• Management

New Kennedy Consulting study discusses the state of IT Consulting firms

A new study released by Kennedy Consulting Research shows some interesting trends within IT Consulting firms.  One of the more notable trends is that IT Consulting firms are increasingly getting requests from clients to provide services on a fixed-fee basis rather than time and materials (T&M).  According to the study, clients feel that they can better control costs with fixed fee billing.  However, many IT Consulting providers are countering this request by proposing more of a hybrid billing method where only a portion of the project is done on a fixed fee basis.  

Of course, our Dynamics AX ERP solution for Professional Services organizations has the ability to handle all types of project billing styles, including Time & Materials, T&M with a Not to Exceed (NTE), Fixed Fee, Cost Plus, etc…  In addition, Dynamics AX allows you to mix and match billing styles within a project, so for example some services or deliverables would be provided on a T&M basis, and others provided on a Fixed Fee basis.  So Dynamics AX is well positioned to help IT consulting firms manage projects where they’ve offered a hybrid billing model to their clients.   

Other interesting points from the Kennedy study include: 

  • IT Consulting has been the slowest of the five primary lines of consulting services to rebound from the prior economic downturn.
  • IT Consulting firms have been slow to hire new employees and instead have turned to the use of subcontractors to augment their workforce.
  • IT Consulting firms are being very cautious in today’s market, especially with expenditures like marketing and travel budgets.
  • In some cases, IT Consulting firms are even turning down business because the potential margins are too small and they’re afraid of the risk of cost overruns.
  • Despite these challenges, many executives at IT Consulting firms showed cautious optimism about the prospects for their business.  

If you’d like to read more or purchase the full report, here’s the link to the Kennedy website:  

http://www.kennedyinfo.com/consulting/research/firmmanagement/IT-Fees-2012?channel=20120725_Kwire

If you’d like more information about SAGlobal’s Microsoft Dynamics AX solutions and services for Professional Services organizations, please Contact Us.

 

About the Author

Michelle Kirby

Michelle Kirby

Michelle Kirby is the Marketing Coordinator and Account Manager for SAGlobal.  Michelle’s dual role includes coordination and execution of marketing campaigns and managing SAG’s existing client base.  Michelle has over 16 years of ERP experience, including consulting, account management and as an end-user in a database administration role.  

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