Mark Livingston: Market Trends for IT Services

Mark Livingston

Mark Livingston

Mark Livingston is Senior Vice President of Cognizant Business Consulting. Livingston is a long-time consultant, having done stints at AT Kearny and Deloitte before signing on to lead Cognizant’s consulting practice.

Cognizant at a Glance

Founded in 1994, Cognizant provides information technology, consulting, and business process outsourcing services.

Industry experience: Includes financial, healthcare, manufacturing, technology, retail, communications, and information services.

Clients: Almost 600, including 46 Fortune 100 companies.

Employees: 78,000 in 25 offices

Source: Cognizant.com

We asked him about the trends he’s observing in the market and how firms and individuals can succeed in the current environment.

McLaughlin: How’s the IT services market doing? Is demand picking up, staying steady, or declining?

Livingston: I read the same news as everyone else and worry about my personal investments. But I’ve also been out there and talked to a lot of CIOs. Mostly what I hear is that IT spending this year will either be flat or slightly up from last year.

We are seeing bullishness on the part of CIOs to undertake bigger programs than they did last year. These more ambitious programs will need consulting services. I think we are seeing good demand out in the marketplace for IT services in general.

McLaughlin: When you talk to CIOs and others, what are the key issues they’re struggling with that are creating that demand?

Livingston: I’ve joked for years that you could take the same presentations that I used in 1985, and some of those issues are still pervasive today. We haven’t resolved some of the basic underlying IT issues, which continue to resurface year after year.

One of those unsolved problems is that we still see extremely poor business-to-IT alignment, as IT continues to struggle to find its role in business. Second, we have the issue of complexity reduction.

When we got rid of COBOL, FORTRAN, and other legacy systems, we swapped them out for a whole other set of Oracle SAP-type legacy systems that have their own complexities. So we haven’t succeeded in making things less complex for clients.

And third, we still have the challenge of IT cost optimization. That is, how does a company best use its IT dollars in the most productive areas?

In spite of the current economic uncertainty, CIOs are drowning in a sea of conflicting demands, including operational issues, minimizing costs, optimizing expenditures, and continuing to drive innovation.

The good news is that businesses are willing to take a little more risk as they try to position themselves for growth in what we are calling the “reset” economy.

McLaughlin: In this “reset” economy, are clients changing the way they evaluate and purchase services? And if so, what’s the nature of those changes?

Livingston: Well first off, everybody is cost conscious today. But that doesn’t necessarily mean that the lowest-cost provider wins. I think clients are being more careful than ever about making sure that you’re qualified to do the work. They want you to show them where and how you’ve done the work before.

I don’t know if it’s any more pervasive than in the past, but clients expect service providers to take some risk and have a stake in the game. They are looking for real partners who are willing to make an investment to help them improve their businesses. And clients rightly expect that, as a partner, you should understand their businesses as well or better than they do.

We’re also seeing consolidation of vendors. To gain some scale advantage and drive down costs, clients are reducing the number of strategic or preferred providers they use. Basically, the idea is—stratify the partners that you work with, get down to a select handful, and give those vendors more business.

McLaughlin: Do you think that too much consolidation of providers can shift the balance of leverage to the service firm?

Livingston: Yes, I think it can. It’s almost like you’re too big to get rid of. After a certain point, there’s no scale advantage either.

If one service provider ends up entrenched in the majority of a client’s strategic initiatives, the client’s flexibility is reduced. And it can be risky for the provider too.

McLaughlin: Clients complain that they have trouble telling one service firm from another. What does Cognizant do to transcend the commoditization or lack of differentiation that we hear so much about?

Livingston: One client, who also works with a number of the big players, did an annual report card for their partner service firms. The client scored Cognizant as the only partner with “green” status. Everybody else got yellow or red.

One reason the client cited is the ease of working with us. We have good relationships with the client’s people, and they feel like we’re part of their organization. Second, the client pointed out that we don’t turn over staff as much as other firms. The others swap people in and out like there’s a sale going on, but we don’t do that.

Another important aspect according to clients is that we understand their industry sectors very well and bring them innovative, creative ideas that nobody else does. We are still small enough to be entrepreneurial, so we’re very responsive and I think clients appreciate that.

McLaughlin: If could give consultants just one piece of advice about succeeding in today’s market, what would it be?

Livingston: I’d point out that successful consultants are not always the ones with the highest IQs. You need a healthy balance of IQ and emotional intelligence to build relationships, sell your ideas, and make a team of people want to work with you. The most successful consultants recognize that early on in their careers and develop those skills.

In my twenty-plus years in this business, I’ve seen a lot of really smart people who didn’t get past the first couple of levels in consulting. They didn’t have the ability to forge relationships or sell their ideas. Without those skills, they couldn’t manage change for clients. And I think those are the skills that really count.

McLaughlin: Thanks for your time.

To learn more about Cognizant, visit www.cognizant.com.

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