Cloud Battle in the C‑Suite
When McKinsey buys Candid Partners, a top-notch Atlanta-based boutique cloud firm, something is going on in the world of boardroom consultancy.
The Big Four — Deloitte, EY, KPMG, PWC — are already in the IT arena running global client projects such as SAP S/4 HANA implementations. So, what exactly is new about the move McKinsey is making?
The answer is that we are entering the phase of ‘Show Me the Money’ in digital transformation. There are two money-related problems in Enterprise IT: 1), change is too expensive, and 2), nobody can explain the return on investment to overhaul the status quo. This is why Accenture announced a $3 billion investment in Cloud First, and why all the major strategic consulting agencies, accountancy firms, and managed service providers are making a move.
So will digital transformation be the next ‘Big IT’, sold to non-tech board members with the catchphrase: ‘Uber yourself or get Kodak-ed’? The FUD factor (Fear, Uncertainty, and Doubt) isn’t going to work anymore. Instead, CXOs need to see proof of value. They want ‘Agile on Steroids’: i.e., adapting IT to the business needs and monetizing outcomes.
This paradigm shift won’t be easy given that most large enterprises must first escape their application legacy swamp. Just delivering strategy consulting on digital disruption isn’t going to do the job anymore for the ‘McKinseys’ and ‘Boston Consulting Groups’. They will need to walk the talk. Having skin in the game means committing yourself to value delivery.
Result: the cloud is hot in the C‑Suite.
After the buying frenzy of creative tech companies (design, marketing, and digital agencies), the incumbent brands are now buying their way into the public cloud. But are these global mammoths capable of achieving the outcomes they desire? Can they efficiently build a dominant position in this field? Moreover: do they really want to? In the Netherlands, local IT service providers such as Schuberg Philis, Sentia, and Solvinity already enabled successful cloud landings with sound economics. And don’t ignore cloud-native scale-ups like AWS pure-players HeleCloud, Lemongrass, Oblivion, and Rapid Circle.
It will be interesting to see how companies such as NorthCloud (acquired by IBM) and Candid can thrive within their respective motherships. The old boardroom saying goes: “No one got fired for buying IBM or hiring McKinsey”. Why? Because it was the safe bet. But playing it safe today will probably mean you are too slow to innovate your way out of trouble. A big risk of strategic acquisitions is the employee turnover. Around 80% of BusinessObjects’ and SuccessFactors’ workforce left within two years after the takeover by SAP.
Sometimes it’s more fun to hire pirates than the navy.