The COVID-19 pandemic disrupted the longest era of economic expansion in U.S. history. Following the Great Recession, the American economy grew an average of 2.3 percent from mid-2009 through 2019. Digital transformation and IT initiatives grew along with it as organizations looked for ways to get faster and more competitive. According to Staffing Industry Analysts’ (SIA), IT job creation in America grew 55 percent compared to just 15 percent for other non-farm industry jobs during that time frame. Prior to 2020, U.S. organizations were turning a record profit, which led to increased investment in their IT infrastructure and applications. For many of these investments, organizations utilized consulting firms to strategize, advise on best practices and, in many cases, execute their recommendations.
Why Consulting?
There is no shortage of both national conglomerates and highly specialized consulting options for end-users today. When I speak with clients about why they opted to go the consulting route, the answer always seems to boil down to risk; executives feel they are able to hold consulting firms more accountable for their technology transformation due to their deliverables. The consulting firm assumes the risk and the organization gets a “fire and forget” partner to execute their plan, leaving them to continue with the day to day.
However, this comes at a cost. Consulting firms pass the cost of that risk in a bundle to the organization, ultimately covering the cost of their insurance and building the possibility of failure into their pricing.
Today, the U.S. economy is in a much different place than it was at the beginning of 2020. GDP dropped over 30 percent in Q2 alone. For context, the country had never seen a drop more than 3 percent prior to this record-setting drop. Even with signs of improvement, there is still a lingering sense of uncertainty in the market. Many organizations are holding onto their IT roadmaps and initiatives, yet they are waiting to execute them until they feel more certain about the economic outlook and their organization’s ability to maintain steady cash flow.
Just in Time Consulting
This uncertainty, along with layoffs, furloughs and budget cuts, has given rise to a new option for the IT industry – Just In Time Consulting (JIT). In the 1970’s, Toyota shifted to a new concept of JIT supply chain management system that they discovered saved them millions in unused inventory and disrupted the automobile manufacturing industry. Instead of bulk ordering parts in anticipation of sales, they started producing vehicles based on orders alone. These same principles are now being applied to independent consultants. Some have experienced layoffs or furloughs. Others saw an opportunity to cut out the middleman in their consulting group, use their network and workforce solutions organizations to find work. Why pay for the risk in keeping a bench when the workforce has shifted to allow companies access to the same experience for a fraction of the cost?
Following the JIT model, organizations can bring in independent consultants who have the same experience they would expect from a niche or Big 4 consulting firm. However, since they are not being carried as an employee and the hiring organization is not responsible for keeping them employed post-project, these savings – usually between 20-40 percent compared to traditional consulting firms – can be passed along. Increasingly, this is proving to be a viable option for end-using companies who have an advisory partner, but want to shop for a better execution pricing option. For consulting firms looking to grow their market share with current clients by bringing on ad hoc consultants to supplement their staff, JIT consulting has been an avenue for them to grow their business, as well.
Looking Ahead
Before COVID-19, many organizations had the extra budget to avoid risk and opt for the pricier (and seemingly “safer” choice) of a consulting firm. Today, there are still some industries who are doing very well and can pay for a firm to take on all the risk, even though surveys have shown that 75 percent of all digital transformation projects either fail to deliver or result in a mediocre solution. In today’s economic uncertainty, budgets are increasingly scrutinized – more so than any time in the last 10 years. Taking advantage of a changing workforce environment and leveraging JIT Consulting can be a great avenue for many organizations looking to keep pace with executing their IT Roadmap.
Are you looking to get your IT roadmap back on track? Contact our team today to learn how solutions like Just in Time consulting can help you keep your initiatives moving forward.
Sources:
- “Chart Book: Tracking the Post-Great Recession Economy.” Center on Budget and Policy Priorities. November, 2020.
- “IT Staffing Growth Assessment: 2020 Update.” Staffing Industry Analysts. June, 2020.
- “The Benefits of Just-in-Time Inventory.” Manufacturing Tomorrow. June, 2017.
- “Orchestrating a Successful Digital Transformation.” Bain & Company. 2017.
