Alsbridge, Outsourcing, Advisor, Value-Chain

Former Ernst & Young Partners spot gap in the market - outsourcing advisor Alsbridge now thriving

06 Apr 2006 | (Case Study)

Alsbridge's founders are ex-Ernst & Young Partners, who simultaneously had the same idea on each side of the Atlantic. On the European side of the Pond, ALS Consulting was born - whilst in the US Trowbridge was formed. Now brought together under the umbrella of Alsbridge, our management consultancy columnist Mick James uncovers the outsourcing related work on which smaller firms such as this are thriving...

Article provided by Top-Consultant.com

One of the interesting trends in the resurgence of the "client-side" advisory form is the way that these new consultancies are opening up opportunities for themselves in value chains that were previously owned in their entirety by the big consultancy firms. Nowhere has this been truer than in outsourcing. When the worlds of consultancy and IT converged, the resulting big firms pretty much had a lock on both business process and IT outsourcing as well as the related advisory work. But not everyone saw this as such a cosy set-up, one group being the three former Ernst & Young partners who set up ALS Consulting in 2002.

"We came from E&Y's Global Operate arm which was its BPO business for finance, procurement and HR, all of which were part of the sale to Capgemini," says founding partner Tim Lloyd. "We decided to do something different — that business was not going in the direction we wanted to go."

Coincidentally, and independently, another group of E&Y partners in the States had the same idea, forming Trowbridge.

"We saw we were doing the same sort of work for the same sort of clients," says Lloyd. "We began to share skills and intellectual property, so we decided to get together and co-brand. The result

was Alsbridge, of which Lloyd is European managing partner, and the move has created greater market opportunities on both sides of the Atlantic.

"It's opened up a new set of clients, clients that wanted this kind of service globally," says Lloyd. "It's not been a typical merger, we don't do politics, we just focus all of our energy on the market."

Lloyd believes the opportunity for his firm comes in large part from the inadequacies of traditional sourcing models to deal with the new world of outsourcing and offshoring.
"The way industry is used to sourcing and still does it is very inefficient," he says. "Sometimes clients don't know what they want, it takes time to get the stakeholders on board and that's increasingly expensive on the client side."

Suppliers suffer from a process that interferes with their ability to properly build a relationship with clients and develop creative solutions.

"On the supplier side we saw how inefficient it was for the industry to go through these rituals, the cost of which has to be priced into the work you do for the clients you win," he says. "Extreme positions are taken up in negotiations, with the result that the solution for the client is not optimal, the supplier relationship is not optimal. That's why we got into this business — industry is inefficient in the way it sources its outsourcing suppliers."

Lloyd believes that many of these problems stem from trying to apply sourcing techniques that are more appropriate to IT outsourcing to more complex back office work.

"Something like desktop support is a commodity, you can buy it from many different suppliers and it's just a numbers game," he says. "With finance and accounting you need a degree of flexibility, there are so many interfaces in and out, and it's nowhere near a commodity business. You need a collaborative approach to get the right partner."

According to Lloyd, what's also helping his cause is the rapidly changing BPO market:

"Five years ago in conversations with boards the question was 'does outsourcing work?'. Now outsourcing is seen as obvious, and the question about offshoring is 'tell me how it works?'.

It's no longer 'does it work', but 'does it work for me?'."

The DIY option is certainly an option for companies, but Lloyd questions how much time and effort and risk companies have the appetite for:

"Any company can do it, but it's like doing your own plumbing — what do you do when it goes wrong? What's your fallback?" he asks. Even companies who have already outsourced back office operations may not be in the best position when it comes to renewing the deal.

"BPO is so different these days," he says. "Besides, it's highly unlikely that the folk who did the outsource five years ago are still around unless their careers have stagnated, so you'll have to learn it all again from square one."

Lloyd stresses that Alsbridge is not simply an outsourcing advisor, but is "agnostic" about the solution.

"Clients don't normally know what the art of the possible is, they don't know what they don't know," he says. "Is outsourcing the right solution for them, or should it be shared services and/or a technology play?"

He is similarly flexible about the way to engage with the client:

"We can help them at any level of granularity from being a one stop shop to the other extreme of being "trusted adviser"," he says. "Or we could be in the middle and help them more effectively manage the implementation team"

Within the consultancy industry, Alsbridge is one of a growing number of intermediaries whose rubric, as Lloyd puts it is that "we focus on what we know about and where we know we add value." There seems to be an awful lot of room for this approach in the modern consultancy market. Clients like it, because as well as a hand to hold they perceive they are getting better value both in cost and outcome. I suspect the big firms aren't too bothered either. For those that are confident they genuinely offer best-of-breed solutions, firms like Alsbridge are in effect a client-funded route to market as well as the source of more solid and long-term relationships. If they lose the feasibility and strategy work but carry on getting the multimillion outsourcing strategies, I doubt any will complain too loudly.

Contact Mick with your views or suggestions at: mick.james@top-consultant.com

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