In yesterday’s post “eVA: Your Still The One!,” I had provided a number of insights into why Virginia’s program continues to be one of the most enduring examples of a procurement initiative that has and continues to deliver results.
While there are other programs to which I can refer in the context of being successful such as eProcurement Scotl@nd and perhaps even Australia (at least from the directional standpoint of progressively following similar tracks to those of the other two), failures such as the VHA, City of Houston and the State of California are still representative of the disappointing outcomes associated with the majority of public sector initiatives.
This has led to a significant change in direction on the client side of the equation, as an increasing number of governments (and even private sector companies) are moving away from the abdication of responsibility approach in which they treated procurement reform and automation as a hot potato to be handed off to a third-party.
Instead, and perhaps motivated by more recent failures such as OECM’s punting of Ariba who in the process took a $20 million hit or, Marin County taking a $30 million loss and pursuing a civil action against Deloitte for botching their SAP implementation, end-user clients are assuming control of their own programs. (Note: OECM’s scrapping of Ariba provides further proof that an initiative’s success is ultimately in the hands of the end-user client as Virginia’s eVA utilizes the Ariba platform. To be even more succinct, technology without the active ownership and involvement of the client will be largely ineffective – refer to my 2005 article “Technology’s Diminishing Role In An Emerging Process Driven World.”)
This of course is a monumental, game changing shift that is openly manifesting itself in the form of devolving revenue models and an increasing number of Mergers and Acquisitions within the consultancy/vendor community.
One of the key dynamics at work as a result of this responsibility shift is that many consulting firms are moving toward what Rosslyn Analytic CEO Charles Clark referred to as a “non-consultancy” model.
The fact that a Capgemini for example is going to an non-consultancy model is a big story because moving from an annuity-type arrangement where a firm was guaranteed 3 to 5 years of steady revenues to a model in which results have to be produced within months if not weeks is a reflection that this change is happening in a very real and tangible way.
Another emerging trend to which I became privy on my recent overseas trips was the pending flurry of M&A’s similar to the Accenture/Ariba deal in which there are going to be clear lines of partnerships established. This in itself creates a interesting scenario that is reminiscent of the relational intrigue usually associated with television soap operas.
For example, with the Accenture/Ariba deal the latter has a vested interest in terms of opening up their client base to Accenture, including the $12 million of the $51 million that is being held back until performance of the Ariba asset proves itself. Beyond the mere money question is the fact that despite claims of a successful DNA transformation to an on-demand model (remember my interviews last year with Ariba’s CFO and CMO ?), the company has been struggling as of late. If the Accenture acquisition fails to produce the desired results, the entire Ariba brand as we have known it, will be harmed . . . perhaps beyond recovery.
That being said, the EDS’, CGI’s and the like are all to varying degrees a little uneasy – although the Capgemini acquisition of IBX certainly put them in a viable leadership position in that it appears that they have both a clear understanding of what needs to be done, and how to go about doing it in terms of staking their claim in the new world of procurement automation.
In short, over the next 12 months consultancy firms are going to be scrambling to either partner with or acquire SaaS Vendor core technologies and expertise, recognizing that sitting on the sidelines will likely leave them out in the cold. Or to put it another way the emperor, which are the traditional models and implementation methodologies, has no cloths. Now, everybody knows it. The question is “what are those entities most affected by this revelation prepared to do?!”
What is the old line programs . . . you can’t tell the players without a program!