IT consulting used to be the domain of the big players–with major companies tapping into large firms that came armed with PowerPoint, strategy plans, and technology implementation insight. No longer.
IT consulting used to be the domain of the big players–with major companies tapping into large firms that came armed with PowerPoint, strategy plans, and technology implementation insight. But as outsourcing has trickled down to every level, IT consulting isn’t just for GM anymore. Smaller, more agile consulting companies have a range of clients, and even use outsourced help themselves. Philadelphia-based Alliance Consulting has been on the forefront of this revolution for a decade, and aims to stay ahead of its competitors, and keep delivering expertise for customers. CEO Tony Ibarguen chats about where the company has been, and where it aims to go.
Alliance Consulting got founded in 1994, at a time when the big consulting firms were ruling the outsourcing scene. Why did the founders take the chance?
The firm’s two founders began noticing that a lot of consultants were leaving the big firms to do consultant work independently. So, basically, companies had a choice of either giant consultant firms, or single-person operations. They began thinking that if there was a network of independent providers, it would really benefit clients. So they set that up with Alliance, and it worked so well that they deployed it to other cities. We’re now in 11 cities.
How has the company expanded beyond that model?
As well as having consultants here, we do continue to have a large network of independent consultants, mainly tied to the idea that clients are fed up with these large firms. They prefer more specialized help. I think many of these large company sold them on some technology ideas and then failed to deliver, resulting in unnecessary budget expenditures. The problem with these large firms is that they were sending consultants out who didn’t know the nuances of an industry. They just took a cookie-cutter approach to something like technology implementation without understanding how it would affect a company’s competitiveness in a specific industry. What we do is take project managers trained in Alliance methodology and marry them up with specialists in different industries to form a tailored, customized team.
How did you get involved with the company?
I was managing director at a company called Safeguard Scientifics, which acquired Alliance in 2002. The partners who had started the firm shifted their priorities after 9/11. The company’s headquarters were in the World Trade Center, and 7 employees died in the bombing. The loss made them want to concentrate their energies in other directions, so they came to Safeguard, which acquired the firm. I really liked Alliance’s model, so about a year ago, I dropped into the role of being CEO.
The tech world has certainly had its ups and downs in the past decade. What kind of trends are seeing emerging now? There were a lot of large system implementations that went on about five years ago, to some extent because of Y2K. As a result, there are tons of huge transaction systems like SAP and Siebel, and what you’re seeing now is that companies are realizing that they aren’t getting results. They’re very disappointed. That’s one of the biggest trends we see, and that we think we’ll keep on seeing. Something else we’re seeing is that although IT budgets have improved somewhat, about 80 percent of money is being spent on maintenance and support of existing systems, and only about 20 percent is being spent on new technology. This is partially the result of regulatory pressures for some companies. If you’re trying to do compliance, it’s chewing up your budget. So, one thing we’ve done is to offer outsourcing of maintenance and support of existing applications, which allows company to spend more money on developing new applications.
Speaking of the troubled tech times, how did Alliance do during the downturn?
We weren’t unlike other firms when the bubble was bursting. We were struggling to maintain client relationships, to be honest. But unlike a lot of other firms, we did reasonably well keeping our core people and clients. There are many employees and clients that were with the firm before the bubble popped and they’re still with us today.
One of your primary sectors is banking and brokerage. How do you help those firms with the kind of heavy-duty regulatory compliance that’s needed now? There are different levels of compliance, so every clients is different. For example, one project was implementation of an anti-money laundering system in Europe. That’s related to the Patriot Act. But of course the more significant one in the past year has been in the accounting rules tied to Sarbanes-Oxley. We usually support data management related to that.
There are a host of consulting firms right now. What kinds of strategies are you implementing to set yourselves apart? In the second half of last year we made an alliance in India to have an office there, and to expand our service offering. We think it’s very exciting, and it’s been successful for our clients.
What types of plans do you have for the future?
We’re aggressively expanding. Having survived the tough years, and then having stabilization, we’re now looking to grow. That means looking for selective acquisition, but we’re also looking to grow organically.
We think that having the ability to outsource maintenance and support of core applications is going to be a big growth opportunity, so we’ll be growing our offshore and onsite services. We also see that the whole area of data management and warehousing, while not a new area, is being refocused on by our clients. It’s the old adage of “garbage in, garbage out.” With the exponential growth of data coming in, figuring out how to do data management efficiently is crucial.