Small IT Conuslting Company

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Company and Services

The firm under analysis is a small IT consulting company in the United States. Cloud Computing has performed in the industry within 8 years, so that it has managed to collect its regular customer base. The company was founded by a group of enthusiastic entrepreneurs being still the chief executive officers. Their team designs and implements IT solutions for various organizations while the rest of the personnel receives the knowledge presented by few founders of the firm. The organization takes a top-down approach in human resource management. However, it is appropriate to make a general comment on the fact that knowledge management is a key driving force within the company. The chief executive team shares its knowledge with the rest of employees, so that a positive ethical environment is always present within this organization.

Surprisingly, the enterprise did not recognize innovations much. That can be justified with the fact that the firm’s financial potential is evidently limited owing to the corporate size and revenues. The company was addressing its target audience, which could not be described as unexpectedly big. Recent changes in a sphere of information technologies have caused the firm to reconsider its entrepreneurial orientation. Cloud Computing technologies have entered the market of the United States. Therefore, the organization has decided to make an adequate response on thea trend and gain a new competitive advantage. The chief executive team was quite aware of the fact that Cloud Computing is a technology typical of large enterprises. The implementation of Cloud-based services in the company would mean the risks of substantial expenditures as well as success to optimize current costs and address a larger context of the competition within the US market.

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As for the services provided with the firm, they comprise a standard list of IT consulting such as Business Intelligence (traditional being not cloud-based), custom software development, servicing of mobile applications, Sharepoint establishment and support, visual design, etc. The company has implemented Cloud Computing technology of a hybrid model in order to serve multiple requests of various customers. Unexpectedly, the firm has started losing its main target audience. Therefore, last five quarters had been associated with its deep stagnation. Cloud Computing services did not produce a desired effect, so that the main risk factor of consistent expenditures had striken the firm. What is more, the company has started losing its target segment in regards to the rest of its initial services. The firm has been in such a situation of an adverse competitive position demanding a new approach to gain a more feasible and cost-effective competitive advantage.

The company has a sufficient potential in human resource management and its knowledge base. To be more specific, the firm is proud of its workforce that demonstrates high rates of learning and unexpectedly strong willingness to change. It is hard to argue that such competences in human resources can be involved in the recovery of the organization after such a disaster. The firm will have to change its business orientation and align its objectives with a newly adopted business strategy. The rest of its services can be also integrated with Cloud Computing technologies. Thus, the firm will be able to enter into the competition on a higher level without a considerable corporate growth. The organization is experiencing an evident decline though with a heavy reliance on change management, human resources, and expertise that can normalize situation and boost its entrance to the national market.

The Market

In regards to the market of IT consulting within the United States, its growth can be admitted. This process, however, is slow because of the recent recession during 2008 – 2012 (Moore, 2013). An up-to-date market forecast suggests that it will grow on 2% in 2017 (Moore, 2013). In such a way, it is reasonable to admit that the trend on Cloud Computing technologies is still persistent within the US industry of IT consulting. The companies, which have already adopted Cloud Computing on a regular basis, expect a better growth of their business. Therefore, an average increase of revenues among such companies will be 40% higher in 2017 (Moore, 2013). This trend is the distinct evidence of the upcoming third wave of a digital revolution. That is why all business organizations deploy information technologies as an indispensable element of the successful performance. Thus, IT consulting companies experience a strong flow of customers with various requests, which result in a new step in the market maturity.

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As a consequence, the increasing market maturity and capacity cause a change in a business orientation of IT consulting firms. The company has failed to react on this shift even though it implemented Cloud Computing. Some changes in business orientation require the organization to promote more flexible and custom services. The firm did not position Cloud Computing as a platform for unique services. That is why it has lost all its competitive potential. A growing demand on IT consulting has implied a related competition for its target audience, which seeks for fast engaging projects and services deployed to their organizational environments (Moore, 2013). The firm has positioned its Cloud services as one of available services without an emphasis on the uniqueness of Cloud-based technologies. Besides that, the organization has neglected the reorganization of its human resources working on the Cloud Computing implementation without any distinct instructions regarding service positioning. That is why the firm has started losing its customers.

The main peculiarity of the contemporary market of IT consulting is based on the demand of its customers to be maximally involved in a process of services (Moore, 2013). In other words, its potential clients were expecting some offers that would facilitate their adoption of Cloud technologies. Meanwhile the company did not specify its scope of a new vertical element of its product line. Generally speaking, it has implemented the new stuff, but has not assigned to it any specific characteristics. As a result, the variety of possible services was not feasible within the technology of Cloud Computing. It is becoming increasingly apparent that the direct impact on the marketing strategy of the firm has not been made with the implementation of Cloud-based services. The technology itself renders a strong competitive advantage even in a rough market environment. The organization has not obtained its service niche. Therefore, a considerable segment of its target audience has moved to the companies with a more profound positioning of the same services.

To return to the subject of changes within the market, it is appropriate to note the reflection of human resources management in that regard. The proactive use of Cloud Computing has changed a functional role of human resources. This technology is more accessible from a perspective of its operational accessibility. Nevertheless, it remains a key decision-maker of IT consulting services. Moreover, the workforce’s value concentrates on a need to implement various models of Cloud-based platforms on a regular basis. In spite of a spreading concern about the depreciation of human resources in a sphere of IT consulting, an average salary has grown up to 20% within several years (Paysacle, 2016). The need for expertise in emerging technologies is apparent in each IT consulting company. Therefore, the firm has appropriately relied on its chief executive team, which evidently holds the most meaningful knowledge in information technologies. Hence, human resources management has not been affected adversely with the implementation of Cloud Computing.

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Competition

The most evident mistake of the organization is its attempt to place the new product in the same position with its key competitors (Galal, 2014). When multiple companies try to obtain a similar product niche, the probability of selection pressure and raise of incentives becomes accordingly high. In such a way, the firm has limited its competitive potential and the market’s maturity, as a whole (Galal, 2014). It has been reflected in absence of specific competences, which can be used for obtaining a custom niche of services. To the greatest extent, the company should have launched a product differentiation strategy. It would be an adequate response to a proactive competition within the market of IT consulting. The firm has been placedin a situation of the so-called overlap product density, which resulted in adverse conditions (Galal, 2014). Thus, the firm is required to take a different approach to positioning of its Cloud-based services.

However, the feasibility of modeling a product differentiation strategy within a small firm is rather debatable. The organzation might have lacked costs, expertise, or technology to make cloud-based services as diverse as possible. What is more, the implementation of a Cloud platform with a flexible model for multiple customer cases is a quite frequent result of a lot of experiments and amendments. These ones are evidently unaffordable for a small firm. Such a profound work could be done with more mature and bigger competitors. That is why competitive conditions had been preliminary unfavorable for the company. From that perspective, it had little chances to defeat bigger and more experienced firms in providing better Cloud-based consulting. Cloud Computing is known to be initially oriented at big enterprises. Therefore, the implementation of these technologies in the environments of small or medium businesses is always associated with the complications related to methodology or expenditures. Nevertheless, the firm has failed to consider not only this aspect but also the issues concerning marketing of the adopted technology.

The contemporary state of competition within the market of IT consulting in the United States presupposes the following issue. Each organization has to use a set of marketing instruments in order to follow a competitive flow within the industry (Baum, 2013). The small firm has neglected its marketing strategy on the recently adopted Cloud Computing technology. The service has been launched without brand building, advertising, establishment of dedicated sales initiatives, etc. (Baum, 2013). It is becoming increasingly difficult to ignore the fact that the firm has been excessively focused on the technology itself. Meanwhile basic strategic rules are still applicable to Cloud Computing despite of its relatively recent entrance to the US market of information technologies and consulting. The trend on these technologies is currently active. However, it does not deny the impacts of the business context and competition. It requires customizing of services to be offered to the target audience.

The competition could have been much favorable for the company, once a buyer power is the highest one within the entire existence of the IT consulting market in the United States (Baum, 2013). As it has been already mentioned, the third wave of digital revolution has caused an active growth of the customer demand on outsourcing or offshoring information technologies. Regarding that, most of the revenues flow from publically and privately owned sectors of business (Baum, 2013). The firm has failed to communicate with its customers being evidently as the most valuable asset of any IT consulting organization under circumstances of the current market trend on Cloud Computing technologies. In addition, modern customers seek for flexible pricing models, which are not affordable for the organization with objectively small financial capacity. A market entrance barrier is low nowadays. However, the company did not recognize a need to establish the communication for its new services. That is why it has lost its group of potential clients.

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Marketing

Marketing Instruments

In regards to the marketing instruments to be applied to the promotion of Cloud Computing services, the frim should have presented its new technology as a package of multiple services (Schultz & Doerr, 2009). It would have increased the differentiation of its product line. The firm would have been recognized within the market. As it has been already mentioned, the organization paid the entire attention to the technology only. Meanwhile the promotion of new services had been neglected. Cloud Computing is not an ultimate means of facilitation business in terms of the contemporary competitive pressure. Hence, the absence of complex services has resulted in an adverse state of the firm.

By the same token, the organization has not established a communication between its recently implemented technology and potential customers. Even though it could not afford advertising and settlement of good public relations, a social media platform is still available for the companies of different corporate sizes (Schultz & Doerr, 2009). Furthermore, the social media is one of prominent environments, in which potential customers look for outsourcing and consulting concerning information technologies, especially Cloud Computing. Social networks is a convenient space for promoting the company’s services as long as its fast feedback, evaluation, and flexibility being available for clients.

The firm has not also applied a branding strategy, which is also important for launching a new technology. One may argue that the branding development is a redundant element in a small business. It is certainly not true, since the company was attempting to address the largest context of competition and defeat bigger and experienced IT consulting organzations. A recognizable brand, however, would not change the situation considerably but would place the firm in relatively equal conditions of competition (Schultz & Doerr, 2009). At this angle, the company also has failed to place an emphasis on its uniqueness. That is why it was defeated with branded firms.

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Product Positioning

Speaking about product positioning, the company has not considered the fact that information technologies are an indispensable component of any business nowadays (Schultz & Doerr, 2009). That is why potential customers need different services and support. The organization did not deploy a flexible Cloud Computing technology. Therefore, it was unable to address any requests of its target audience (Schultz & Doerr, 2009). The company has positioned its Cloud Computing services as an up-to-date technology. It is a relevant decision. However, the technology should have been diversified, according to the needs of its clients. The common trend on Cloud Computing consulting implies that outsourced firms have to provide their services in the customers’ environments. In order to fulfil that purpose, the establishment of client-shared network is required. The implementation of WAN network is one of the most widespread means of regular communication with customers. The chief executive team obtains the sufficient expertise in that regard. However, the costs and expected benefits should have been forecast. The company has implemented Cloud Computing technology without creating a developed network for the distribution of services to its business environments.  The recent market trend presupposes the participation of IT consulting firm in terms of the clients’ case for a better optimization of resources and knowledge.

The firm has not defined the concept of its Cloud Computing services. That is why it was hard to create a service package. The common practice of Cloud Computing technologies recognizes three models of access: private, public, and hybrid. The firm has evidently implemented the last form of Cloud Computing. However, it did not formulate the scope of activities possible with the use of this technology. Consequently, the organzation was unable to address the customers’ needs as long as its product did not render any distinct value (Schultz & Doerr, 2009). In such a way, a cutting-edge technology has become a redundant element of the firm’s product line.

General Comments

Taking these points into account, it is appropriate to make a general comment on the following fact. The firm did not align the implementation of Cloud Computing with its overall marketing strategy. Cloud Computing is a strong competitive advantage. However, the company did not integrate it with its general business strategy. As a result, this project did not belong to its project portfolio. Thus, product deliverables did not address the customers’ expectations. The technology itself is a valuable asset for the organization. However, its independent placing within the product line has made it redundant. Therefore, the company could not apply it to any aspect of its performance.

To be more specific, the firm has implemented Cloud Computing technology as its key competitive advantage for addressing the intensified competitive pressure within US market. The technology has been successfully incorporated. However, the implementation towards improving the customers’ participation was not conducted (O’Mahoney, & Markham, 2010). The firm was expected to use Cloud Computing for gaining a competitive advantage. The technology itself does not make any organization harder to compete. The company did not settle an exact goal, towards which Cloud Computing technology can be used. Additionally, the more experienced businesses manage to direct Cloud Computing towards multiple marketing objectives.

Overall, the product differentiation strategy would require the firm to experiment on the models of Cloud Computing or even redesign the entire platform. It is informative to note that the company is unable to cope with such expenditures on the single technology (O’Mahoney, & Markham, 2010). That is why the firm was not ready to use Cloud Computing as its key competitive advantage and leading product of differentiation strategy. Its financial capacity can justify this statement. It is necessary to give an account of the financial analysis of the company. The probability of an inappropriate allocation of costs is always high. That is why the financial analysis of Cloud Computing project is required.

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Financial Analysis

The starting balance of the Cloud Computing project was $500, 000. It is hard to argue that it is a moderate amount for implementing such costly technology as Cloud Computing. Therefore, the organization launched the project quite early, as long as it could not afford a sufficient financial support. The rest of expenditures, however, were appropriately allocated. However, the company has spent $200, 000 on the deployment of Cloud Computing technology itself. It is sufficient, especially for the operational capacity of a small-sized firm. The company has managed to establish even security considerations of the technology within the costs spent on the implementation. It is possible to argue that overall credibility may be not satisfactory. Conversely, a chief executive team consists of experienced managersbeing aware of the risks associated with the implementation of Cloud Computing. At any rate, the expenditures related to the implementation of the technology are justified.

Further, the company has spent $100, 000 on its workforce. These expenditures have included bonuses, training, rewards, and the payment for the outsourced personnel for the project’s completion. The company has placed an emphasis on its human resources as its most valuable asset. That is why investing in the personnel was excessively high (O’Mahoney, & Markham, 2010). The workforce, however, justified such substantial costs and successfully completed the project within the budget and deadline provided. In such a way, investing in workforce was not a crucial point. The rest of the starting budget, i.e. $200, 000, were spent on the development of the technology towards key functions of Cloud Computing. Once the implemented technology was designed in terms of a hybrid model, consistent expenditures are justified (O’Mahoney, & Markham, 2010). Provided that costs were appropriately allocated to the particular extent, the following question emerges. One should inquire what a real cause of the company’s failure in promoting its Cloud Computing services is. The allocation of costs is an important aspect. However, the firm has neglected another factors related to finance.

Factors of Failure from Financial Perspective

The recent recession of IT consulting industry has made a market entry barrier much harder to overcome even though it is low. In other words, the costs required for entering the market have grown while an opportunity of entrance was available. It leads to the conclusion that the use of Cloud Computing technology does not mean entering the competition (Monapartha & Lokhande, 2014). The company has appropriately allocated its costs regarding the implementation of the technology. Meanwhile the expenditures assigned to the development of services for the promotion were unreasonable (Monapartha & Lokhande, 2014). The organization should have conducted a cost-benefit analysis and chosen the most feasible models of a Cloud layout (Srinisavan, 2014). On the basis of these models, the company could have developed a preliminary service package. Its core failure is based on the fact that the costs assigned to the promotion of Cloud Computing services were spent on redundant and unfeasible activities.

Likewise, the firm has decided to launch Cloud Computing services within a single project. It is almost an impossible task, especially for such a small organization. In consequence, the budget assigned to launching a new service was comparatively weak. The differentiation strategy presupposes multiple attempts to optimize and update services package. The firm has implemented a hybrid model of the Cloud platform. Therefore, numerous approaches should have been taken towards scoping the values of new services (Srinisavan, 2014). Taking into account the fact that requests the customers tend to vary, the company should have invested more in the optimization of the technology. The conditions of the modern competition within the market of IT consulting require each firm to find a flexible solution to penetrate customers’ environments with minimum costs for itself as well as for every single client. In general, the organization has completed a maximum of activities within the budget available. However. the feasibility of the project was dramatically underestimated.

Cost Factors of Cloud Computing

The analysis has already mentioned that the company determined fixed costs while associated ones were not included and allocated. Cloud Computing technology presupposes multiple services for supporting the platform. Support services do not require contracting an external party, once they provide a system of pay-as-you-go (Srinisavan, 2014). The firm did not orient its budget towards future expenditures. Therefore, the technology has become redundant fast. The chief executive team has the profound knowledge in information technologies. Howvere, the support of Cloud Computing implies regular outsourcing, which is financially hard for the firm. The common practice suggests that outsourcing of Cloud Computing support saves up to 30% of monthly expenditures of IT consulting company (Srinisavan, 2014). The organization has relied much on its expertise and human resources being obviously effective. Nevertheless, the company should have hired an external party for optimizing the technology. Meanwhile the personnel could have learnt the peculiarities of working with Cloud Computing.

All in all, the main cost factor for Cloud Computing is the determination of fixed and associated costs. The company has failed to distinguish associated costs thereby making its Cloud Computing technology redundant. The overall approach to the cost allocation was moderately reasonable while a heavy reliance on the experience and effectiveness of human resources from cost-effective solutions throughout outsourcing the external support (Monapartha & Lokhande, 2014). Therefore, the main reason for the firm’s failure is the inappropriate product positioning, unreasonable use of expenditures, and excessive reliance on the technology itself. In the light of these conditions, the organization still has a chance to leverage its performance towaeds Cloud Computing services. Considerable changes should be made. However, following the basic rules of marketing, project management, and IT business modelling will lead the firm to its stable performance.

Technology

Since the firm has implemented a hybrid model of Cloud Computing, it has to invest its further development into various approaches. The inclusion of public as well as private functions of the technology will enable it to serve more companies without switching on a single model. The firm is recommended to start with starting basic functions. These ones can address its minimal target audience. These services can be integrated for rendering a better product differentiation and flexibility for customers’ business environments. Still, these changes should provide an outsourced Cloud platform provider.

The firm has to apply the so-called 8I framework, which involves the following ingredients (Poulfelt, Geiner, & Olson, 2009). They are software, hardware, power, environment, payload, network, human, and policy. This framework will indicate the main dimensions of the work aimed at improving Cloud Computing technology. These aspects are the basic principles of optimized operating with Cloud Computing technology. That is why the firm needs to consider them on a day-to-day basis (Poulfelt, Geiner, & Olson, 2009). Some of them may need an individual approach.Mean while the core of the technology is integrated. As a matter of fact, human resources and policies need a separate approach.

However, the preparation of a flexible Cloud platform may require the enlargement of the regular workforce. The company relies heavily on its personnel, which is why widening the personnel will facilitate the optimization of Cloud Computing (Monapartha & Lokhande, 2014). It is an objective requirement, as long as a successful deployment of Cloud Computing technology with such a small company that is almost impossible. Human resources are a central decision-maker regarding the technology in the firm (Monapartha & Lokhande, 2014). Therefore, the organization needs the sufficient number of workers for a credible fulfilment of its Cloud Computing project. Technical considerations, however, are not a single group of recommendations for the firm.

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Costs

The first recommendation regarding the costs is based on the need to structure them. The firm has to plan its budget considering the expenditures allocated to Cloud Computing. As it has been already mentioned, associated costs will be needed within the entire lifecycle of the implemented technologies. That is why the company should be ready to readjust its budgeting in case of any arising issues (Bauer & Adams, 2012). It does not have to be necessarily a loss or other disaster, since the development of information technologies is proactive nowadays. Henceforth, the organization will need to plan its budget together with these costs.

As a consequence, the expenditures on Cloud Computing is not a single source of costs in the company. That is why the firm may align cost planning with its overall business model (Bauer & Adams, 2012). Some changes, however, still should be made. However, their nature has to be consistent with the entrepreneurial orientation of the firm. Once it relies on its knowledge, the investment in talent management and benchmarking is reasonable. The exchange of expertise is pivotal for the firm. Outsourcing of Cloud is also a justified approach to cutting costs, so that the financial state of the organization has a chance to improve.

The company may establish partnerships with other IT enterprises and even share the Cloud technology. At this stage, it is a strategic decision, which will enable the firm to gain much experience and knowledge in Cloud Computing consulting. Partnership may influence the independence of the organization. However, it will provide an access to a wider experimental field for Cloud Computing (Bauer & Adams, 2012). It will diminish costs on support and outsourcing of technology. Therefore, the company will be able to design an additional plan for its recovery. Partnership with other IT companies will place it in a more protected business environment.

Marketing

The firm has to comprehend the fact that Cloud Computing is a part of the majority of business models. That is why the companies use this technology as its strategic instrument (Poulfelt, Geiner, & Olson, 2009). Therefore, the organization has to position its services towards that concept. What is more, many companies have already found redundant to implement information technologies within their business environments. The firm has a chance to become a regular outsourcing partner for many enterprises. Therefore, its Cloud Computing services should presuppose a long-term cooperation with devoted customers (Poulfelt, Geiner, & Olson, 2009). Since the capabilities of Cloud Computing are diversified nowadays, it is appropriate to recommend the company to optimize its services throughout such trendy functional requests of enterprises as business analysis and intelligence, technical support, project management, and the integration with stakeholders.

Many companies rely on Cloud Computing as the element for gaining strategic advantages and intelligence (Poulfelt, Geiner, & Olson, 2009). Thus, the customers would like to receive a profound and participatory consulting. The firm will need to position its services as a package of solutions aimed at addressing the clients’s strategic goal not as the high technology, once Cloud Computing is not recognized as an average innovation any longer (Poulfelt, Geiner, & Olson, 2009). On the contrary, many business representatives claim that they will do less outsourcing in a shortcoming future, as soon as the personnel acquires peculiarities of the strategic use of Cloud Computing. The company, however, needs to consider a threat from external markets. Offshoring of information technologies is a common practice, especially for the organizations that plan the international expansion (Poulfelt, Geiner, & Olson, 2009). That is why the firm should position its services at an angle of appropriate policing and reasonable pricing. These ones are crucial factors for attracting thetarget audience. Eventually, a horizontal line of Cloud Computing services will have to grow progressively in order to be ahead of the firms’ client base. Generally speaking, the company should apply basic business principles to Cloud Computing technology. The latter ones have influenced the organization to the particular extent without rendering any benefit to use the basic strategic knowledge.