Enterprise

Consulting firms aren't just recommending software anymore, they're building it

Management consulting firms like McKinsey and Booz Allen are upending the traditional consulting model and building their own software.

Booz Allen Hamilton

Booz Allen is just one of several traditional consulting companies that are increasingly building software for their clients.

Photo: Jim Watson/AFP via Getty Images

A cloud-native, consumer-facing digital platform was built from scratch in 15 months using agile software development. The portal runs on AWS and has more than 163 million page views. It wasn't designed by a software company; in fact, it wasn't even designed by a tech company — it was built by a consulting firm.

That portal is recreation.gov, the U.S. government's one-stop shop for public land use across the nation. And it was built by software engineers and cloud architects from the defense contractor and management consulting firm Booz Allen.

Years ago, no one would have believed it if you told them consulting firms were hiring software engineers and beating out tech companies to win development projects. Instead, consulting firms focused mostly on recommending software vendors, or advising clients on technology implementations.

But the traditional model of management consulting is being flipped upside down as every company tries to figure out how to become a software company. Gone are the old days of consulting firms selling people, time and resources; now, consulting firms are selling actual software and products.

Meet the new consulting

Haluk Saker, a senior vice president for Booz Allen from Turkey, is an engineer by both trade and passion. "All I wanted to be was an engineer and stay as an engineer," he told Protocol.

When Saker came to the U.S. after earning his master's in engineering, his objective was to use his skills across multiple products and projects, which led him to Booz Allen. "But then I quickly realized in Booz Allen, OK, you're an engineer, then a tech lead, then an architect and then some sort of manager." Saker wasn't interested in the traditional consulting career path. So even after rising from a software engineer to a partner, he found a way to stay deeply technical by communicating his career ambitions upfront.

Saker's path soon became the model for a new engineering track at Booz Allen. "Booz Allen invented the technical track based on my progression," he said. He's one of the few hands-on technical partners in Booz Allen, and was the driving force behind the recreation.gov proposal and rollout.

Winning that project was an eight-year journey full of hackathons and client presentations. During one of those hackathons, Saker was in the basement of the Department of Labor in Washington, D.C., working with three of his best teams, while the rest of the teams were from the Bay Area.

"People see Booz Allen as a defense contractor — everybody ignored us," Saker said. Everyone except the client; Saker's team of engineers ended up winning the entire hackathon. "The top four companies all were product companies, they had their products or similar jobs. We had just our brainpower," he said.

Saker's journey is representative of a broader shift in the consulting model.

Francisco Caudillo, a solutions leader at McKinsey, a consulting firm that also designs software for clients, believes the industry has come a long way from the stereotype of dumping 100-page strategy documents on clients' desks, leaving them to figure out the implementation on their own.

"I think that's probably a stereotype of, I don't know, maybe the '80s or even '90s? I don't think that is the case anymore," said Caudillo. What consulting firms do now is "start projects and they have some risk involved in the sense of, 'If this works, then we are going to bear part of that risk.'"

Booz Allen also follows a similar approach, which they call a "transaction-based fee model." The model lets both Booz Allen and its government clients make money as the product produces revenue. In the case of recreation.gov, Booz Allen invested in the development of the platform, which then generates income for the firm on a transactional basis.

Soren Kaplan, an affiliate research scientist at the USC Center for Effective Organizations, believes these shifts are occurring in part because the old "billable, time-based business model is not scalable." He thinks consulting firms need to look at how they scale beyond just selling time, because you can't scale people.

"As you look at how to scale a business, and you look at how to scale offerings, if it's people-based, it's not as scalable as if it's software-based," Kaplan said.

The challenge with building software and products, however, is finding the talent to build that software. The "cliche of the MBA graduate coming and going to solve the challenges of clients is definitely something that's going to change," said Caudillo. To him, the future of consulting is one that centers around the nexus of business and technology.

"The main challenge for the consulting world really is going to be: How do you find the talent that is at the intersection of those two points? The business acumen and the technological acumen," he said.

The talent race

Saker is passionate about beating Big Tech when it comes to talent. "I'm not competing with Apple, Google, Netflix by any means for a project, but I compete with them for the talent. So I lose talent to them, I steal talent from them," he said.

So when Booz Allen does beat the Apples, Googles and Amazons of the world in the race for talent, how does it do it?

Saker believes when it comes to winning talent, it's all about culture. "If the person likes you, it's a lot more likely that that person will accept my offer versus Microsoft or what the other companies offer," he said.

At McKinsey, Caudillo says engineers join the consulting firm to work on different products at different companies over the course of their careers. "If you think about companies like Facebook and Google, they are working towards a product," said Caudillo. The difference at McKinsey is, "We're not trying to sell software, we're not trying to sell a product, we are trying to solve a challenge," he said.

Consulting is still not tech

Still, consulting firms aren't tech companies.

"I don't think any of the consulting firms will see themselves as substituting SAP or IBM or those kinds of providers. That's something I don't think is going to happen. It's more a complement than a substitution," Caudillo said. He doesn't think "consulting firms will ever be able to play at the volume and scale of companies that are specialized." Because when it comes to software development, larger consulting firms "lack the skills and capabilities to do that at scale because it's not their core business," he said.

Kaplan agreed that there are some structural barriers preventing consulting firms from innovating and building software.

When a consultant has to bill 40 hours a week, all the innovation has to be accomplished in their spare time. "And it's not going to be valued, because the rewards and recognition are usually set up on billable time," Kaplan said.

Consulting firms do have several strategic and competitive advantages when it comes to selling actual software. "People go to consultants because they need expert knowledge, either content-expert knowledge or process-expert knowledge," said Kaplan. They are also close to their customers, "so if you can find the technology opportunities and partners, and then match them with your existing clients, you can do rapid experiments and prototype," he said.

These advantages have played out well for Saker. And he prefers to show, not tell.

"I'm not a sales engineer," he says. "So they do some magic and they sell. But I do magic by building prototypes." This approach enables Saker to show solution designs to clients in real time, often winning them over.

Ultimately, Kaplan thinks the long-term value of consulting will come from building technology that stays with the client. "You're going to start to see many more product offerings and software, service and subscription business models, and partnerships between the consulting firms and startups as well as big companies like IBM," he said.

That means consulting companies are starting to look a lot more like software companies, just as every company in the world is thinking about how to get better at building and maintaining software. It's a challenge for them, but it will also be a challenge for older enterprise tech companies with longstanding technical relationships with clients, which will now face more competition.

Fintech

Judge Zia Faruqui is trying to teach you crypto, one ‘SNL’ reference at a time

His decisions on major cryptocurrency cases have quoted "The Big Lebowski," "SNL," and "Dr. Strangelove." That’s because he wants you — yes, you — to read them.

The ways Zia Faruqui (right) has weighed on cases that have come before him can give lawyers clues as to what legal frameworks will pass muster.

Photo: Carolyn Van Houten/The Washington Post via Getty Images

“Cryptocurrency and related software analytics tools are ‘The wave of the future, Dude. One hundred percent electronic.’”

That’s not a quote from "The Big Lebowski" — at least, not directly. It’s a quote from a Washington, D.C., district court memorandum opinion on the role cryptocurrency analytics tools can play in government investigations. The author is Magistrate Judge Zia Faruqui.

Keep Reading Show less
Veronica Irwin

Veronica Irwin (@vronirwin) is a San Francisco-based reporter at Protocol covering fintech. Previously she was at the San Francisco Examiner, covering tech from a hyper-local angle. Before that, her byline was featured in SF Weekly, The Nation, Techworker, Ms. Magazine and The Frisc.

The financial technology transformation is driving competition, creating consumer choice, and shaping the future of finance. Hear from seven fintech leaders who are reshaping the future of finance, and join the inaugural Financial Technology Association Fintech Summit to learn more.

Keep Reading Show less
FTA
The Financial Technology Association (FTA) represents industry leaders shaping the future of finance. We champion the power of technology-centered financial services and advocate for the modernization of financial regulation to support inclusion and responsible innovation.
Enterprise

AWS CEO: The cloud isn’t just about technology

As AWS preps for its annual re:Invent conference, Adam Selipsky talks product strategy, support for hybrid environments, and the value of the cloud in uncertain economic times.

Photo: Noah Berger/Getty Images for Amazon Web Services

AWS is gearing up for re:Invent, its annual cloud computing conference where announcements this year are expected to focus on its end-to-end data strategy and delivering new industry-specific services.

It will be the second re:Invent with CEO Adam Selipsky as leader of the industry’s largest cloud provider after his return last year to AWS from data visualization company Tableau Software.

Keep Reading Show less
Donna Goodison

Donna Goodison (@dgoodison) is Protocol's senior reporter focusing on enterprise infrastructure technology, from the 'Big 3' cloud computing providers to data centers. She previously covered the public cloud at CRN after 15 years as a business reporter for the Boston Herald. Based in Massachusetts, she also has worked as a Boston Globe freelancer, business reporter at the Boston Business Journal and real estate reporter at Banker & Tradesman after toiling at weekly newspapers.

Image: Protocol

We launched Protocol in February 2020 to cover the evolving power center of tech. It is with deep sadness that just under three years later, we are winding down the publication.

As of today, we will not publish any more stories. All of our newsletters, apart from our flagship, Source Code, will no longer be sent. Source Code will be published and sent for the next few weeks, but it will also close down in December.

Keep Reading Show less
Bennett Richardson

Bennett Richardson ( @bennettrich) is the president of Protocol. Prior to joining Protocol in 2019, Bennett was executive director of global strategic partnerships at POLITICO, where he led strategic growth efforts including POLITICO's European expansion in Brussels and POLITICO's creative agency POLITICO Focus during his six years with the company. Prior to POLITICO, Bennett was co-founder and CMO of Hinge, the mobile dating company recently acquired by Match Group. Bennett began his career in digital and social brand marketing working with major brands across tech, energy, and health care at leading marketing and communications agencies including Edelman and GMMB. Bennett is originally from Portland, Maine, and received his bachelor's degree from Colgate University.

Enterprise

Why large enterprises struggle to find suitable platforms for MLops

As companies expand their use of AI beyond running just a few machine learning models, and as larger enterprises go from deploying hundreds of models to thousands and even millions of models, ML practitioners say that they have yet to find what they need from prepackaged MLops systems.

As companies expand their use of AI beyond running just a few machine learning models, ML practitioners say that they have yet to find what they need from prepackaged MLops systems.

Photo: artpartner-images via Getty Images

On any given day, Lily AI runs hundreds of machine learning models using computer vision and natural language processing that are customized for its retail and ecommerce clients to make website product recommendations, forecast demand, and plan merchandising. But this spring when the company was in the market for a machine learning operations platform to manage its expanding model roster, it wasn’t easy to find a suitable off-the-shelf system that could handle such a large number of models in deployment while also meeting other criteria.

Some MLops platforms are not well-suited for maintaining even more than 10 machine learning models when it comes to keeping track of data, navigating their user interfaces, or reporting capabilities, Matthew Nokleby, machine learning manager for Lily AI’s product intelligence team, told Protocol earlier this year. “The duct tape starts to show,” he said.

Keep Reading Show less
Kate Kaye

Kate Kaye is an award-winning multimedia reporter digging deep and telling print, digital and audio stories. She covers AI and data for Protocol. Her reporting on AI and tech ethics issues has been published in OneZero, Fast Company, MIT Technology Review, CityLab, Ad Age and Digiday and heard on NPR. Kate is the creator of RedTailMedia.org and is the author of "Campaign '08: A Turning Point for Digital Media," a book about how the 2008 presidential campaigns used digital media and data.

Latest Stories
Bulletins