A new Harvard Business School working paper traces the evolution of IT management consulting and trends for the future. Read our e-mail interview with professor Richard Nolan and HBS Interactive Senior Vice President Larry Bennigson.
The explosion of “computer-to-computer” communication in the twenty-first century is triggering a growth phase for IT consultants. Harvard Business School professor Richard Nolan and HBS Interactive Senior Vice President Larry Bennigson trace the evolution of IT management consulting.
Johnston: Your research refers to the PC in the 80’s and the Internet in the 90’s as triggers of explosive growth for the IT consulting industry. Have you identified a third trigger for this decade?
Nolan and Bennigson: The trigger in this decade underlying autonomous computing is “computer-to-computer” communication. By the end of the decade, more than 60 percent of the computer communications will be computer-to-computer. Computer-to-computer vastly speeds up the pace of business. For example, end-to-end supply chains can be automatically adjusted by point-of-sale computers directly communicating with warehouse computers, which in turn directly communicate with manufacturer computers, and, again in the chain, manufacturers’ computers directly communicate with their supplier computers. In addition, computer-to-computer communications can track demand and adjust logistic systems to automatically direct product to geographical points of demand.
Q: Can you describe some of the enablers and drivers behind the growth of the IT consulting industry? How has globalization impacted this growth?
A: The enablers and drivers of growth of the IT (see working paper (pdf)) consulting industry have been several. First, innovation in frameworks and methodologies along with trained professionals have provided value-added services uniquely available from the consulting firm. For example, the Boston Consulting Group and McKinsey innovated unique conceptual frameworks for assisting management in sorting out action plans for their various lines of business.
WE THINK IT IS IMPORTANT THAT IT IS TEMPTING BUT RISKY TO COMPLETELY TURN OVER IT INITIATIVES TO IT CONSULTING FIRMS.
— NOLAN AND BENNIGSON
And, there are forces that will drive new demand. Security is fast becoming a ubiquitous issue. The Internet will experience dramatic growth in Asia and Europe. New applications such as bioinformatics and telematics create new consulting segments. And the adoption of Internet2 will eventually have broad impact.
IT consulting, as much as any product or service, creates its own demand. A high degree of industry adaptation in the IT consulting industry will be required in the future. By introducing innovations and educating the market about the competitive benefits of those innovations, IT consulting invents and “earns” its opportunities for growth. This ability of IT consulting to lead and to adapt is a key to its robust development.
Q: What lessons can operations managers take away from your research?
A: There are a number of lessons we think are important for operations managers:
Many functional and business leaders have become conversant about IT and many IT specialists have become knowledgeable about the strategic and business benefits of IT. Companies that encourage and incorporate this integrated and more sophisticated capability within their organizations will have an edge over those that have to rely on outsiders for the integrated view.
The rate of change in IT capabilities is a companion to the rate of change most companies experience in other technologies, markets, and initiatives of competitors. We have noted that the successful IT consulting firm must be able to anticipate, sense, and nimbly respond to change. This is equally true for operations. Operations managers face the daunting task of implementing new IT capabilities while ensuring they are also prepared for the next version or generation.
The emerging IT environment is at a level of complexity such that efforts to build IT infrastructure and integrated applications require specialized expertise that is often available only in IT consulting firms. Good operations managers will ensure that their organizations have the ability to work effectively with and integrate the value from networks of service providers with a variety of special capabilities.