Strategy: What Digital Business Service Providers Mean When They Say It
Consulting Service Definition
We have long proclaimed that vendors should have formal business and well-vetted
processes in place in order to lay claim to having the service (see for
Does your e-Business Provider have Internationally Recognized Tools in
its Digital Business Consulting Toolkit?). This is particularly true
of strategic consulting.
Digital Business Service Providers (DBSPs) still use on-the-fly methodologies
to accomplish the strategic examination of an e-business plan prior to
executing processes to achieve digital business capabilities. However,
it should be understood that what is meant by strategy consulting by a
DBSP can differ markedly from the traditional role of say a McKinsey process.
DBSP strategists take over where the McKinsey process lets go (see figure
Phase I). DBSPs serve largely in the operational strategic role by taking
the business idea to the step of design and architect to achieve deliverable
some overlap of the McKinsey-like and Operational strategic consulting
functions is inevitable, and the realities of implementation can further
enforce change on the original model. The nature of the mix is often dependent
on the type of client. Dot-coms are likely to need more business model
strategy from the DBSP than an established traditional company. Traditional
Bricks and Mortar (B&M) companies face other issues (internal and external)
in blending the online world with their existing brick and mortar.
the operational model is executed, DBSP strategists must obtain feedback
in the development and early deployment phases to assess the validity
of the market.
a business model is executed in the real world, a third component of market
and brand validation and refinement comes to the fore. Thus in essence
there are three potential steps where the strategists of a DBSP can play
a role. We divide them into three phases.
I: Operational Implementation
this phase the DBSP strategists work with the client to translate the
business concept into a workable reality as an operational strategy, and
define the technological requirements of the business, its branding, marketing,
functional, technical architecture and artistic structure. A digital market
review, including surveys, focus groups, and other marketing tools, can
be employed to define the market environment and viability of the business
proposition. When this phase is largely complete, as shown in Phase I,
this can lead to the 'Heavy Lifting' of coding, systems integration and
the other components needed to affect the business solution.
II: Pre-Release Validation and Testing
Phase II, the solution is tested for human response factors as well as
usability, often during the development process, and shortly after. The
work of the Phase II strategist is to assimilate the information from
the various tests and make changes - usually leading to tweaking of the
designs and implementation. In this stage, most of the 'heavy lifting'
where systems are integrated, built and tested, is executed.
III: Post Release
final phase is open ended in the sense that continual market monitoring
and feedback of the effectiveness of the solution may cause further tuning
and changes made to the operational strategy. Some modifications to the
solution may be needed, which can involve additional 'heavy lifting'.
In this post-execution phase the Phase III strategist serves as the feedback
to the client to improve performance and validate the market.
these basic strategy components provide a basis for 'birth to adulthood'
online business creation, when it comes to specific requirements there
are a number of additional points to consider.
industry/market experience. Vendor experience in a vertical market is
an important component.
internal management structure in which the strategy steps exist to provide
a smooth flow.
provides adequate documentation to enable monitoring of progress, and
appropriate measures enable performance and performance trends to be
be a mistake to consider that DBSPs provide the same strategy as a McKinsey,
Deloitte, or Andersen. The focus here is on digital media implementation
and operational strategies. Many pure plays have hired from the traditional
strategy houses to bolster their capabilities in the area. This is not
simply a question of increasing the revenue value of an engagement: it
is also one that provides the tools and know-how needed to carry through
an effective digital business launch, and can distinguish a pure play
from that of a more generalist consulting organization.
of a DBSPs Approach to Strategy
By way of example, Razorfish has developed what it calls User Intelligence.
User Intelligence provides Razorfish with the three phases of the Strategy
development, composed into four parts which are:
and Value proposition development
Usability and value proposition testing
and Functional Usability Testing
validation and review
two items above correspond with Phase I strategy components, the third
and fourth with Phases II and III respectively. In connection with these
phases are four functional consulting units consisting of, respectively:
including value needs analysis for users of the business, branding
Experience group which develops the user experience of the website ranging
from sounds to other multimedia and image
- hardcore architects, systems analysts and programmers
- as with a movie set, these are the people who coordinate web designers
and marketing, and orchestrate the creation of the e-business
Razorfish has 35 people dedicated to its User Intelligence team, with
regional centers in London and New York. The expertise of these associates
are linked through Razorfish's internal network. When necessary, these
core personnel will travel to bolster local teams. Each office generally
has at least one proponent familiar with User Intelligence tools and methodologies.
Differences in Services
The user may find that there are regional differences in services largely
due to the environment and the way in which the DBSP has grown up. One
way to acquire talent in the areas of strategy is through acquisition
of companies with digital management consulting expertise. As many pure
play DBSPs started as creative web designers, they still have that image.
Now that they offer end-to-end services, the message probably still has
to permeate the user community. This is part of the pure play DBSPs challenge.
example of a regional difference is in systems integration. Much of the
heavy lifting in Europe to integrate customer systems to web-enabled products
may be outsourced to other vendors, partly because this may not always
be what the DBSP finds value in doing. In the US, they may have a larger
capacity to deliver systems integration solutions. Pure plays are keen
to ensure their market niche, and will not (or should not) try to be everything
for everyone, though this message can get somewhat confused because of
regional capabilities and histories.
theory at least, globalization should not cause a geographic fragmentation
of services the DBSP can deliver. The internal capabilities of the global
company should appear as one seamless whole. In practice it is not always
practical because of cost, time and talent availability. The strategy
component is one of the most financially leveragable components of the
service offerings, and therefore it can make sense for a vendor to fly
in a strategist specialist from another part of the globe for a particular
engagement. Technical expertise, on the other hand, may not be worth the
added cost, and could also provide service remotely if necessary. Scient,
for example, has been known to fly specialist strategists from as far
away as Singapore and Japan to the US on major engagements.
DBSPs have instituted knowledge management and control systems to ensure
that they even the skill set playing field across their organizations.
Setting up core teams to distribute skills among the organization, or
encouraging interest / self-learning groups are methods that have been
employed. Razorfish, for example, has an internal knowledge management
system, and claims to integrate acquired companies - technically encompassing
their knowledge base - within 90 days of a signed contract.
We regard a DBSP as having digital strategy by the following characteristics:
and documented methodologies
- An internal
practice group consisting of an adequate number of personnel in the
geographic region covered, where coverage may depend on internal knowledge
sharing capabilities being considered.
applications of the methodologies which have made a difference to at
least two clients
- At least
two out of the three above strategy phases are covered
points are given if there are measures of the effectiveness of the digital
positives and negatives to a company adopting acquisition and integration
strategies to achieve strength in providing strategy consulting. On the
positive side acquisitions mean the company quickly gains expertise and
can deliver services. The negative side is the need to quickly integrate
and disseminate skills throughout the company, and ensure there is one
'face' to the company's offerings - this is particularly difficult across
continental distances and consequent markets environments. This can be
particularly daunting if two similar organizations are acquired with dissimilar
processes. It may take some time to sort out and integrate processes into
an overall company set of methodologies. This may not however, be a major
issue, depending on the extent of the cultural gap. More importantly are
the cultural divides that must be bridged.
plays have to recognize further that to deliver services in particular
industries they must gain and/or import the experience. Razorfish, for
example, recently completed an engagement with Thomas Cook, thus gaining
experience in the Travel & Tourism industry. In Thomas Cooke's case, part
of the User Intelligence gathered was how people buy tourist packages
and travel plans. The information becomes part of the expertise available
to future clients. Eventually, with a few more engagements of this nature
under its belt, Razorfish will be able to lay claim to expertise in the
travel booking industry, and will create a Travel Industry group. Once
the latter is formed, Razorfish can truly present a compelling competitive
case as having digital Travel Industry vertical expertise
with strategy 'images' in the service provider space can be clarified
when one compares Razorfish to another, more management oriented pure
play in the area such as Scient or Sapient. Scient, for example, has the
capability of delivering McKinsey-like strategy engagements through what
it calls its Conceive step. This is provided to brick and mortar companies
as much as to dot-coms, and Scient has bred its brand to reflect this.
Razorfish, however, through its acquisition of i-Cube can do more heavy
legacy coding than Scient in the US. In Europe, the difference may not
be so profound, though it still exists. As these pure plays develop, we
predict they will find their niches and reputations just as the legacy
management consultants formulated their capabilities and brands 20-30
years ago. We only hope they keep their innovative cultures!
Pure Play Predictions
The international oriented DBSP pure plays will continue to develop along
well planned lines into a number of vertical industries. notably healthcare
and travel. They will continue to build up their strengths, rapidly expanding
particularly in Europe and Asia. In order to achieve this however, they
must continue to generate high revenues, and to acquire their way to new
markets and talent.
acquisition path, however, is expensive with a real effect on net earnings
and potential share dilution. Hence we expect expansion to slow as a need
will be apparent to show better earnings to shareholders. Further, internal
adjustments may have to be made to ensure smooth operations as a company
continues to absorb its acquisitions and unify its offerings.
time, the DBSP pure plays will find themselves facing a stiffer market
as other organizations ramp up services (such as Andersen, Cap Gemini
Ernst & Young, Deloitte, KPMG, and so forth). However, we believe they
will hold their own, partly because the reputation of the legacy consultants
have soured many users in the past. Also the pure plays have a better
reputation and track record as specialized digital business developers.
This is based on a limited TEC survey of 18 experienced and senior executives
who were (and are) clients of one or more DBSPs, including (and still
are in some cases) clients of the legacy consultants. Most of these senior
executives have had multiple engagement experiences with legacy as well
as pure play. In some cases, they have used both legacy and pure play
companies on one engagement, generally utilizing the legacy companies
for either the strategic goal setting or the heavy legacy lifting work.
believe there is a trend to the specialized pure plays when it comes to
strategy. As digital strategy increases its role in the business development
of a company, so should the tendency toward the pure play involvement
increase. Further, the pure plays, as illustrated by Razorfish, are moving
to more comprehensive coverage of the strategy realm, depending on the
market niche and brand they want to develop.
is also a trend to division of strategy from the heavy lifting consulting
provided by traditional IT outsourcers. It would not be surprising to
see this division create a tendency for at least some of the major DBSPs
splitting the integration work away, to focus on the more lucrative end
of strategy. Arthur Andersen recognizes the value as is demonstrated when
comparing its more traditional accounting offerings to IT and strategy
consulting of Andersen Consulting (see Implications
and Attitudes As the Andersen's Split under the ICC Ruling: Consulting
To Go for a Name Change).
In selecting your vendor for an engagement that is to include strategic
elements as defined in this article the user should ensure:
the vendor has well defined and documented processes
the data the vendor gathers is utilized for your benefit, at least within
a fixed grace period
you can continue to benefit from the feedback from the vendor. Sometimes,
sharing data in the industry is a means of collecting intelligence to
understand where you sit. Your DBSP is very unlikely to grant exclusivity
to you in your industry for eternity - if ever - of course.
the service provider supplies the strategic elements you want covered
in entirety. Make a checklist of your requirements. If the service provider
cannot cover all elements, seek a second source, or ask the service
provider who they recommend. If the service provider is used to outsourcing
in this area, it means they are also are familiar with their own holes.
At the least they should be able to resolve the issue prior to an engagement
start. It also generally means you are dealing with an honest provider
with outsource associations, and further, that you need not single source
everything. However, check out the suggested outsource company.