Logica MD: Why consultants must 'dance with the devil'

Financial services are a key sector involving the work of a huge number of management consultants and their firms.

Link: Consulting survey: Manufacturing work plummets

The job is tough and always confidential due to high-level security issues and the possible risk of fraud. Tight deadlines are vital to turn great ideas into successful projects, and technology is constantly pushing delivery boundaries. Fortunately, some individuals are dedicated to the cause, willing to advise, manage and take responsibility for results and the delivery of projects as well as constantly striving to learn new methodologies. Whether they handle bank accounts, security and ID cards or mortgage applications, these people mastermind the smooth running of many of our financial affairs.

Guy Warren, UK managing director of financial services for LogicaCMG, is one of them.

Trained as a software engineer, his first posting was to oversee IT implementation at Dungeness nuclear power station – something he was keen not to get wrong. Now, he is an expert in running large-scale systems integration and IT outsourcing projects.

His main expertise, though, is heading up the outfit, driving growth within the business as well as for his clients, and delivering on time.

‘I head up a 500-strong team who work directly in financial services, while 250 work in outsourcing and enterprise services supporting customers. We service all the major sectors including banks, building societies, retailers, insurance, capital markets and intermediaries such as BACS and the FSA.’

While Warren’s title suggests that he deals mainly within the UK, one-third of LogicaCMG’s work is outsourced and offshore – a trend that is far from dropping off the radar.

‘Eventually the bulk of the processing for financial products will be offshore,’ says Warren. ‘You can’t differentiate on managing a bank account, mortgage or a policy through its life. The things you can differentiate on are your product: what it looks like, how it’s structured, how you charge for it, how quickly you go to market, will it be through a call centre or a branch.’

‘You can perhaps also differentiate on the customer experience such as the use of UK or Indian staff, but all the clerical work that gets done is just that – clerical. Staff never speak to a customer. They carry out renewal notices, for example, and the things that keep the financial services market moving forward. ‘It can be done anywhere, and that’s thousands of jobs. There’s no reason for it to be done in the UK.’

LogicaCMG outsources a huge amount of IT work thanks to a blend of cost, efficiency and risk purposes. Warren says clients and outsourcers will continue to steer this momentum because they are constantly looking at ways to drive down costs.

‘We’ve created a website where independent financial advisers can input customer details. We then send it to India and they call up the providers or do the work online, using the IFA authorisation code to verify various policy valuations. We prepare a paper statement and send it back to the IFA, who then calls the clients.

‘The service shows how much costs can be cut by shifting processes to a different geography. IFAs generally have five items per portfolio, which costs around £15 to process. We’re doing it for about £7.50 using a bit of IT and offshore processing.’

This type of consulting work is currently booming but Warren warns consulting firms to be wary of putting all their eggs in one basket because of the largely unforeseen global threats.

‘If you have it all in one centre and that centre gets taken out, it leaves a firm highly exposed.

‘In Hong Kong they had Sars, in the US there was a backlash against offshoring, and four years ago there were a million Indian soldiers on the border with Pakistan. They are both nuclear powers; if that had gone off, it would have been messy.’

Outsourcing may be thriving but classic consulting is still part of Warren’s day-to-day remit. This, though, poses a problem for the financial services expert, especially when it comes to partnering with rivals.

‘We have to work hard to sort out work share deals. If I give them a bunch of capability by working on a project with them that they can then use against me on the next deal, then I’m shooting myself in the foot.

‘But if a client says “I like IBM’s hardware and software and I like your services and the ways you two do payments, so would you two partner together for me?” then they don’t want to hear hard-luck stories – they want the best.’

Warren calls this ‘dancing with the devil’ but in a world he often refers to as a global village, outsourcing across continents and partnering with rivals are all part of the modern consulting game – and they’re here to stay.