenue sharing and other (as yet) undefined models could point the way for technology companies and their consulting partners in this scenario. Models that will provide incentive for both parties to stay loyal and to specialize, rather than offering a bit of everything depending on their mood.

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