IMGCAP(1)]At the recent Information Technology Alliance Fall Collaborative, our members came together using a theme of “2020 Vision for the 2020 Firm” to discuss the issues and opportunities facing their firms as they continue to adapt to an ever-changing technology marketplace.
As I sat in on their breakout sessions and discussions, I captured some of the key themes that these industry leaders were discussing as they focus on making their businesses stronger and better.
Consulting and Reselling Firms
We all know that the cloud has changed the focus and the business model of anyone in the accounting systems implementation and consulting business. At the Fall Collaborative, some of the other topics our members were discussing include:
Product and Service Diversification. If you were to examine the business model of most of our ITA consulting members 10 years ago, they implemented one or two accounting/ERP products from a single publisher. Today, these firms have significantly diversified their business models in order to better serve their clients. Not only are they supporting ERP products from multiple publishers (both on-premise and cloud based), many of them have expanded their service offerings to include CRM, business intelligence and financial analytics. In addition, they’ve broadened their professional services to include security, IT infrastructure planning, IT/accounting outsourcing and project management. It’s clear to me that the successful consulting firm of the future will be able to offer their clients a broad set of professional services. Rather than being their client’s accounting system support firm, they need to position themselves as their client’s trusted advisor on all IT related issues and the first call for help on technology topics.
Industry Specialization. While our consulting firms are becoming more diversified, at the same time they are becoming more industry specialized. Business owners are expecting their IT service provider to understand their industry. As a result, we are seeing a significant shift of consulting firms who used to work under a generalist “accounting systems” model become much more industry specific. Many firms are selecting two or three key industries as their focus and then building/hiring new skill sets within their professional services staff to add value to these industries. Firms are focusing on industries such as health care, manufacturing and not-for-profit and are demonstrating to their clients that, in addition to helping them with their accounting automation, they can also help address operational and regulatory concerns. Their clients appreciate this level of industry knowledge, resulting in higher client satisfaction and increased wallet share for consulting firms that are adopting a more industry-specialized model.
Mergers and Acquisitions. There seems to be a much higher focus on M&A activity in the IT consulting marketplace than in the past. Firms who aren’t willing to invest in diversification and industry specialization seem to be looking for an exit plan for their businesses. However, the majority of firms are focused on growth and realize that, while organic growth is important, growth through M&A can also be a key contributor to their long-term success. Based on the conversations I heard during the M&A sessions at the ITA Fall Collaborative, I would expect that we will continue to see a significant amount of merger activity in the IT consulting space over the next five years.
Most of the consulting firms that I spoke to at the ITA Collaborative are bullish on the future of the technology consulting industry. While there are many business challenges they are facing, the demand for services from small to mid-sized businesses is high, as these clients have limited internal technology expertise and are looking for quality service providers to outsource many of their IT activities.
Coming in part 2, the key trends identified by IT leaders of CPA firms.
Stan Mork is the president of the Information Technology Alliance.
