Rooms Without Walls

Moreover, multi-iterative documents that often are lost in the ceaseless flow of strategy consulting are easily found via powerful search functions, relieving the time-consuming chore of hunting through file boxes and folders or e-mailing colleagues with a plaintive "Do you have the offering document?" Finally, the ability to peruse project progress over the Internet offers the client continual assurance that the project is moving forward as planned. "There's accountability at work here," says Hayward.

Meet and Greet

Vendors of digital workspace solutions — companies and products with fanciful names like eRoom, IntraLinks, IntraSpect, and SharePoint — say that consulting firms are a mainstay of their business. "They're the primary users of our software as a client-facing extranet for all kinds of engagements," boasts Jake Sorofman, manager for product marketing at Cambridge, MA–based eRoom Technology, Inc.
"There are a lot of iterative documents and files in the consulting space that are applicable to electronic creation, distribution, and storage," Sorofman explains. "Structurally, a consulting organization typically favors a widely distributed team concept, in which the different teams must come together to work cohesively on the engagement. Digital workspace software unifies this environment by offering a way to capture and track activities, milestones, and all communications."

EDS, an eRoom client, has set up digital workspaces for both internal and external projects. "We just opened an eRoom as part of a three-month sales effort, a fully integrated, outsourced IT proposal in which everything was done in the workspace," says Laurel McElreath, service line director at the Plano, TX–based information technology consulting firm, with $21 billion in 2001 revenues.
EDS's consulting teams gathered in the eRoom to discuss and provide input on the integrated IT proposal, based on their individual area of expertise. "Each group had its own portion of the eRoom, structured in a way to allow questions and responses, store documents, and see what other teams were doing in their spaces," says McElreath.
"What was great was that they could meet project deadlines without all having to be in the same place at the same time. If something wasn't done on schedule, instant notifications were sent out. The effort was coordinated with such efficiency that our productivity increased substantially. Team members didn't have to worry about sending huge files over the Internet and whether there was enough bandwidth to carry them. They could access whatever they needed when they needed it."

The preceding scenario involved internal use of digital workplace technology. Ernst & Young LLP is using the software externally — for merger & acquisition, corporate restructuring, global tax, and postmerger integration consulting engagements. Is it a better mousetrap?
"No question," says Carolyn Buck-Luce, global account partner at the New York–based consulting organization. "In the past, when we were engaged to advise a seller of a company, the iterations of the offering document alone were vast, simply because of all the different people involved. Investment bankers, lawyers, and accountants are all reviewing hard-copy documents, tacking on their own 'wordsmithing,' and distributing them by e-mail or FedEx, back and forth, ad nauseum. It's not uncommon for there to be 20 iterations of an offering document before it is done. This, of course, takes time and eats up money."

Yet, this is just the courting phase of the engagement. After the offering document is sent to potential suitors, the M&A due diligence phase commences. A war room is created, and a veritable library of critical documents propagates. "Say you have 20 potential buyers," Buck-Luce says. "At a minimum, it will now take 20 days for each of these potential buyers to visit the war room to do their due diligence, simply because you can't have them all in there at the same time. Meanwhile, we as consultants have to monitor everything to make sure what needs to be read is read, and what shouldn't be read isn't read."
Once a potential lead buyer is selected, the negotiations begin in earnest. Purchase agreements and other documents are drafted and vetted by both sides' lawyers, accountants, and investment banks, and then redrafted. Buck-Luce says that it is not uncommon for the documents required in selling a company to "stack 10 feet high" when all is said and done.
That's when E&Y sought a better solution. Today, the company engages an M&A client with digital workspace software provided by IntraLinks, Inc. "We give them a way to post documents, review them, change them, track them, and move them along, all managed on an outsourced basis," explains Adam Sloan, senior vice president of business development at IntraLinks, a New York–based digital workspace vendor and hosted service.
"Our clients now tell us that they cannot imagine ever working with us the way they did in the past," Buck-Luce comments. Pleased with the experience, E&Y has bought an 8% stake in IntraLinks.

The Invisible Consultant

Digital workspaces aren't a panacea for old ways of conducting engagements. That is, they don't replace face-to-face meetings, phone calls, e-mails, and faxes — they complement them. "You're not ditching these older forms of communication; you're creating a mechanism to pull them together," says Gartner's Hayward.
"What you're building is a virtual war room where it is relatively easy for people to engage with each other and collaborate by putting stuff into the 'room' and seeing what others have put there," he explains. "It adds to the depth of interactions between consulting organizations and clients. But it is not a silver bullet. It is a tool, one that will not compensate for poor customer relations or a poor understanding of the objectives in an engagement."
Face-to-face meetings remain important in the early stages of an engagement, but less so as the project moves forward. Viant Corp., for example, created a digital workspace provided by IntraSpect Software, Inc., for a bank client wanting to build a portal to support its deal-making. In the workspace, Viant unveiled several mock-ups of the portal, which were reviewed and critiqued in the workspace by the bank's experts on IT and other subject matters.

"At this stage, we had a lot of intense face-to-face meetings, but once we were in agreement on the look of the portal, these initial stakeholders faded away to their day jobs, and would check the progress of the project almost exclusively in the workspace," says Chris Newell, chief knowledge officer at Viant, a Boston-based consulting firm. Newell adds that Viant now uses digital workspaces for all client engagements —"from Day One."
Other consulting firms rely on workspace technology as the major form of communication with clients. TidalWave, Inc., an Orlando-based technology consulting firm specializing in Web-based strategy and implementation, recently completed a client engagement calling for the development of an on-line medical bill review system. Using SharePoint Team Services, workspace software provided by Microsoft, TidalWave virtually eliminated the need for meetings and phone calls, says Robert Methven, the firm's president.
"A lot of our work was conducted through threaded discussions, which took place basically on an on-line bulletin board where we would post a topic and the client would discuss what was posted with us — all on-line," he notes. "We still met on occasion and shared some phone calls, but for the most part we engaged each other in the workspace. We would exchange documents, work orders, invoices, and files, and then store them in the document library."

Trina Seinfeld, SharePoint product manager at Redmond, WA–based Microsoft Corp., says that the software "takes the place of having to use e-mail all the time." A former consultant with Software Spectrum, Seinfeld explains: "Instead of sending out an e-mail to a dozen people on a project team and asking for the latest project plan, and then waiting for all of them to reply, you simply post the question in the team's workspace with a deadline, for a response. If they miss the deadline they are prompted immediately. Time lines are crunched."

Client Clones

Another perceived benefit is the ease with which all the documents and interactions involved in one engagement can be duplicated for use in another engagement. M&A engagements, for example, require many similar documents, meeting notes, research materials, and team structures and processes. Instead of reinventing the engagement from scratch, an earlier, similar engagement can be cloned.
Sorofman from eRoom touts this function as providing significant return on investment. "Consulting firms can create a template of a past eRoom and then reuse it across multiple projects," he says. "When the project team engages the new client, they just click onto that template to map out the new project. The folder headers and structure already are in place. This gives them a helluva head start."
Other digital workspace vendors concur. "Consulting is all about intellectual capital," says Robert Schoettle, vice president of marketing at IntraSpect Software, Inc., in Brisbane, CA. "If a project team in Tokyo did a project similar to the one your group is now contemplating, a simple search of key words will open access to that archival material."

He adds: "A great deal that goes on in the course of an engagement, if it is archived, can be an important resource for other projects. Maybe 80 percent of your project already has been experienced and accomplished by the work output of other people's brains. Why reinvent the wheel?"
While hard ROI metrics on digital workspaces are elusive, consulting firms say that commonsense expense reductions are amply evident. "You don't need to dedicate a war room and schedule meetings again and again to get everyone in the same room or fly people all over the place," says McElreath. "Given enhanced security after September 11, it is not uncommon to stand for hours just waiting to get on a plane, which is a complete waste of time and billable money. With a digital workspace, consultants are sitting at their desks contributing to meetings at their own pace and on schedule."

Schoettle says that anticipated savings from digital workspaces can be reflected in the bid on a consulting engagement, thereby differentiating the firm in the bidding process. The technology also "brings new people on a project up to speed immediately, since the entire engagement is accessible and archived," he adds. "Because consulting firms endure a fair amount of turnover, the sooner you bring new team members on board and get them billable, the more you increase worker productivity."
The trade-off in ROI is the cost of the systems, which vary depending on whether the workplace is a hosted environment or an actual site established by the consulting organization. Fees for a hosted site run upward from $35 per user per week, on top of the up-front licensing agreement costs. To install, customize, and monitor a digital workspace without an application services provider (ASP) runs into the six figures.
Each vendor cited here has particular strengths. Hayward notes IntraSpect's e-mail knowledge management capabilities and eRoom's hosted environment and real-time discussion capabilities. SharePoint targets small- to medium-size companies and is the least expensive option, being bundled into Windows XP, but it is limited in terms of multi-users (e.g., all the parties involved in an M&A engagement). IntraLinks, on the other hand, is specifically touted for its "one location, many organizations" functionality.

Hayward, who has written extensively on the subject, says that down the line, the technology will become more standardized, yet paradoxically more flexible. "You don't want to turn these things into rigid, regimented work-flow systems, in which you drive users through standard repetitive processes, but you ideally want to provide users more support than a blank sheet," he explains.
The biggest drawback to the strategy, at present, "is difficulty controlling who sees what," Hayward adds. "Arranging the level of discrimination as to which documents and parts of documents can be shared, when and by whom, needs improvement. You don't want everyone to have access to everything, but I expect that continuing refinements will solve this problem in the next few years."