Disrupting the IT Management Consulting Market

An open letter to WGroup clients, employees, and peers about how WGroup (now Wavestone US) is doing, and where we’re heading

Since assuming the role of CEO of WGroup in July of this year, I’ve spent my time meeting with clients, industry peers, and employees to share my vision for WGroup’s future. In the past four months, I’ve received a lot of questions, had some great conversations, and witnessed extraordinary things. Recognizing that we don’t often talk about the firm publicly, I thought it appropriate to share a few things, and comment on common questions I’m asked.

For those who may not know, WGroup is a management consulting firm with a peer-to-peer approach to IT optimization and transformation. Our team is comprised of consultants with over two decades’ experience as former C-suite executives and IT leaders. We work with leading brands and industry pioneers under the unifying purpose of helping IT and business leaders succeed. WGroup is known for an outcome-driven, service provider-agnostic approach that optimizes IT operations and minimizes costs.

We were founded in 2004, and have operations across the globe. Our headquarters is in Philadelphia, PA. 

The most common question that I’ve been asked is, “How is WGroup doing?” This is a reasonable question—as our industry shifts, technology advances, and client preferences change, many management consulting and advisory firms are struggling to evolve, while others are merging to survive. 

The best answer to this question can be understood by looking at WGroup’s growth, clients, and people.

Growth

In 2013, WGroup had 20 people in the firm. Today, we are nearly 100. Our firm has grown 32% per year, organically, from 2013 to 2016.  2017 will continue this trend: October represented the largest revenue month in the company’s history. The business is stable, healthy, and profitable.

As has been the case since our founding, WGroup has funded its own growth. We do not have external investment and we do not carry any long-term debt. In the past years, we have been able to consistently invest back into the firm to propel our business forward. Having made these investments, our foundation for growth is strong—we have an accomplished management team, industry-leading consultants, and a robust back office to support all aspects of our business.

Clients

Recently, WGroup has had tremendous success in winning new clients and in deepening relationships with existing clients. A statistic that I like to share is our best-in-class win rate, which currently sits at 63%. When prospects evaluate WGroup, they value the difference in our track record and abilities.

Due to the sensitive nature of some of the work that we do, I am not able to share client names publicly. What I am able to share is that some of the most well-known companies in the US choose to work with WGroup. In this year, we’ve expanded our client base to include many more Fortune 500 and midsized firms. In addition to our work across all industries, WGroup has continued expansion into healthcare through our work with some of the most advanced payers, providers, and suppliers in the industry. We’ve grown our relationship with the private equity (PE) industry, and are a preferred management advisor for some of the largest PE firms in the world. What’s more, we are increasingly being hired at the CEO and board level to help senior management address their most pressing challenges in aligning IT to the business, reducing the cost of run activity, and improving the speed of operations.

All of our active clients are referenceable—a statement that few consulting firms can make.

Some comments about WGroup that our clients have recently made:

• “WGroup has a track record of exceeding my expectations. I’ve used your firm for complex issues as CIO across four different companies. You’ve earned my trust and are my go-to partner for management consulting.” – Client CIO
  
  
• “WGroup continues to earn our business because you come in and add value quickly. You don’t work to rack up unneeded consulting hours and instead get right to the best solution.” – Client CIO
  
  
• “By all accounts the business results that we achieve with WGroup’s support exceed expectations.” – Client CIO
  
  
• “Before WGroup, I worked with Deloitte, Gartner, and ISG. All of these firms approach sourcing as widgets and it felt like they learned sourcing from a classroom. WGroup approaches it from a wealth of experience and focuses the activity on business outcomes and sustainable solutions. Every dollar we spend with WGroup goes to partner-level attention. With other firms, it mostly goes to junior level associates fresh out of school.” – Client IT VP
  
  
• “WGroup’s guidance, expertise, and dedication in getting us the best solution has been above and beyond. We can’t thank you enough” – Client Director of IT
  
  
• “WGroup continues to provide invaluable insight and expertise. You play a critical role in our success” – Client Director of Procurement
  
  
• “There is no advisor in the marketplace that has WGroup’s depth of IT leadership experience.” – Client CIO
  
  

Statements like these represent the purpose of our firm: to help IT and business leaders be successful.

People

When asked why clients buy from WGroup, the first and most important reason is our people. Our consultants are the smartest and most experienced in the marketplace. I am humbled to have so many accomplished individuals on the team. I continually hear from our clients that they don’t want our consultants to leave for another engagement because they are making a daily impact on the success of their company. 

In recent years, we have invested heavily to make recruiting and talent management a core competency of our firm.

In the past six months, we’ve had extraordinary top talent flock to WGroup. We’ve recently hired consultants with backgrounds as senior consultants or partners at McKinsey, Accenture, Everest, Deloitte, PwC, KPMG, and others. In any given month, we receive an average of 170 applications for our senior consulting roles. The majority of our consultants work full time at WGroup, and in addition to being highly invested in our future, they represent the most accomplished professionals in the industry.

We’ve continued to upgrade our consulting bench with modern skills in cloud, Automation and AI, and Agile/DevOps, while retaining our top talent. WGroup is a place where leading consultants want to stay.  

These are some other questions I’ve been asked:

How is WGroup’s Sourcing Advisory Practice doing?

The answer is very well. Our deal volume is up 71% YTD since 2016. And this wasn’t off a small base—2016 was up 40% over 2015. This may be surprising as many in the industry talk about the death of third-party sourcing advisory (TPA) firms. Depending on who you read, the numbers show a 20-30% drop in annual activity. If you are talking about procurement staff augmentation, then I agree—that industry is dead. Client procurement organizations have become more mature, and many are now smarter than most of those kinds of advisory firms in the marketplace. Simple procurement augmentation support is no longer needed.

Instead, what is needed is advice for driving business and IT transformation outcomes through sourcing. This has been our focus since our founding, and this is why our sourcing practice is growing.

Beyond an increase in volume, WGroup is also advising on some of the most complex transactions in the industry. At present, we are leading a business process transformation and outsourcing renegotiation that I believe represents the largest of its kind in 2017. Clients continually turn to WGroup to help them design a sourcing model that will enable them to operate faster and modernize as they maintain. We don’t call that sourcing. We call it Run Optimization, as it should span the complete insourced/outsourced service delivery approach, operating model, vendor portfolio, and reference architecture. Our philosophy is that Run Optimization is the first step in the Digital Transformation journey, as it frees up the much-needed capital and resource bandwidth to invest in digital initiatives. 

Last year, we submitted the company’s first ever application for the International Association of Outsourcing Professionals (IAOP)World’s Best Outsourcing Advisors designation. As expected, IAOP was impressed with our story and recognized our firm as a part of this list. What’s more interesting is that IAOP also gave us top recognition for Customer References and the highest possible score for Programs for Innovation and Consultant Certifications—components that demonstrate our relevance to clients.

Many Service Providers have asked me, How much investment do they need to make in WGroup to be recommended to our clients?

The simple and complete answer is $0. Unlike nearly all of our advisory peers, WGroup is not set up to extract money from the service provider community. Whether other advisors call it “Credits,” “Research,” “Sponsorships,” “Joint Marketing,” or “Tokens,” we call it pay-to-play and we don’t do it. WGroup is an independent advisor free of financial conflicts of interest. 

Our likelihood to recommend a provider to clients is and will continue to be solely based on two factors:
1) Track record of exceeding expectations in their existing clients, and
2) Understanding and ability to deliver on a transformational service model that will make a tangible impact on business outcomes for the client. 

Related to this, I’ve told our clients to be careful of who they buy consulting from. Based on data from a group that researches Service Provider investment in advisors, Providers spend an average of $685,000 on the advisor community, and over 60% of providers plan to increase this in the future.   

This conflict of interest makes it impossible for many “advisors” to give impartial advice in the client’s best interest. This even applies to the research side. Many of us who have been in the industry long enough know that getting into the right spot on a 2×2 matrix can sometimes depend more heavily on your investment in sponsored “activities” with the respective analyst than on the true capabilities of your firm.  WGroup’s advice is based solely on the best solution for our clients—the solution that we, as IT Leaders, would implement.   

What about the services WGroup offers outside of sourcing?

While sourcing is a strong part of our business, we also provide other services to help IT and business leaders transform. In 2017, 40% of sales came from Sourcing Advisory. The other 60% came from our broader portfolio across Strategy and Service Management. Inside this portfolio includes M&A integration, operating model design focused on agile and devops, cloud strategy, application portfolio optimization, governance, overall IT strategy, and others. A full list of our services is available on our recently revamped website, https://www.wavestone.us/capabilities.

A fun story to share is one from October when I received a call from the Head of IT Strategy for a Fortune 500 company that we’ve never met before. This individual called us cold from their IT leadership summit. He said the company was considering many components to IT transformation, and were interested in every service listed on our website. He said that after extensive research of consulting firms, no other firm demonstrated real depth and practical experience in these topics. Needless to say, it was a great call, and we look forward to helping this client accelerate their transformation.

Has Harry Wallaesa retired?

This is my favorite question and the answer is No. As Chairman, Harry continues to advise our clients. He meets with at least one new prospect every day. He continues to be a creative inspiration behind our evolving service portfolio and is more than just the “W” in our name.    

Then I’m asked, if Harry hasn’t retired, why did he announce a CEO change, and why am I here?

Aggressive growth begets a lot of new work. As mentioned, WGroup has grown at an average CAGR of 32% over the past three years, and has welcomed many more consultants to the firm. Harry’s passion is not in providing operational management of a consulting firm, his passion is in being in front of clients and providing provocative advice that will help them make a step-change in their business. My background is in building and executing a blueprint for scale, and since I’ve joined in 2015 as Chief Operating Officer, that has been my mission. We’ve added structure in our delivery and go-to-market organizations, and we have expanded our management, consulting, and back-office talent to ensure a sustainable foundation with quality of delivery. As evident in the growth numbers that we have achieved so far, it’s worked.

WGroup hasn’t ever been about one person—it has always been based on a team. From our CMO, Domenic Colasante, to our CFO, Managing Principals, General Managers, and Principals, the growth of WGroup can’t happen without the best team in the industry. Together, with Harry, we have an unwavering focus on building WGroup into the most admired management consulting firm in the industry.

Where is WGroup headed?

Our future is as a preferred management consultancy aligned to the strategic purpose of helping IT and business leaders be successful. We will continue to grow in healthy double digits for the foreseeable future. You may even see WGroup grow inorganically, as we expand our capabilities to provide even more value to our clients.

I couldn’t be more excited to be leading our team. I’m proud to be a part of WGroup, and I’m having the most fun I’ve ever had.

In closing, if you are an experienced IT or business executive who wants to join a team of top talent consultants, we are looking for people like you. Send me a message or reach out to us at https://www.wavestone.us/careers.

If you are reading this as a prospective client, not happy with receiving mediocre advice from other consulting firms, you know where to find us. Please reach out to me directly, or connect with us at https://www.wavestone.us/contact.

Best,

Jeff