Cloud Consulting Acquisitions Accelerate

The recent flurry of consulting company acquisitions focused on cloud computing is another clear indication of the accelerating shift of IT systems and enterprise applications to Software as a Service, Platform as a Service and Infrastructure as a Service alternatives.

IT and business decision-makers are no longer asking why they should move to the cloud, but instead are trying to figure out exactly where, when and how to capitalize on the rapidly expanding array of SaaS, PaaS and IaaS options.

Every executive survey shows an overwhelming level of interest in moving IT and business operations to the cloud. Every industry forecast shows cloud service adoption growing rapidly while on-premises systems and software experience declining demand.

While cloud solutions are supposed to be much simpler to deploy and use than legacy on-premises software and systems, the truth is they still require considerable time and effort to properly implement and employ.

Sorting through myriad cloud alternatives to determine which SaaS, PaaS and IaaS solutions are best suited to address a specific organization’s needs is a significant task.

In most cases, organizations are not swapping out their old software and systems entirely in favor of a new set of cloud solutions. Instead, they are augmenting the legacy applications and data sources with new cloud services.

Specialized Skills

This means they need specialized skills to configure and integrate the cloud solutions successfully into their existing software, systems and business processes.

Compounding this basic cloud migration challenge is the growing need to perform these tasks in vertical markets where specific domain expertise is necessary to ensure that they meet industry compliance and regulatory requirements.

Although we’ve been talking about the cloud for nearly a decade, these technical and industry-specific cloud computing skills are still hard to come by.

Therefore, large-scale enterprises and SMBs alike must turn to IT consulting companies to provide the expertise and experience to meet their needs.

It’s no wonder that the biggest exhibitors in Salesforce.com’s Dreamforce AppExchange Expo every year are the major cloud consultancies that pay millions to be right in front at the main entrance of the hall.

The truth is, however, that the traditional IT consulting firms are facing similar challenges. They are watching their existing data center and enterprise application consulting businesses slow down, while demand for cloud consulting expertise rises.

Augmenting Through Acquisition

Given the limited pool of experienced cloud consultants, and the costs and risks associated with trying to recruit them, it is not surprising that a growing number of established consultancies are seeking to fill the gap through acquisition.

Accenture’s acquisition of Cloud Sherpas and IBM’s purchase of Meteorix are the two most prominent examples of this trend. Both are already major players in the IT consulting business and big players in the cloud consulting segment of the market.

Cloud Sherpas gives Accenture greater resources to address the rapidly growing consulting opportunities associated with Salesforce.com and Google. Meteorix strengthens IBM’s position in the Workday human resources and financial management arena.

Speed and Efficiency

Both companies not only are acquiring a new brigade of badly needed cloud consultants, but also an infusion of new blood that can help them streamline their service delivery methodologies.

In the past, traditional consultancies depended on large-scale IT and software development projects that could take years to complete for the bulk of their consulting revenues. In today’s on-demand world, corporate executives and end users want quicker results at a far lower cost with much less risk.

Acquiring a fast-growing cloud consultancy can inject new energy and provide new insight into how the major firms can deliver quicker and more economical project results.

However, having gone through a similar acquisition back in the dot-com days, I know firsthand how difficult it is to use an acquisition strategy to transform a consulting company’s culture and service delivery methodology.

Ultimately, how well Accenture, IBM and other major consulting companies integrate the cloud consulting firms they acquire into their own operations will determine if they can keep pace with escalating customer demand.