Effect of Technology Development on Management Consulting Profession - Essay Example

Introduction Management consulting has always been actively involved in aligning business and technology strategies with matching competence requirements in accordance with internal resources. With the advent of modernization era, problems have been encountered in consultancy, which required solution to be effective enough to replace paper documents with e-documents. Paper could be reproduced and used relatively easily by anyone who could read, but the advent of electronic dissemination has raised new equity concerns, since, to the extent that electronic formats had distinct advantages with inclusion of timeliness and searchability, those without electronic access were disadvantaged. In addition, as technological innovations become available, possibilities increase and so does the cost but what technological advancements has given to management analysts, that not only has helped them in boosting their managerial skills by analysing and proposing alternatives to improve an organisation's structure but has also enabled management consultancy to acquire a division that would help reorganize the structure of the firm and eliminate technological complexities. Effect of Technology Development on Management Consulting Profession Information technology cannot by itself change the inherent inflexible nature of its tools but any profession particularly on the management side whether it be financial management, strategic management or consultant management by using the developing trend of information technology can change its effect with respect to any organization infrastructure in such a way that they use these tools in two ways. "First, by reengineering the way that existing tasks are carried out. Second, by creating new tasks and opening up consultancy opportunities that were not previously possible. Changes in various management use of computer technology have enabled technological developments to be implemented in general". (Margetts, 1999, p. 17) If we consider the development of technology from management point of view, it is obvious that today organisations of all kinds have taken on new functions and new techniques that would otherwise have not been possible without merging and cooperation of information technology. Information technology in private sector companies is now widely recognised as a crucial element in a company's business strategy and the reason is transparent for the way technology has boosted the growth of consultant management, is incredible. "It is now a truism that information technology has transcended its established administrative support functions and has moved towards playing a more central role in business operations' that has not only modified its organisational structure but has also taken part in increasing the ratio of contended customers". (Margetts, 1999, p. 23) Let us take an example of Electronic Data Interchange (EDI): "EDI has made it possible for two trading partners to exchange their information of trade or business transactions such as orders and invoices which otherwise would have taken umpteen effort and time. Today EDI has been widely accepted as an essential business tool used to facilitate inter-organisational transactions and sometimes to enhance internal operations by integrating internal and external systems". (Chen, 1998, p. 68) It has potentially reduced the transaction costs by eliminating duplication of effort involved in re-keying documents generated by computer in the first place. In this aspect, the development in technology started in 1980s, which first brought a dramatic increase in the use of the Internet, a global research network, consisting of a loose confederation of inter-connected networks providing services such as file transfer and electronic mail. After Internet the vast technological change was felt and realised by the then consultant management when the use of databases, online and offline processors for report writing and interactive communication was introduced. "Prior to this, it was the consultancies who set the agenda, who dictated the fees and who held the intellectual high ground. While it is certainly true that, by the end of the 1980s, many larger clients, who had by then been exposed to consultancy on an extensive basis, had become more sophisticated buyers, it was not until the 1991-2 recession that clients started to take a much more active control. A combination of lower overall demand for consultancy and the proliferation of new entrants into the market had meant that, for the first time, there was an excess of supply over demand. Greater competition meant that clients could play firms off against each other and negotiate down the fees. More intangibly, a growing sense of frustration among clients at the quality of service overused of the word 'consultant' which had come to be applied to anyone from a sales person to an academic and had started to erode the mystique of the consulting industry. It is not surprising, therefore, that numerous business books appeared on how to buy consultancy, or how to get the best from consultants at that time". (Czerniawska , 1999, p. 14) Before the implication of Information Technology in consulting management services, it was not only difficult for a network of agencies, bureaus, divisions and sub-divisions to control and standardise the hiring, firing and paying of staff, but it was also hard at that moment to customize and manage the manual work as a consultant firm. Perhaps it was the most obvious point of comparison when it was expected that by giving the high cost and necessity of technological innovation, what one can expect how long would it run "Analogous mechanisms had been set up to control and steer information technology decisions. But in common with all central agency functions, the extent to which information technology decision-making was centralised in consultant management waxed and waned over time. It was at that time the government employed centralising techniques implemented in management technology at first and then later it became a part and parcel of consultant management". (Czerniawska , 1999, p. 34) "In the past, consultants were located by word of mouth, yellow pages, or complicated directories but today technology has made it fast and easier for a common man through website to get access to a variety of online consultancy firms". (Online Directory of Consultants) It is often argued that consultant management on the one hand despite employing computerized centralising techniques, tried to decrease agency costs by improving efficiency of the control systems in IT organisations, therefore the size and complexity of most corporations necessitated the incorporation of multilevel, multidimensional organizational control systems. On the other hand, size and complexity contributed to increasing agency costs and to an overflow of information. In order to control the scenario, agencies started bidding for the information technology services they received. "But Government officials argued upon the bidding regime which caused user agencies to treat IT as a free good: the fact that users bear no direct costs stimulated the demand and supply and created few incentives for management consulting professionals and those who were new in implementing IT to the profession". (Margetts, 1999, p. 45) Today clients seek out management consulting firms to help them with a more effective and efficient solution. Technology is the answer to all queries required by the client. The impact of technology has explored new dimensions to work in the field of consultancy so today clients' expectations have risen, with consultants giving more professionalism to management consulting firm, which is more client-driven than ever to optimise revenue from existing clients, increase sell-through rates and productivity, and maintain a healthy lead flow for new business. Yesterday's information which was kept in papers and files, making it difficult to provide a truly unified face to the client is today found in client billing systems, talent management systems, proposal files, practice area plans, account plans of varying utility, messaging systems, contact management applications, and various lists and miscellaneous documents. The challenge of multiple repositories, multiple vendors, diverse locations and costly data integration issues severely constrain most firms' ability to use client data effectively. Apart from the client convenience, technology has made drastic changes in consultant management over the past 5 years that has enabled management consultants to prosper and flourish in this field by discovering and inventing new software and consulting projects. For example "Data Management Consultants Inc. has grown 520 percent, expanding from seven to more than 70 employees and increasing net revenue by 35 percent per year". (2006a) In the field of outsourcing, a tremendous change has been noted in the last 10 years. Today outsourcing focuses on managing technology infrastructure so that the client can easily concentrate on managing his business directions. Technology has helped outsource to regain its lost trust and to a greater extent it is successful in doing so as now client has been given equal opportunity to reduce and make variable non-differentiating back office infrastructure costs, eliminate fixed overhead costs of back office systems and processes that drain his bottom-line during slower market times, leverage greater economies of scale, and dedicate his resources to those capabilities that will differentiate his firm in the marketplace. Technology to support this vast interconnected global commerce network is maturing rapidly due, in large part, to the great progress being made in establishing standard specifications for building commerce messages, contracts, invoices and so forth. Soon there will exist completed libraries from which businesses can build and dispatch electronic messages that any other businesses in the world can accept and act upon with ease. Prior to the emergence of IT-related consultancy, the role of consultants was to provide the factual analysis, which fuelled management action: most consultants were not expected to take actions themselves. Above everything else, the industry has been characterised and defined by its facts: the bottom line for consultants was that they had more facts (in the form of wider knowledge, experience, and so on) than their clients. But, in the past 20 years, the pendulum has swung much more towards action. Facts have been less important: what has mattered has been the extent to which a group of consultants can work with a team from the client's own staff in order to help make decisions and then execute them. "All consulting assignments vary in the extent to which they involve the client. On one side of the scale, we have what we could term "fact-based" consultancy, where the consultant is effectively hired to tell the client what to do. By contrast, "action-based" consultancy is much more process orientated. In this case, the means by which the ends are arrived at are as important as the ends themselves; rather than wanting to be told what to do, clients in this type of assignment want to learn how to decide what to do for themselves. At its most extreme form, the consulting process shifts into a secondment in which the consultant works for the client, as part of the client's own team". (Margetts, 1999, p. 56) In terms of technological implementation the era of 1980s was important as it changed two things: "First, although firms like Andersen Consulting had been involved in IT since it began to be applied in business, this period saw the first real growth in IT-related consultancy. IT posed a challenge to consultancies. On the one hand, it was clearly forming an increasingly significant part of a client's operations and was therefore a market. A market in terms of both size and strategic importance which consulting firms could hardly ignore. But, on the other hand, IT involved doing, just as much as advising. The major firms tried to square this particular circle in two ways: they developed methodologies for implementation (so that they could 'advise' clients on the 'doing') and they formed partnerships with the larger hardware and software companies (who would do the 'doing'). But it was a balance, which was difficult to maintain - where does 'advising' stop and 'doing' start in this arrangement Moreover, it became increasingly obvious that it was a balance that consultancies should not maintain: much of the revenue and profits from IT-related projects came from the implementation". (Czerniawska, 1999, p. 65) Second, as a result of the growing market for IT-related consultancy the number of consultants and consultancies grew suddenly and rapidly: "in ten years, an entire industry was born which had barely existed a decade earlier. Accounting firms merged and spawned consulting practices; recruitment into the sector soared. Finally, and again as the result of these first two trends, the consulting industry began to be demystified: no longer was it a function confined to a handful of gurus, discussing strategic issues in hushed tones in the shadowy corners of board rooms. If you were not a consultant yourself, then you knew someone who was. Consultants up till 1980s were considered not special, but common people". (Czerniawska, 1999, p. 66) The first of these is the nature of consulting work itself. There appears to be no foreseeable let-up in the extent to which IT dominates the consulting industry. As in the past, this continued to put consultants under pressure to do, rather than advise. "Nowhere will this trend be more marked than in the area of outsourcing. Confined in the early 1990s to IT, outsourcing is now occurring in a wide variety of functions - finance, internal audit, tax. Outsourcing - in the broadest sense - poses exactly the same problem for consultancies as IT did 20 years ago. Even more than systems implementation, outsourcing involves 'doing'; hence the fact that some consulting firms has consciously decided not to move into this field. Yet, simultaneously, the temptation to get involved is proving almost irresistible, mainly because of the size and duration of typical contracts". (Thierauf, 1978, p. 87) The development of networks and their reliance on telecommunications networks engendered a further change in the nature of consulting companies providing information technology goods and services. "Telecommunications companies began merging with computer companies in global alliances that could deliver services in all those countries where multinational companies had offices: According to Financial Times, May 1993, 'The revolution in the world's information and communications industries is like a dance of giants, with corporate heavyweights trying a range of partners in the hope of finding the perfect match' (Financial Times, 17 May 1993). Electronic Data Systems, by 1992 the largest computer consultancy company in the world, sustained a protracted flirtation with Sprint, the telecommunications group which is America's third largest long-distance carrier, but the alliance never took place. Companies providing services around the Internet also grew rapidly and 1997 saw the buyout of CompuServe by AOL, making AOL Europe's largest Internet service provider, with over 1.5 million European subscribers". (Thierauf, 1978, p. 90) However, the widespread use of computer consultants has been a feature of government computing since the 1970s and predates the Market Testing initiative. "In National Audit Office reports, and departmental responses to them, the use of consultants has often been presented as a response to the shortage of trained and skilled information technology staff. Such a shortage undoubtedly existed throughout the 1980s and was described as 'the most important single issue inhibiting the UK IT industry. The very fast evolution of information technology created its own skills shortages'. However, a shift towards 'contracting as good' rather than 'contracting as a necessary evil' was already evident in the early 1980s. By 1991 the public sector accounted for 43 per cent of the 400 million information technology facilities management market in the UK (Financial Times, 26 March 1992). A leaked Cabinet Office Efficiency Unit report in 1994 was reported as detailing government spending of 500m a year on outside consultants (565 million for 1992-3), 160 million of which was spent on information technology consultancy". (Margetts, 1999, p. 91) Thus, computer companies and consultants carried out work in almost all British central government departments and agencies, with a bewildering array of contracts spanning the spectrum of possible contract arrangements. "Some UK companies such as Logica and ICL (the former preferred hardware supplier of government) retained a hold in this market. ICL led a consortium developing the MoD's head office automation scheme (CHOTS) at a total contract value of 250m. ICL were also developing the RAF's UK Air project (41m originally, but over budget), the Scottish Prison Service prisoner record system (1994-5, 1m) and the Contributions Agency system for Civil Recovery sections". (Margetts, 1999, p. 95) Data processing systems in the 90s was responsible to unset boundaries by the constraints of available equipment in the field of consultant management. Manual systems were augmented by adding artificial machinery and calculators. Punched card equipment and tabulating machines provided expanded system capabilities. As electronic computers became available, the data processing systems were adapted to utilize these machines, making the translation of data into information much faster. Also, the computer provided capacity for the development of new applications and software for consultancy. Operating systems also played a vital role in the development of technology towards consultancy as the technology and approach for diagnosing and modifying operating systems provided help to many scheduling consultants, efficiency experts, and industrial engineers. They used techniques for modifying operating systems as their primary means for improving throughput and productivity. However, most operationally oriented consultants work out of the paradigm of the "organization as a machine" and so generally approach the improvement of operating systems as a technical problem to be solved. As consultant management moved away from traditional, top-down models of authoritarian control and evolved new management philosophies that were more participative and self-regulating, this technical orientation and approach became less effective as a strategy for change. (Golembiewski, 2000, p. 137) When the firm used an integrated management information system (batch processing-oriented), which converted to a distributed processing system (interactive-processing-oriented), the problem encountered with the integrated MIS. The trouble with those systems was that information (for management and non management purposes) was not sufficiently timely to effect changes in the current operating environment. Too often, information was received too late by corporate headquarters to affect the necessary control over manufacturing and warehousing operations. Thus, the batch-processing mode of the integrated MIS whereby data collected for a period of time before being processed and summarised did not facilitate optimal day-to-day decision-making. Because of this problem with the integrated MIS, it became apparent that a company-wide information system had to be developed. And so the management consultant firms took a new leaf in the development of personalized client-server systems. Conclusion Right from the advent of EDI, which played a vital role in cost reduction to the era of operating system, which helped, consulting firms to develop their own software compatible to run on all platforms, IT enabled management consultancy to be an attraction for the new entrants. Technology where on one hand is liable to give boom to consultancy management, on the other hand it has escorted consulting firms to a position where it is successful to regain the lost trust of its clients. The reliability, which the firms lacked in absence of technology, is found due to technological implementations in consultancy management. Computerised centralising techniques have given complete solution to the problems confronted by the customer with respect to the firm. Technology has taken the customers towards the heights of convenience and satisfaction due to which management consultancy has been successful in opening new doors of achievement to the coming analysts and tomorrow's developing professionals. References Chen Jui-Chih & Williams C. Bernard, 1998. "The Impact of Electronic Data Interchange (EDI) on SMEs: Summary of Eight British Case Studies" in "Journal of Small Business Management". Volume: 36. Issue: 4. COPYRIGHT 1998 International Council of Small Business. Czerniawska Fiona, 1999. "Management Consultancy in the 21st Century": Macmillan: Basingstoke, England. Golembiewski T. Robert, 2000. "Handbook of Organizational Consultation": Marcel Dekker: New York. Publication Year: 2000 Margetts Helen, 1999. "Information Technology in Government: Britain And America": Routledge: London. "Online Directory of Consultants" in "Journal of Environmental Health", 2000. Volume: 63. Issue: 3. Publication Year: 2000. Page Number: 59. COPYRIGHT 2000 National Environmental Health Association. Thierauf J. Robert, 1978. "Distributed Processing Systems": Prentice-Hall: Englewood Cliffs, NJ. Page Number: 139 2006a, accessed on July 10, 2006 from Read More