Integration: A Trend For The New Millennium Written by: C.C. Do and Mehera Wohltmann
There is a new paradigm in business today and it is called INTEGRATION. Integration of technology, people, organizational competencies, strategy, and process are critical elements in the success of any business. The theme of "integration" is prevalent throughout the consulting industry; the concept is dominant in their literature, websites, and the rhetoric of their employees. In our study of the trends in consulting, we examined a wealth of company brochures, in-depth interviews with employees of all levels from entry through management, from small to large firms, from practitioners to academics, and firms with varied specialties from Human Resources and Knowledge Management through Technology. From the information we gathered, we were able to identify several trends that have a significant impact on how consulting firms conduct business. The trends that consulting firms are experiencing include specialization, increased growth of two particular practices, and mergers and acquisitions.
Background Information
In the past, the focus of the consulting industry has evolved through several trends. In the 1960's and 1970's organizational development focused on the quality of work life. The general belief was that people should be happy in their work, a value that was not perceive as a competitor to profitability. Following closely from this was Andrew Demming's movement focused on Total Quality Management (TQM), which led to an emphasizes on firms as a whole body of parts, spawning the growth of flattened out organizations and cross functional teaming. Through the 1980's, reengineering associated with process redesign and radical organizational re-structuring became the focus of improved business performance. By 1991, Michael Hammer, the champion of reengineering, espoused that the traditional model of organizing companies based upon the division of labor was a total fraud in the context of the information age. What Hammer and many others had missed is that changing technology and processes means changing the way people work, and people inherently resist change.
Today, a new model has emerged. The best of organizational development and reengineering have been combined with a new blend that views organizations as organic and integrated systems with an appreciation of the human factor. Across most consulting firms, the key practices are integrating human components as added tools to their consulting approach. The desire to create seamlessly integrated solutions to clients can be reflected in three of the largest trends impacting consulting firms today.
Specialization
The growing trend in outsourcing has emerged with a broad influence on all aspects of organization. Initially, outsourcing was limited to specialized areas in Human Resources such as Employee Assistance Programs and background checks. However, in recent years consulting firms have expanded their service offerings to include recruitment, hiring, customer service centers, and benefits administration. The tendency toward additional outsourcing varies by industry and organization size. The primary reason for the growth in outsourcing is due to the changes in organizational strategy, need for technological support, and the results of process redesign and reengineering efforts that impact the decision to outsource non-critical functions. Outsourcing of administratively burdensome or high cost activities will allow professionals to intensify their strategic focus on those processes which create a competitive advantage. Also there is a continuous push for adding value by doing more with less. The breadth of outsource consulting services places companies in a better position to concentrate on those processes and outcomes that contribute to business strategies, operating results, value added financial returns, and customer loyalty. Due to the increase in outsourcing of administrative functions, consulting firms have experienced tremendous growth within technology and change management, critical emerging areas that can be leveraged to gain a competitive advantage.
Two Rapidly Growing Practices
Technology
Technology has increasingly been the driver in change within an organization. In the past, the hardware and software technology has been treated as a complete solution for maximizing business results. If a company wanted to achieve a 20% to 30% increase in productivity, an information technology solution in one isolated operation was often perceived as THE SOLUTION. A more integrated solution has been presented through Client/Server systems, computing technologies in which the hardware and software components (i.e., clients and servers) are distributed across a network. Client/Server technology such as BAAN, PeopleSoft, SAP, Oracle offer total information systems, that weave together all the data from manufacturing with all the data from inventory with all the data from purchasing with all the data from accounting, with all the data from sales with all the data from human resources, etc. to create an integrated information platform. By automating business processes, it fulfills the expected outcomes of decreasing costs and increasing productivity. It also facilitates communication by adding a new dimension of increased empowerment throughout the organization. Client/Server technology "mashes everyone together, forcing them to deal with people they barely know before and to make decisions that affect other departments." Empowering employees can be seen in the movement away from traditional centralized computer systems towards distributed computing systems. The wide spread, availability of information throughout organizations allows employees increased access resulting in better decision making and coordination of relevant activities with other departments.
Change Management
Much of the information technology in the 1980's was implemented as of the "Reengineering" movement. However commonly known, is that 50-70% of reengineering efforts failed to achieve their long-term goals. As a result, today, technology is seen as just one facet of the solution package. Both clients and consultants have come to realize that though their technology may be state of the art, the organization's use of it is not. This realization is reflected in the massive growth of Change Management practices across almost all major consulting firms. The integral role of people and communication in the process of implementing technology changes has become a common facet of the consulting solution. As companies recreate themselves, the best of them, large and small are designing products and communications as strategic assets for the future development of the organization. In this age of global communications and digital convergence, entrepreneurial organizations might rethink the design of everything to emerge as competitive winners. They are imagining alternative futures and reinventing their companies to create newer organizations, redesign business processes and develop dynamic structures to meet the ever-changing requirements of the next century.
Change management focuses on managing human performance. According to Andersen Consulting's Business Integration Model, leveraging human performance means enabling the workforce, enabling the individual, and reaching the individual. Enabling the workforce means whether the proposed organizational design parallels their strategy. Enabling the individual requires building employee confidence through performance support and training. Reaching individuals involves communicating the changes to all those who will be impacted by discussing job design, communication planning, and addressing employee concerns. The emphasis is in the integration of the organizational structure and the human component. Employees are bought into the process because they hold the key to whether the change will ultimately succeed or fail. By sharing with clients stories (good and bad), predicted statistics of profits, productivity through qualitative numbers, reasoning/logic, ethos and pathos firms are able to express and convince clients of the benefits and need for human change or involvement into the organization. In past efforts, the missing link tying together all the elements of technology change efforts, were the human factors that help internalize changes into the culture of the organization. Change Management reflects the integration of people as a central aspect of streamlining business processes and achieving maximum performance of an organization.
Mergers and Acquistions
It used to be the "Big 10", then it was the "Big 8", for the past few years it was the "Big 6", last month it was the "Big 5", and now it will be the "Big 4". What is it going to be tomorrow? Consulting firms have reached a pinnacle in their development and have sought out mergers and acquisitions as sources of increasing their business. By joining forces with consulting firms who possess complimentary competencies they can gain greater economics through the addition of different well-developed industry expertise. At the same time the firms are increasing the size of their business, they are consolidating their resources. The result is a better-rounded consulting firm that can answer the diverse needs of their clients. The benefit for clients is that these consulting firms offer them "one stop shopping" for services.
Globalization
As the scope of consulting firms' clients expands into global markets it has implored them to follow their clients' business abroad. The opportunities and demand for consulting services in the Pacific Rim and Europe represent new markets where competition may not be presently as intense. Expansion into international markets, not only meets the needs of existing clients, but creates an opportunity for consulting firms to build new clientele. Mergers and acquisitions have enabled consulting firms to partner with companies who have already established an international presence. A partner from Price Waterhouse (PW) illustrated this best in explaining the merger of his company with Coopers and Lybrand (C&L). The merger has opened up PW's heavy American base by adding C&L's broader and more reputable international presence. Globalization has allowed individuals of all backgrounds and cultures to work and experience other cultures. A reflection of this can be seen in the fact that consulting firms are recruiting increasing numbers of international students to work in their native countries. They also express in interest in American students that have lived and worked abroad. This desire for cultural diversity and expertise has become an integral part not only of diversified work forces, but in the training for employees. Training addresses important issues such as how a consulting firm manages communication when it goes global and how they transfer that knowledge onto their clients.
Consolidation
As discussed earlier, specialization in particular industries and competencies has narrowed the field of potential clients because they are demanding consultants with a detailed expertise in their business area. Generalized knowledge is not sufficient in a marketplace where the consulting industry has grown faster than the economy. Just as with the trend in globalization of consulting firms, client organizations are becoming so large through mergers and acquisitions that it is difficult for small firms to gain access to clients. The proposed consolidation between Ernst &Young and KPMG Peat Marwick brings together E&Y's stable consulting practice with KPMG's well developed tax and audit practice. Firms are offering clients a broader range of services from strategy through implementation. Consolidation is creating economics of scale for consulting firms by allowing them to share resources in non-core areas of knowledge and maximizing resources in their relative areas of strength.
The goal of all consulting firms is to help their clients and themselves leverage their competitive advantage while creating the greatest output at the lowest costs. It all comes down to the "BOTTOM LINE". In the past, many departments, individuals, and groups have tried to achieve maximum efficiency, but have fallen short. Consultants and companies have realized that there was always one missing link—Integration. Integration of the departments, individuals, and groups allows them to achieve greater gains by sharing knowledge and resources. The key to integrating all aspects of the organization is knowledge. In the past, technical skills or capabilities were measures of your value to the organization. Today, workers are valued for what they know and how they apply that knowledge. It is the knowledge to discern what is not critical to one's organization and what can be outsourced. It is the technical knowledge of software applications and the type of complete solutions they can provide. It is the ability to identify, manage, and communicate about change. It is the ability to grow globally while at the same time consolidating your operations. Knowledge is the fundamental element that allows organizations to integrate and become seamless. Knowledge can be compared to our central nervous system in that it is the area that receives, filters, generates impulses or information to all the other areas of the body or organization.
Bibliography
Barge, B., Vice President, AON Consulting. Personal interview. 19 Oct. 1997.
Consultant, Change Management Competency Group, Andersen Consulting. Personal interview. 6 Nov. 1997.
Experienced Analyst, Change Management Competency Group, Andersen Consulting. Personal interview. 25 Oct. 1997.
Filipczak, B. "Are you getting SAPped?" Training Mar. 1997.
Hill, K., Professor, University of Southern California. Personal interview. 4 Nov. 1997.
"HR...Today and Tomorrow: Key findings of the 1997 survey of human resource trends". HRMagazine. October 1997.
Olson, T., Professor, University of Southern California. Personal interview. 17 Nov. 1997.
Online. Available: HYPERLINK http://www.peoplesoft.com/news_and www.peoplesoft.com/news_and_eventsmation Technology Environment 1009-2000. October 25, 1977.
"Organizational futures by design" conference. Haas School of Business, University of California, Berkeley. June 19-20, 1997.
Partner, Coopers & Lybrand. Personal interview. 7 Nov. 1997.
Partner, Price Waterhouse. Personal interview. 20 Nov. 1997.
[back to top]
Copyright © 2000-2005 Active Minds. All rights reserved.
To send questions or comments about this site, contact us.