The SAP Observation Deck

Managing successful technology consulting partner relationships. Where the buck should stop - and why.

In a rather insightful blog “Take Back Control of your Consulting Relationships” (click here to view), the author, Jenny Sutton, talks about where responsibility for relationships with external consultants should lie - and how the value of their work can be measured.

 

Here at Invenio we work side-by-side with many business consulting and advisory firms to ensure that technology becomes an enabler in helping our joint-customers realise their goals.  Whether that be in reducing costs, improving performance, introducing new product or service lines or expanding across new markets - technology is almost always a foundation block in underpinning the success of these efforts.  These particular types of consulting relationships are usually owned by the business or executive functions within a firm - and are therefore clearly measured in terms of what impact they have on the bottom line (not always, but that’s a whole other story!).

 

However, one relationship that is often at arm’s length from the business is that of the technology consulting partner. These consulting relationships are traditionally ‘owned’ by IT department. So, since we’ve already established that technology is a tool that helps to improve business performance, should it therefore follow that the business – rather than IT - owns these relationships too?  

 

In her blog, Jenny goes on to suggest that the responsibility for a consulting relationship – ANY consulting relationship – should lie with the CFO, as the “guardian of business value for the enterprise”. And, as technology falls squarely under the banner of providing “business value”, then shouldn’t the CFO be more involved with driving technology consulting decisions?   Whilst the value of having the CIO as a key facilitator within any technology consulting relationship should never be underestimated, as the first priority is to ensure that technology supports the objectives of the business – wouldn’t it be wise to have the CFO more closely involved to provide a business perspective on what these consulting relationships should deliver?

 

In many businesses today, the CIO reports directly into the CFO’s office - thereby ensuring open (if not always convivial!) communication between the business and IT functions.  However, even then there still exists a disconnect between the CFO and technology consulting partners - and so I do wonder if many of the horror stories we hear about cancelled and failed projects, budget overruns, incomplete and ineffective systems could be avoided by closer ties with the CFO. When you look under the surface of these stories you’ll often find references to “ambiguous objectives”, “unclear project definitions”, “poor communication”, “changing expectations”, “moving of goalposts” and a “lack of direction or leadership”. Now that’s not to say that blame should be laid entirely at the door of the IT Department as, after all, they are simply trying to do what is in the best interests of the business... but I do think that any business-savvy CFO worth his or her salt could make enormous inroads into clearing up many of these issues from the get-go – thereby helping to reduce these kinds of stories by a not insubstantial amount.  

 

So, as I step down from my soapbox, I would like to end with saying that the most successful software implementations we’ve delivered are those that are actively driven by the business users themselves - with a supporting hand and good, clear guidance from the IT function – so perhaps it is time for both the CIO and CFO to get closer in managing what the technology consulting firms do - so that way everybody wins.

 

 

Laura Coles

Marketing Director and Chief Blogger   

 

M&A for IT Directors: "The gun is loaded but boards are reluctant to pull the trigger".

City AM today reported that small and mid-size companies have been increasingly active on the M&A scene in the first half of this year - dabbling in a greater number of more lucrative deals as the economic tide begins to turn.

 

Financial Market specialists, Thomson Reuters’ latest review reflects this - stating that the value of global mid-market mergers and acquisitions (mid-market defined as companies valued up to $500m), surged by 42.3 per cent to £206.9bn over the past six months.  

 

In the UK, despite fears over the impact of the coalition government’s fiscal tightening, mid-market deal values rose by almost 90 per cent for the half-year. And the UK was not alone in showing an increase in activity with almost every region across the globe experiencing growth in mid-market M&A activity. 

 

However not all commentators are bullish on the current M&A Outlook. 

 

KPMG’s latest Global M&A Predictor showed that although forecast net debt to EBITDA ratios have come down by 20 percent - indicating increased deal-making capacity - forward PE ratios have tumbled by the exact same amount, suggesting that deal-making appetite is under severe pressure.  Commenting on the latest Predictor results, David Simpson, Head of Global M&A at KPMG said: “M&A has always been a confidence game and the latest Predictor suggests that it is currently in short supply”.

 

Coverage from the Financial Times recently stated: “Europe's sovereign debt crisis and turbulent financing markets rattled the confidence of corporate dealmakers across the globe in the first half of the year, damping already lacklustre mergers and acquisition activity”. 

 

It is the FT article includes a particularly interesting metaphor from M&A stalwarts Citigroup, who’s European Head of M&A, Wilhelm Schulz said "The gun is loaded, but in light of recent market volatility, boards are reluctant to pull the trigger".

 

What’s all this got to do with Business Systems?

 

As Gartner rightly points out M&A activity leads to a need for good integration skills. They recommend that chief information officers should brush up on these skills so that companies are primed to reap the benefits of any future M&A activity. 

 

Dave Aron, VP at Gartner says “IT should be placed firmly at the heart of M&A plans with an involvement that begins at the due diligence planning stage and culminates at the "reap the benefits" phase”.

 

Mary Mesaglio, a research director at Gartner continues: "A good rule of thumb is that roughly 25 per cent of a typical M&A integration effort will come from IT. But the time and effort that each phase requires from IT varies significantly”.

 

From Invenio’s experience, integrating systems (or decoupling them in the case of divestment) can be a complex process. In the same vein, implementing a brand new solution to help integrate the various constituent parts of a group of businesses to become one entity takes considerable time... business processes must converge and a common set of operational standards and methodologies must be agreed.  If you’d like to find out more about the IT challenges brought about by M&A I’d be happy to help so please do drop me a line if this is an area of interest (or, indeed, frustration)!    

 

Laura, Marketing Director and Chief Blogger

 

 

Sources:

 

http://www.cityam.com/news-and-analysis/mid-cap-ma-activity-surges-economy-rebounds

 

http://www.ft.com/cms/s/0/1a9d90ec-83de-11df-ba07-00144feabdc0.html

http://finchannel.com/Main_News/Business/67202_KPMG%3A_Dramatic_loss_of_confidence_postpones_reopening_of_M%26A_market__/

http://www.gartner.com/it/page.jsp?id=1396213

Is social media the final nail in the IT Exhibition coffin?

This week we have a crack team of Invenio personnel exhibiting at an IT conference in Sri Lanka.  A decade or so ago, corporate IT departments were in the midst of a love affair with the tradeshow.  Each year, millions of delegates would converge at various conference centres in various locations around the world to see the very latest technologies on the market (or, in some cases, watch a powerpoint of soon-to-be-available technologies!). The big vendors would spend hundreds of thousands of pounds, dollars, deutschmarks and yen to attract us to the biggest, flashiest and outré stands that were stuffed with as much tat as you could stuff into your branded exhibition satchel.  The market for stress balls and branded mints never had it so good.

But then came the internet.

With a few notable exceptions including the traditional “XYZ User Conference”, everybody wants to do business sitting behind a computer screen. These days it seems, businesses search for prospective suppliers through the proliferation of social networks that have sprung up. Blogs, discussion forums, twitters, facebook and linkedin are no longer the must-have accessory for the technology marketing fashionista - they are a mainstream requirement for IT suppliers everywhere if you are to stand a chance of getting on a shortlist.

Of course, social networking isn’t a new concept – it has in fact been around for decades in the guise of usenet and listserv et al...  but its elevated position in how we use it to find new suppliers – has all but replaced the range of human interaction provided by an exhibition.  

In his recent blog entitled “The Social CIO”, Alastair Behenna wryly stated “I’m going to have to leverage my “social” skills if I’m to succeed in “consumerising” corporate IT.”  This, in response to a Gartner press release that declared a new dawn in which we’ll have occupations that include “virtual-assistant designers ... who create Web beings that replicate the actions of a human being in providing agent services on the Web”.  OK, I’ll look forward to that.

But (bringing this blog back to its original subject) I think that social media is a poor substitute for real world business networking.  The delegates in Sri Lanka get to shake hands with our CEO and have a proper conversation about how we can work together. They get to ask questions and get unrehearsed, PR-free answers. They get to see our team in action - and we get to look our prospective new customers in the eyes. And these are the things that this blog can never do. 

Social networking is a great tool (in spite of my previous protestations!).  But I think we’ll all be a bit better off if we keep a degree of human interaction in our business dealings with each other. And that means getting out of the office and into the exhibition hall to press the flesh and grab a few stress balls to give to the kids when you get home.

Yours

Laura, Marketing Director and Chief Blogger