Will Office 365 Destroy Consulting?

This post originally appeared on CMSWire.

If you had asked me back in 2010 if my banking or insurance clients would ever move their content to the cloud, I would have laughed. But over the past couple of years, these same organizations have shifted their perspective. The idea of hosting email in Exchange online and providing users with an option of Office 365 capabilities (OneDrive, SharePoint, etc.) intrigues many in the financial services industry.

Which raises the question: How will the shift toward SaaS technology impact modern consultancies like system integrators (SIs) and managed services providers (MSPs)?

A Harbinger of Things to Come

Office 365 is just one example of a SaaS first world. But it is a harbinger.

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Once an organization moves its email to the cloud (and not just a cloud infrastructure, but a full SaaS environment), it sets the precedent for future content applications. In the near term, the consulting community potentially has a lot of work ahead of it, helping migrate content from legacy exchange environments, on-prem SharePoint, file shares, etc. But then again, maybe not.

Microsoft and providers like Box and Dropbox have been bidding fixed-fee migration services very aggressively. They don't care about the migration business. They understand that the provider with the most clients will win the cloud war. So migration fees are a drop in the bucket. Gaining market share is a sprint, not a marathon. And there will be plenty of opportunity for margin enhancement in the future.

I've written about why letting a cloud provider do your migration is like letting the fox guard the henhouse. They have all the incentive in the world to get your content moved quickly. But if you’re a customer, migrations are a great opportunity to impact business transformation, clean up your organization’s content, and update / improve your information architecture. A good SI will help make sure that you move the right content and that that content is enriched with all of the appropriate metadata.

But what’s left for the SI community once the content is in the cloud?

The entire modern SI business model will disappear. No more fat 2- to 5-year multi-million dollar projects delivered by busloads of badged consultants. Farewell to the endless support contracts. Their expertise is no longer needed for upgrades; those upgrades will happen regularly in the background.

Some work will remain – e.g. integrating on-premises systems with the cloud systems. But developers are building an ever-growing community of apps around Box and others to provide at least baseline capabilities in that area. A need will remain for custom applications in the cloud, but hungry app developers will partner on many of these opportunities for little or no cost, so that they can resell the capability.

Skipping the Bloat

The current SIs or MSPs just haven't been built to thrive in an environment where contracts last months, not years – for six figures (if not seven). This doesn't mean that the future will be consultant-less. (Perish the thought!) The consultants of the future will look like Appirio.

Appirio's cloud-based consultancy employs more than 1,000 people on staff. But it also has a crowd-sourced developer group of more than half a million individuals. The company claims an average project time of 3.9 months. Its average deal is in the low six figures. But the real kicker is the way its customers are changing their approach to big problems. CEO Chris Barbin writes:

[O]ur customers are approaching complex business transformation in a more transactional and iterative manner, recognizing the need to see results quickly to justify ongoing investment. In addition, these projects can typically be staffed by far fewer full time and client FTEs as they take advantage of reusable IP and crowdsourcing to supplement design and development efforts. This results in faster time-to-value and higher levels of project success, as potential overruns can be identified and corrected in before the bloat sets in.

Barbin also claims "More than 75 percent of our projects have been delivered on-time and on-budget." If firms like Appirio can provide low-cost, quick-hit projects that move their clients’ transformative initiatives forward with a high success rate, then I think we can offer a hearty "Amen!"

Perhaps the future will look like more consulting firms taking an approach resembling Appirio's. Drastic change isn't going to happen overnight. There will be stages of evolution as organizations move from on-premise to hybrid and eventually SaaS in some applications, but not in others. But just as certainly as the heyday of the enterprise sales rep is dusking, so, too, is that of the traditional consulting firm.

The disruption brought on by cloud and SaaS isn't just impacting the enterprise. It is forcing the entire ecosystem to change.

Rich Medina
Lane Severson
I’m a Practice Leader, managing relationships with Doculabs’ West Coast clients to improve information management and security.