ERP Consulting 2010: future business model and alternatives

We are talking about mid-size ERP systems implementation, customization, integration and support, which requires more than one independent consultant efforts – client needs Microsoft Business Solutions partner to implement the system.  The most important changes in our opinion happened in the time of recession and these changes will reshape the industry in a few years.  Right now we are experiencing the time of market redistribution.  Let’s look at the processes:

• Consulting Companies Consolidation.  Great Plains Software was supporting small and tiny partners, down to one consultant – this was up to the moment when Microsoft purchased the company and formed Microsoft Great Plains Business Solutions, later on renamed into Microsoft Business Solutions.  However the realities of recession-time cash flow forced small and mid-size Microsoft Business Solutions partner to merge with auditing firms.  The opposite side of the coin is – large companies, serving mid-size and small businesses are pushing consulting and hidden implementation price up.
• Recession-time Expenses reduction CEO.  Yes – corporate, mid-size and small clients launched the program of cost reduction.  Recession inevitably pushed consulting rates down and the consolidation process leaded to the situation when clients could not afford the price level due to the weak budget or the believe in the price decrease.
• Consultants Layoffs.  This is very prosaic process – but it is inevitable in the time of recession and lack of orders.  Consultants, who were serving client in the booming time had to find another job, mostly in different industry, something like to become controllers for mid-size businesses (when former controller was laid off due to high pre-recession time salary).  These historical layoffs however resulted in the nowadays shortage of experienced consultants, especially technical consultants: Great Plains Dexterity, VBA/Modifier, Integration Manager programmers and technical specs writers.

Predictions and Prognoses:

• Offshore is only part of the solution.  The main reason in our opinion is reasonable conservatism from the side of potential clientele.  There were so many malicious virus attacks from overseas and we do not simply trust somebody who is over there and never had a chance to shake our hands.  The second reason – small to mid-size companies (who have conservative approach to trust somebody) might not have strong IT support and infrastructure to be served via remote desktop, VPN or web session.
• Established Partners with Offshore facilities.  This is possible way, however we have certain skepticism here.  The reason to our skepticism is – established partners have to command highest consulting rates due to high level of administrative and headquarters expenses, so the savings to the end client might not be substantial
• New Small Nationwide Partners.  Due to the recession, there were cases when minor partners had to leave mid-size consulting companies and form new companies on their own, believing in their expertise and the new way of partnering with offshore programming groups.  We believe that the future market will turn to these partners and new nation-wide practices.