IT may be a big firm’s game these days but that doesn’t stop smaller consultancies from carving out a profitable niche. One such is Clarion Consulting whose managing director, Pat Millar (pictured), knows all about the big business end of IT having been a former consultant with KPMG Consulting (now BearingPoint).
Founded by Millar two years ago after he left a small rival consultancy, Clarion has now 23 staff and a client list that includes some blue-chip names, including Microsoft, PepsiCo and EMC. Although it sells ERP systems and other products – it is Ireland’s channel partner of Sweden’s IFS – Clarion Consulting is, as the name suggests, mainly a services business.
The term ‘services’ can cover a multitude. In Clarion’s case it consists of an IT services business focused mainly on enterprise resource planning (ERP) software – the big business process automation platforms used by most large organisations and, increasingly, smaller ones too – and a business services arm, offering strategic advice and training in areas such as project management, business analysis and IT strategy.
IT consultants may get a bad press – we all know what Dilbert thinks of this breed – but when organisations, especially large ones, make important strategic IT or business decisions, more often than not they rely heavily on external advice to clarify their thinking and execute the plan. So for example it was on Clarion’s advice that Eastern Health Shared Services recently decided to outsource its server hosting and disaster recovery functions – the result of which was a €1.5m managed services deal with HP announced just this week.
Millar feels that the health services agencies are particularly needy of innovative IT solutions. “They’re under cost pressure; they’re not being allowed to hire more people; their headcounts are being reduced. They are having to offer more services with a smaller number of people. So they’re asking: are there parts of my IT system that I could give to someone else to manage and free up my staff to do other things?”
After several years of halting progress, the managed services message may at last be getting through to the business community, Millar feels. He also believes that large organisations are best placed to benefit in that they can more easily isolate areas within their IT systems that can be parcelled off and handed over to an external provider. He identifies basic IT infrastructure such as wide area and local area networks and desktop systems as the low-hanging fruit for those considering outsourcing, while the management of complex and sensitive business applications such as ERP and CRM systems is much more likely to be kept in-house.
While cost benefits, or perceived cost benefits, are one of the main drivers of outsourcing, Millar points out that cost reductions do not always follow and argues that organisations need to take a more holistic view of its advantages. “While saving money is often the original motivation, it is more important to look at whether you can get a better service for the same price or a slightly lower price. It’s that, plus the saving in management time, where the company will benefit.
“A lot of companies can still be a bit naïve about outsourcing in that they think it will save them a fortune and solve all their issues. It won’t. It may save you some money but over a five or seven-year period, not straight away,” he points out.
Outsourcing as a panacea to internal IT strife is another no-no, he advises: “You can’t just outsource a problem to anyone else. The vendor will insist on stability in what he’s taking on. If you try and give him a mess, he’ll charge you for cleaning it up.”
While larger organisations may view consultants as a necessary evil, smaller ones are even more suspicious. Millar concedes that it can be a tough challenge persuading the small business owner that they may require his services but the need is there nonetheless, he feels. He likens the role of the IT consultant to the independent mortgage broker who is not tied to one particular product and therefore can recommend the most suitable or best value product in the market. But for doing this they will charge a fee.
“Sometimes people don’t want to spend money on consulting even though it would probably save them money in the long term. They’d spend it in other areas but sometimes the attitude to IT is: we’re too small to pay that kind of money [on consulting].”
While the IT services market can be a hard sell at least it is showing good signs of growth at the moment. The same cannot be said of the ERP market, Clarion’s other core business area. In general terms, the market has become a bruising contest between industry heavyweights Oracle, SAP, JD Edwards and Microsoft, which muscled its way into the market two years ago through the acquisition of ERP vendors Navision and Great Plains. As their corporate client base became saturated the traditional vendors started to move down market to target medium-sized business. At the same time Microsoft has shifted upmarket from its small-business client base. The result says Millar is that companies like IFS that have traditionally focused on mid-market customers have ended up being “the meat in the sandwich.”
Millar believes that the key to survival in this most intense of markets is straightforward: offer a better deal to customers. He claims that not only is IFS cheaper than competing software by 25-30pc but it is also quicker and easier to install than that of the big names.
It seems that in the ERP market, as on the IT services side, there are still plenty of gaps – business opportunities – left by the big boys. Pat Millar has made it his business to fill them.
By Brian Skelly