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DIGITALISATION DISRUPTING: THE CONSULTING INDUSTRY, A RACE AGAINST TIME

25 May 2020
DITALISATION DISRUPTING: THE CONSULTING INDUSTRY, A RACE AGAINST TIME By Vartika Singh, Audencia Grande Ecole Programme Student

HOW CONSULTING FIRMS ARE ADDRESSING DIGITAL TRANSFORMATION

With the advent of the digital era, a new craze has taken over the world. We want everything at just a click away. However, the verdict on whether it is revolutionary or just another demon ready to push us to  the apocalypse, is still pending. Whether we like this pill or not we have to take it in order to survive. Yes, our lives are that dependent on ‘1’s’ & ‘0’s’ now. If we talk about the business food chain, there is a lot of pressure from the demand side for newer and faster technology. Providers are struggling to keep up with this hunger and the easiest way for them is to turn to advice peddlers commonly called ‘consultants.’ However, the million-dollar question is, “Are these peddlers themselves ready for this change?” Traditional management consultancies often struggle with this question.

IT IS HARD TO COMPETE WITH THE COMFORT CONSULTING PROVIDES

According to research carried out by Consultancy.uk, Clairfield International and Forrester Research, the technology consulting market worldwide was worth 48 billion U.S. dollars in 2016 and as forecasted may grow up to 53 billion U.S. dollars by 2020. More particularly in the field of digital transformation consulting, there are three types of companies: strategy consulting firms, IT execution consulting firms and technology providers. A junior associate in BCG explains, “It is easier for the IT consultancies and technology providers to build credibility with the customers, who are seeking solutions for their digital issues.” However, when it comes to strategy or management consulting the game is entirely different. He adds, “Digital solutions require expertise during implementation.

Building technological capabilities integrated with management capabilities is a must for us

“When the clients do not get the right talent to do so, they do not appreciate the work done by consultants.” Just providing a strategic map would not always solve their problem. The client company needs to build capabilities, however just training their workforce is not enough. Instead, they need to hire people that are experts in digitalisation which for them it is an added cost. Our interviewee adds, “I feel sometimes it is hard to compete with the comfort IT consulting can provide to clients. Hence, building technological capabilities integrated with management capabilities is a must for us.”

WALK THE TALK

Consulting firms have been bandwagons for digital transformation while recommending digital tools to customers. However, they themselves struggle to embed digital proficiencies in their processes. The junior associate says, “I have worked on two projects in the operations and strategy area. Although we recommend to our clients solutions like video-conferencing and virtual tele-presence, I myself had to travel to Nairobi frequently for my first project which is a significant cost to the clients and an added pressure on me.” In this way, consulting firms can struggle to deploy effective knowledge management practices themselves while recommending life-changing solutions to clients.


No big sharks in consulting like McKinsey & Bain may be considered as first choice for building digital solutions when compared to Accenture or Deloitte. In fact, one of the shortfalls of the traditional consulting firms has been that they work in silos.

However, McKinsey has been building its digital arm aggressively, topping it up with re-branding itself this year. Our interviewee shares the same opinion about BCG. According to him, BCG is moving towards providing digital solutions and have dedicated teams to create digital tools. “We have a team called Gamma team who works on analytics and providing digital solutions for the clients. I believe we are getting  there.”

NEVER ENDING NEED FOR NEW SKILLS & INNOVATION

Clients expect constant innovation, agile cycles, shorter and more impactful deliverables. However, these fast changing innovations pose a dilemma for the consultants. The risk is that these solutions are becoming obsolete rapidly. There is a potential that the consultants lose credibility with the clients. Then the question becomes whether we should defend the status quo or stealthy keeping chasing the new carrot in front of us. The junior associate comments, “We as consultants will be left behind in the race if we don’t constantly re-invent our solutions.

“Traditional consultancies such as McKinsey & BCG have a vast knowledge of industry. What we really need now is to make ourselves capable of leveraging those experiences and converting them into insights. Data mining, cloud technology, artificial intelligence, etc. can be great value addition for both the firm and the clients.” This essentially means that the consultants have to continue to expand their skills sets. They should be able to provide solutions that are more holistic and cater to both the strategic and technological demand of the customer. They should be able to envision the synergy between capabilities, services, products, technology and digital tools in order to apply them to business problems. The interviewee remarks that, “we need an engineering mindset in management consulting now.” Engineers are better at drilling down the problem and providing implementable and tangible solutions as compared to consultants and their project plans on a PowerPoint slide.

We need an engineering mindset in management consulting now.

UBERIZATION OF CONSULTING LANDSCAPE

Another threat that is coming to engulf the consulting industry is the “Gig Economy.” It is not too far away that clients might be able to apply a couple of filters and search for their perfect consultant. Consultants have forever loathed the long working hours and hectic schedules because of which they often branch out and start their own independent consulting firms. The associate adds, “It will become difficult for the big guns in consulting to compete with such an economic model, especially on the price front due to low transactional cost involved when consultant and clients meet directly for short-term projects.”

WHAT THE FUTURE ENTAILS

It will be interesting to follow whether consulting firms will be able to help their clients go through digital transformations effectively and, at the same time, make sure they are digitizing their own business model and internal processes. The clock is ticking as the industry is moving at an alarming pace. Soon we will see who survives this battle of “staying relevant.”


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