Body shop to mind shop

Businesses look for more from third party consultants

May 2009

Most organisations have had to supplement their IT capability with

some form of external help at one time or another. However, as
financial pressures mount and technology continues to evolve and its
relationship with the business becomes increasingly complex, how
does this change the expectations and needs of those external
relationships?

Rob Bamforth Bob Tarzey Jason Colombo

Quocirca Ltd Quocirca Ltd C&C Technology
Tel : +44 1962 849746 Tel: +44 1753 855794 Tel: +44 1256 660000
Email: Email: Email:
rob.bamforth@quocirca.com bob.tarzey@quocirca.com jason_colombo@cctechnology.co.uk

An independent report by Quocirca Ltd.

www.quocirca.com
Commissioned by C&C Technology
Consulting
 Body shop to mind shop May 2009

Body shop to mind shop

Businesses look for more from third party consultants
IT departments rarely have the luxury of spare capacity or sufficient knowledge of all the
products and technologies that the rest of their organisation expects. However, IT is an integral
part of most businesses, and supporting diverse or specialised technologies and understanding
their impact on the business is a necessity. Organisations not only require help from third
parties, they need it to be focussed, expert and cost effective, and based on a long term
partnership to ensure that internal and external staff work effectively together.

IT departments are often overloaded and overstretched, impairing their view of new technology
New technology, even in the IT function, can be viewed as a burden requiring extra work, rather than an
opportunity to add value to the business or something interesting for them to tackle. Those companies that
use third parties to augment their IT function are less inclined to see things this way and have a far more
positive attitude to new technology.
Despite the recession, one in five companies think staffing levels in their IT function will increase
This might be a little over optimistic for those who are not tightly linking IT with business needs and, if they
ignore this, they risk being overtaken by events. It might not be necessary to make wide-ranging cutbacks
which may damage the capabilities of the IT function, but it might be worthwhile to check how the skills
currently available meet the needs of the business, prune where necessary and bring in outside help to fill
gaps.
Experienced external consultants bring vital operational skills and offer support for strategic thinking
While in-depth technical knowledge is still important, companies are expecting third parties to deliver
business consulting skills and industry experience. As well as compensating for missing in-house skills, being
able to trust an experienced partner to take care of operational matters can allow more time to work with
them to look at the bigger picture. Companies making use of third party help seem much more comfortable
in dealing with their overall strategic needs for planning.
With rapidly evolving technologies, trusted external partners can help with product selection
Although using an external consultant for guidance on vendor selection is not high up the list for most
companies, product selection is, as is help with looking at the direction of new technologies. This is an even
greater issue for smaller companies who are often too busy trying to deal with existing requirements to look
too far ahead, and would appreciate independent advice.
Achieving an alignment of IT with business requirements and measuring its impact is more common for
those organisations using external support
Those having to justify spending on third party help are likely to be familiar with measuring the results and,
as a consequence, are more likely to formally measure the impact of IT projects. This is part of the process of
ensuring that IT is well aligned to the business, something that companies working with external contractors
are also more likely to achieve.

Conclusions
As budgets tighten, it is even more important for a company’s IT function to demonstrate its fit with the business and
obtain the best value from all resources and services at its disposal. Simply scaling up by regular recruitment or ad hoc
use of contract staff is not always a sensible option. Companies can cover gaps and needs with outside help, but they
need trusted partners that can supply transferable business knowledge, as well as offering an extra pair of IT hands.

1. Introduction
The options for companies looking to outsource some
or all of their IT needs have increased as suppliers look
for innovative ways to offer software products such as
Software as a Service (SaaS) or on-demand and hosted
IT offerings.
However, for as long as there has been IT, it has been
common to ‘in-source’ or bring in external third party
consultants and support staff to work alongside the
in-house IT personnel. At one time the approach
would have been to just hire technically adept ‘bodies’
from consultancies, but now broader skills have
become important (Figure 1).
Those brought in are not only expected to
complement and fill in gaps in the knowledge of the
internal personnel, but also to perform skills transfer,
coaching and training. In addition to technical
expertise, there is an expectation of business
consulting skills and advice on product or vendor
selection.
Understanding new technologies and products is an
area where close working with a third party can be
beneficial. Not only can individuals with the right skill
sets be brought in to help with evaluations, but the
experience and knowledge gained can be transferred
to in-house staff should the new technology actually
be purchased.
The value of this is noticeable by its absence among
companies that do not use third party support. These
companies tend to view new technologies as extra
work rather than something that might add value to
the business (Figure 2).
©Quocirca 2009
Body shop to mind shop May 2009
No IT department can ever hope to have all the skills
required at any given time, especially as this is a
rapidly changing and evolving industry. Even in the
largest companies with a well staffed IT function,
there are always new products coming to the market.
Often, the IT department will have to juggle many
support and management issues, or not have
sufficient resources to fully investigate new
technologies. Staff enthusiasm may be worn down
from constant fire-fighting and, even if the interest is
there, assessing the impact of new technologies may
not be high on the management agenda if there is not
the right level of expertise to do the job well.
It is not just about numbers, as having the right mix of
staff with the right capabilities to meet changing IT
needs is vital too. Those focused on day to day
operational roles may lack the skills necessary to
evaluate a particular technology, or to make strategic
decisions about its impact. It might be that, with time
and suitable training, those skills gaps can be closed,
but when time is precious, or specific knowledge is
only required for a limited period, other options will
need to be considered.
This report looks at how the in-house IT function
might be able to work better and closer with third
parties, treating their staff as valued and valuable
resources for knowledge and skills transfer, rather
than just cost-effectively getting ‘extra hands to the
pump’. This report is based on 100 interviews with
managers and users from organisations in the UK with
annual turnovers of up to £500m.
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2. Sufficient resources
The size of in-house IT departments varies
considerably, and although some companies have
dedicated IT departments, smaller organisations may
have only one to four individuals and, for some, IT will
only form part of their duties (Figure 3).
Many organisations augment their in-house staff with
third party resources providing onsite support,
training and guidance. These numbers of external
people may be fairly low, but only around a third have
no onsite third party support whatsoever.
Almost all businesses rely on IT to a greater or lesser
extent, and many recognise that business
performance is linked to IT capabilities. Even though
the recession means budgets are tight, the majority
do not expect to be changing their IT staffing numbers
over the coming year, and around one in five think
they will be increasing headcount (Figure 4).
This is likely to be somewhat optimistic, and managers
will be coming under strong pressure to either reduce
headcount or, at the very least, freeze recruitment.
However, IT departments will still have to deliver and,
while some may be reducing the number of contract
staff to cut costs, others are looking to grow their
external staff numbers. Whether any of those
©Quocirca 2009
Body shop to mind shop May 2009
expecting to grow staffing levels actually do so or are
just being over-optimistic may depend on how well
the IT function aligns with the business. This is always
an important metric, but is critical in times of financial
restraint. Those already making use of third parties to
augment or fill in the gaps internally are more likely to
exhibit a better alignment with the business (Figure
5).
Partly this will be because they have already had to
justify the external spend, and partly they will be
setting more specific and measurable goals against
the external organisation than they would for their
own staff.
It is often easier for managers to be more objective
and hardnosed with staff when they are not
responsible for man-managing them or their career
development. Also, external contractors and
consultants are often thought of as better paid than
internal staff, so more is expected of them even if this
is not always the case.
3. The right skills
Bringing in external help is sometimes to make up
numbers or just throw ‘bodies’ at a problem and,
when budgets were more freely available, this
probably happened quite a bit. Now these
relationships will come under closer scrutiny.
Canny businesses will no longer tolerate being
presented with senior or highly experienced third
party staff during the sales process, only to realise the
project is fulfilled by juniors. They are looking for solid
experience and deep expertise, with the hope that
this will not only be more cost effective, but also help
develop the skills of their own staff. Those who
believe they are outgrowing their sector peers, in
particular, are more focussed on growing the
capabilities of their staff in line with this (Figure 6).
Page 4

In order to turn these skills, whether existing internal
or being bought in from outside, to worthwhile use,
they have to be targeted at the IT management and
planning aspects that add the most value to the
business.
There is an expectation that third party skills can be
applied to a broad range of IT planning challenges,
although few specific issues strike a chord with more
than a third of companies (Figure 7).
Larger companies often have sufficient internal IT
resources to give them a spread of knowledge and
experience across different technical disciplines, but
sometimes this will lack depth and would benefit from
sharpening up in specific areas. Smaller companies
with fewer IT staff may struggle to understand the
implications of specific new technologies or make
informed decisions about product selection.
Companies of all sizes have different needs when they
look to third parties for assistance and so, rather than
identifying partners that can supply sufficient
numbers of additional heads, even of the right quality,
they need to look more deeply at the skills on offer.
This means looking at the third party staff on offer as
individuals, rather than just numbers, as it is ‘minds’
that are being paid for, not bodies.
©Quocirca 2009
Body shop to mind shop May 2009
As a minimum, companies should request profiles that
outline the complete breadth and range of skills and
experience that a third party team can offer, and the
scope of projects that can be tackled. This should also
detail past examples of customers where similar
projects have been undertaken.
Beyond the technical skills and experience, a
significant number of companies are looking for third
parties to provide help with strategic planning and an
understanding of the impact of technology on the
business. This, alongside advice on technical, product
and vendor issues, seems to generate more
confidence in the IT function’s ability to plan for the
future (Figure 8).
4. Measuring impact
While self-confidence of the IT function is welcome
and necessary, it is not sufficient and needs to be
tested against the effect IT has on business
performance.
Ideally this should be a formal process, so that there is
consistency between different types of projects, and
take place over time as staffing changes. If such a
formal process is impractical, then some form of post
implementation check should at least be applied to
every project to provide some evidence of value to
the business.
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 Body shop to mind shop May 2009

function that could perhaps be more effective if

outsourced completely. Certainly, cost control is a
One client where C&C Technology major expected improvement for those employing
helped to align IT with the business: third parties and, in particular, for those organisations
A major global law firm struggling with that believe they are outperforming their peers
a large IT budget was finding projects (Figure 10).
were virtually never delivered on time
or to budget. There was a lot
happening—too much change, too
many projects at once—so the value
was not clear.
C&C established a new function to
manage the portfolio of projects and
formal systems to measure progress
and provide governance. This created
clarity between roles and buy-in from
the internal teams.
As a result, not only are projects
delivered on time and to budget, but
the perception of the IT function
internally is enhanced. There has been a
reduction in costs, partly from Beyond that, these growth-minded companies are
rationalising the number of projects, looking for third parties to support that growth
but also from reducing the impact of through enhancing their competitive advantage,
change on the business. Internal staff customer service and overall business performance.
expertise has also increased, creating
more confidence and enabling new Price, however, is rarely out of focus and, as a
procedures to be kept on track. reflection of the current economic challenges and
need to justify budgets, is, on balance, the most
important factor when selecting partners. However
the knowledge they bring and the fact that they have
Those companies using third party help know they successfully delivered before for other organisations
need to justify the cost, are more used to making and have established a reputation follow close behind
objective measurements, and are more likely, (Figure 11).
therefore, to employ a formal process (Figure 9).
Unfortunately, many companies still only perform
some form of impact analysis on some of their IT
projects, and many others are even more lax.

Again, when looking for external support, those

This will do little for the reputation of the IT function
in the broader business, and in more difficult
economic times will make it even harder for IT to
justify the expense. No wonder then that many
financial controllers are viewing IT as a costly internal
companies growing faster than their peers are seeking
skills that will enhance the business, making their own
staff more effective and productive, and not just to fill
gaps. The aspects they believe are most important
revolve around business skills and values, and it is
these that are more important differentiators when
choosing between different third party consultancy
companies.

©Quocirca 2009 Page 6


5. Conclusion
Companies should always try to get the best out of
their IT resources, and this includes people too.
However, no matter how large, no company will ever
have the perfect mix and numbers of IT staff to cope
with changing market conditions or technology
evolution and development.
Finding external help, guidance or support will always
be part of the equation. Some will choose to entirely
outsource IT to one primary partner, others will try to
do it all on their own, and many will use a mix of
internal and external manpower.
Selecting the wrong third party partner could be a
costly exercise and, while a short term fix of renting
temporary headcount might get the IT function out of
a hole, a broader perspective is important in order to
obtain lasting business value out of any engagement.
This means:
- Keep an eye on costs, but understand that the
impact of the lack of internal resources to the
business could be significant. Work out the real
internal cost of in-house headcount, and use
external resources where it is more cost effective.
- Do not be tempted to cut corners on cost.
Consultancies with a good reputation and
industry knowledge will cost more initially, but
will benefit the business more in the long run and
avoid costly mistakes.
©Quocirca 2009
Body shop to mind shop May 2009
- Seek out consultancies that provide specialist and
distinctive skills that are difficult to recruit for.
Look to those who provide senior and
experienced staff through the lifetime of the
engagement and not just at the beginning or
during the initial sales pitch.
- Integrate external and internal staff. Encourage
in-house staff to engage with and learn from the
external specialists, and foster a long term
relationship based on trust and sharing of
information and skills.
- Ensure that third party engagements have
defined measurable outcomes and that these
include an element of skills transfer and coaching,
but not the interviewing and poaching of internal
staff.
Not only are external services under greater scrutiny
for the value they bring, but internal services, such as
the IT function, need to be demonstrating their
effective impact on business performance. More than
ever before, companies need to identify external
partners they can trust to deliver not only technical
knowledge, but also wider market understanding and
an ability to transfer some of their expertise to further
develop internal capabilities.
Partners will still be expected to deliver all this at
what is perceived to be a keen price but, providing
they add demonstrable value to the IT function and
the business, they will be able justify the cost.
Page 7
 About C&C Technology Consulting
Bringing IT Know-Why & Know-How
C&C Technology Consulting provides independent consultancy to businesses that want increased benefit
from technology. C&C works to bring a more integrated approach to Applications, Infrastructure and
Networks, —from Desktop to Data Centre. C&C’s unique approach encompasses IT Know-Why & Know-
How, to deliver IT that really works. IT Know-Why is concerned with clarity of the purpose behind what you
do; Know-How is capability and expertise. C&C recognises that there is a great deal of Know-How in the
market, but it is the combination of Know-Why that is missing. This powerful combination ensures C&C
works with the customer to help make the right decisions and implement solutions more effectively; meeting
their business agenda and helping them do IT better. C&C has established a reputation as a trusted advisor
to its clients, combining a strong heritage in technical IT disciplines with a flair for developing an
understanding of how their business and people operate. Working with clients across the mid-market and
public sectors, C&C provides a totally dependable and objective service.

C&C provides consulting, coaching/education, resources and services to help clients align IT activities to
business vision and goals. It assists clients in developing and implementing a well thought out, structured
and appropriate IT strategy—covering both the ‘why’ and the ‘what’, which can be divided into smaller,
manageable activities or projects. To C&C, it is the ‘why’ aspects of IT which are so often undervalued,
which leads to increased complexity, risk and cost within IT. ‘Why’ is the link between IT and the business,
ultimately the brief and purpose for action.

C&C’s work with previous clients, centring on helping them do IT better, has resulted in an enhanced
reputation of the IT function across their businesses. C&C firmly believes that IT needs to be represented at
board level in order for the maximum benefit to be realised; which C&C helps clients achieve.

C&C provides its services by partnering with clients across its three key areas of IT model:

1. Strategy & Management - formulate IT strategy & plans in alignment with the business objectives
2. Build & Change - manage projects & programs, designs solutions/transitions & manages the
delivery of IT related change within the business
3. Operations & Service Management - manage the IT infrastructure & operation. Optimising &
delivering

C&C Technology uses this model when helping clients develop and manage their own IT capability, across a
broad spectrum of activities. C&C believes that in order to deliver successful IT projects within any business
requires more than a simple choice of technology, it must cover the following aspects:

An understanding and interpretation of the business plan and requirements

A clear IT strategy
The ability to objectively source and select technology solutions
For each activity a clear scope, budget and set of requirements
Clear definition of roles & responsibilities across all areas
The right resources & skills to complete the task efficiently
Structured approach and process to IT project delivery
Structured approach to managing IT operations
Right support from partners who understand your agenda

With this approach in place projects are completed faster, on or even at lower than originally budgeted and
according to the original scope. C&C believes that IT capability drives great IT performance, which in turn
results in outstanding business performance.
REPORT NOTE:
This report has been written
independently by Quocirca Ltd
to provide an overview of the
issues facing organisations
seeking to maximise the
effectiveness of today’s
dynamic workforce.
The research behind this report
involved interviews with 100
managers and users from
organisations in the UK with an
annual turnover up to £500m.
The report also draws on
Quocirca’s extensive
knowledge of the technology
and business arenas, and
provides advice on the
approach that organisations
should take to create a more
effective and efficient
environment for future growth.
Quocirca would like to thank all
the participants for their time to
take part in the telephone
interviews from which the data
for this research was derived,
and to thank C&C Technology
Consulting for its sponsorship
of the research.
About Quocirca
Quocirca is a primary research and analysis company specialising in the
business impact of information technology and communications (ITC).
With world-wide, native language reach, Quocirca provides in-depth
insights into the views of buyers and influencers in large, mid-sized and
small organisations. Its analyst team is made up of real-world practitioners
with firsthand experience of ITC delivery who continuously research and
track the industry and its real usage in the markets.
Through researching perceptions, Quocirca uncovers the real hurdles to
technology adoption—the personal and political aspects of an
organisation’s environment and the pressures of the need for
demonstrable business value in any implementation. This capability to
uncover and report back on the end-user perceptions in the market
enables Quocirca to advise on the realities of technology adoption, not
the promises.
Quocirca research is always pragmatic, business orientated and conducted
in the context of the bigger picture. ITC has the ability to transform
businesses and the processes that drive them, but often fails to do so.
Quocirca’s mission is to help organisations improve their success rate in
process enablement through better levels of understanding and the
adoption of the correct technologies at the correct time.
Quocirca has a pro-active primary research programme, regularly
surveying users, purchasers and resellers of ITC products and services on
emerging, evolving and maturing technologies. Over time, Quocirca has
built a picture of long term investment trends, providing invaluable
information for the whole of the ITC community.
Quocirca works with global and local providers of ITC products and
services to help them deliver on the promise that ITC holds for business.
Quocirca’s clients include Oracle, Microsoft, IBM, O2, T-Mobile, HP, Xerox,
EMC, Symantec and Cisco, along with other large and medium sized
vendors, service providers and more specialist firms.
Details of Quocirca’s work and the services it offers can be found at
http://www.quocirca.com