Each week, we seek out expert advice to help a small or medium-sized company overcome a key issue.
Steve Litwin can't hide his frustration. The founder and president of Toronto-based IT consulting firm Litcom has almost 30 years of experience in his field and a seasoned staff of 14 delivering a wide variety of services to clients that have ranged from Vincor Canada to OMERS Private Equity Inc.
Yet, Litcom, which Mr. Litwin founded in 2003, often finds itself battling for business against the blue-chip consulting houses. From Ernst & Young to Deloitte Touche Tohmatsu Ltd. to Accenture PLC and International Business Machines Corp., these bigger rivals have moved into the small -and medium-sized business space. And when bidding on projects, Mr. Litwin says that Litcom sometimes loses out to their powerful brands.
It doesn't matter that the firm sees itself as more flexible and more affordable, partly because it keeps overhead low by adding independent consultants for larger contracts.
"We hear clients say things like 'We'd like to work with you, but we need to go with a bigger firm because our executive or our management or our board, they know those guys; they don't know Litcom,'" laments Mr. Litwin, whose background includes being a senior manager at Deloitte, a partner at E&Y, where he led the IT consulting group, and heading up the Canadian IT practice at Capgemini after E&Y sold its management consulting business to the French IT services giant.
"I guess it goes back to that old adage where no one ever got fired for hiring IBM," Mr. Litwin adds.
When his firm does beat out the big shops, Mr. Litwin says clients offer many accolades."More often than not, we hear the message that 'you looked easier to work with, you brought a very professional team to the table, we certainly did like the affordability and the budget [and]…we got the sense that your team was going to show up; we weren't going to get junior people doing a lot of the work,'" he says.
But still, "our challenge continues to be with clients who do choose the large firms over us because of perception, rather than value of the solution we bring," he says.
Determined not to compromise quality by slashing prices – which he doesn't believe would have any significant effect because the company's fees are already generally lower than those of the larger firms – Mr. Litwin needs to solve this perception problem so he can accelerate Litcom's growth. Since 2009, revenues have increased by about 20 per cent annually, but his goal is upward of 50 per cent, he says.
"We've done solid work and we are making good headway," he says. "In some instances, when we are not chosen for the work, I think it is for the wrong reasons."
THE CHALLENGE: How can the small firm overcome the bigger-is-better perception and win more business?
THE EXPERTS WEIGH IN
Anson Lee, client partner,Longview Communications Inc.,Vancouver
With tech consultants that are pitching against the Deloittes and the IBMs of the world, my experience has been that there's a distinct advantage to being a boutique. When a client is considering outsourcing some specialized IT projects, they are looking for the team and the individuals. There's a good story there, but it doesn't come through on Litcom's website.
The website is the first destination people are going to go when they're considering Litcom, so I would focus my attention there. Looking at their home page, there's a bunch of photos of people, but none of them work at Litcom. These are just stock photos or silhouettes of people in suits. That says, like, anonymous body shop, not someone who has 29 years of experience.
Companies that tend to do this a little bit better are the next generation of IT consulting. They were born out of the dot-com age and have matured into a more sophisticated or rigorous consulting world, but they still bring with it a personality.
Who have they worked for? What were the challenges? What insights did they bring? How did they implement it? And it's very personal. All the photos are of actual people that work there. You get a sense of what it would be like to work with these people.
Mark Satov, founder and leader, Satov Consultants Inc., Toronto
The two ways to get your win rate up are to win more but also to bid less. If Steve were going after fewer of these opportunities or doing more screening early on, then he'd spend less time on the ones where he's not as likely to win, spend less time bidding overall and do other things, or use that time to bid in other situations where he has a greater chance.
When I'm bidding for work at Rogers, let's say, and I'm bidding against Accenture or BCG, I know if it's a division-level strategy, I have a great shot at getting it. But if it's a CEO-level strategy, then probably they're going to want to go with a brand name. He needs to do an analysis of the bids he's losing and try and understand who's taking them and why. He may find that it's not just the big brand, or he may find that there are only certain situations where the big brands take his business away…And he would look at his past success and say, 'You know what? The last 10 times I bid on that situation, I've not won. So I'm not going to play this; I'm going to put more effort against another one.'
Amanda Steeves, vice-president of marketing, The Mezzanine Group, Toronto
The larger issue is a business-strategy question. The reality is, they can't go head-to-head with a Deloitte. That's not to say that they can't win business from them; it's more a question of what's their competitive edge over, say, a Deloitte or an IBM. If you look at the IT consulting space as a whole, what's that sweet spot that they feel they can actually own in the market?
It's great that they're growing, but from a business strategy perspective, you're always better off to be narrow but deep – to have a narrow focus but be very rich and deep in that focus, rather than being too broad and too thin.
If they can carve out that competitive differentiation, then they also need to look at the sweet spot in terms of the customer segment they want to go after. If you look at everyone they target, there's going to be those people who maybe just want to buy the brand, and there's nothing you can do to deter them. Again, it comes back to not trying to be all things to all people.
THREE THINGS THE COMPANY CAN DO NOW
Revamp its website
Bring more personality to the site. Use it to play up your deep experience and high-quality, flexible services by showing real consultants in action.
Be more strategic about chasing opportunities
If you determine exactly why you lose certain bids, then you can concentrate on those you're most likely to win.
Stop catering to everyone
By narrowing your business focus and your target audience, you can stand out in the marketplace and cut down on losing bids.
Special to The Globe and Mail
Facing a challenge? If your company could use expert help, please contact us at firstname.lastname@example.org
Join The Globe's Small Business LinkedIn group to network with other entrepreneurs and to discuss topical issues: http://linkd.in/jWWdzT
Our free weekly small-business newsletter is now available. Every Friday a team of editors selects the top picks from our blog posts, features, multimedia and columnists, and delivers them to your inbox. If you have registered for The Globe's website, you cansign up here. Click on the Small Business Briefing checkbox and hit 'save changes.' If you need to register for the site,click here.