In this era of digital economy, the demand for change to the traditional consulting business model is more pressing than ever. Digital transformation is providing consultants with nearly 40% of their revenue. However, there are plenty of challenges for both Clients and Consultants.
The good news is several levers can be implemented to guide Consultants and Clients in the right direction. For example, Digital Transformation can help clients discover more effective ways of organizing their consulting procurement activities through the adoption of mature digital tools and cutting-edge procurement technologies.
This new-age procurement can prove not only more cost and resource-efficient but also an excellent means to reduce risk and enhance innovation.
In this journey, Clients and Consultants has this shared goal – both parties aspire to become digital enterprises.
And it’s interesting to see is how Digital transformation is changing consulting business models, and more specifically, the challenges that Clients and Consultants now face.
Consulting firms still have many hurdles to address to be able to exploit this opportunity, and to avoid being disrupted themselves by new forms or automation.
“Problems are good, as long as you solve them quickly.” – Meg Whitman
We have developed a list of challenges that represent new opportunities as well. Let’s take a look!
12 Digital Transformation Dynamics That Are Shaping Consulting Procurement
1. Adoption Is Still Slow
Even though Digital transformation is happening, and Consultants are adding digital service offerings to their portfolios adopting digital tools to enhance their capabilities, the process is still slow.
The slow digital transformation of many consulting firms is inexcusable. Take a look at the websites from the consulting firms in your network, and you will see if the shoemakers have good shoes.
Some Consulting Firms are just more expensive than others. The real question that you should ask yourself is: “What is worth the investment?”
2. Clients Expect Better Value and Customized Solutions
Clients in the digital economy are demanding more value from day one and customized solutions unique to their specific problems. New upstart competitors leveraging data and technology are beginning to make waves.
Should the clients take the usual route through consultants or embrace the disruption proposed by fashionable start-ups.
3. Stronger Integration
Adopting new consulting business models that leverage digital applications is crucial to the transition of Consulting firms into the Digital transformation economy. For example, Accenture started to implement Agency-type services that comprise of ad spending, media, and consulting together.
4. Optimization of the Intellectual Property Value
McKinsey Solutions lead the way with their Productized Approach in an attempt to get the best value of their intellectual property. BCG is stepping in the same footsteps with several tools that look extremely close to the Mc Kinsey ones. See for instance Key by BCG vs. Wave by Mc Kinsey.
Another productization is offered by a company like nine lenses industrializing assessments (maturity models, capabilities, …) for all professional services from consulting to talent.
5. On-demand Subscription Service
First introduced by GLG Introduces, the As-A-Service Model, this new opportunity needs to be tested as a business model. ”As-a-service” will include more long-term, smaller projects rather than large-scale projects for a fixed period.
Subscription pricing, instead of billable hours, and on-demand services, is also a new financial model that will gain ground.
6. Consultants Need to Lead by Example
The challenge to Consulting firms seems that first, they need to adopt digital transformation, then promote it to clients. Management consulting companies have mastered the art of selling “digital transformation” projects to clients, but still struggle to adopt digital tools in their business model.
Also, digital transformations promoted by consultants need to be pragmatic enough. Aspirations do not always convert at the bottom-line level, and the level of risk associated with digital models is quite high.
7. New Significant Cost Savings for Clients
The significant cost savings that Digital transformation can bring represent an attractive proposition. If clients can save enough, thanks to digital in their operations, it can fuel other profound transformations in other areas.
From digitizing processes to the digitalization of ways of working, which can start with digital procurement, the opportunities for savings are almost unlimited.
8. Embracing Digital Transformation Internally
Consulting firms followed different strategies to deliver digital transformation projects, with a strong focus on how to best serve their clients externally more than how to embrace a digital culture internally. A good indication would be the number of Chief Digital Officer within consulting firms.
Rather limited, isn’t it? Are consultants sharing best practices or re-inventing them? How codified is knowledge? Are they using digital learning platforms …. Do they take advantage of open innovation?
9. Opportunity to Attract Top Tech Talent
Thanks to the attractive elements of the consulting career such as low risk, higher salary, diversified work experience, and fast career growth, Consulting firms can attract the best tech talent, at least those not joining the GAFAs and have them join their digital transformation teams. But the competition is fierce with the start-up world and the sirens of venture capital.
10. Pressure on Consultants to Deliver Top-Notch Digital Transformation Expertise
We see digital transformation as a massive opportunity for growth for clients and consulting firms. Businesses will have to rethink their business models and processes to succeed fundamentally.
Clients will be very selective in choosing their business partners while willing to pay high consulting fees to ensure their business doesn’t get disrupted in the Digital transformation age. This calls for creating a successful differentiation among Consulting firms, as they offer similar sets of expertise.
11. The Emergence of Crowd Consulting
As an evolution of innovation crowdsourcing, consulting crowd consulting could provide great value to the clients to solve micro battles, allowing them to access the best possible expertise and insights irrespective of which Consulting firms they decide to work with.
From a Consulting Firm standpoint, it raises similar questions. Should Consulting firms build the capabilities in house, develop a network of reliable experts and subcontractors or Should they rather rely on digital platforms?
12. Clients’ Capability Development
One of the main challenges for both clients and consultants remains capability building of clients. In any consulting project, capability building is important, to ensure the implementation of the strategy, but even more demanding in Digital Transformation.
As client gear to embrace digital transformation, they will need to staff at various levels. Implement governance to manage demands for Digital Transformation. Create catalysts in the organization to promote digital culture and propose low-cost rapid prototyping.
But also connect the ideation and project management properly with the rest of the IS infrastructure without hampering speed with legacy processes. Did anyone say agile?
As we outlined the main challenges and opportunities in the Digital Age, we know that every client faces a unique set of questions. We welcome the opportunity to discuss your specific needs and see how we can further assist you in your Digital transformation journey.
Do not miss the chance to step up your digital strategy today and bring it up to pace with the changes transforming your industry.
How Consource Can Help?
As digital transformation is redefining the game in the consulting industry, consource can help consulting buyers find opportunities in challenges by providing them with powerful tools tailored to their needs. The platform is eager to facilitate better, data-backed decisions, helping them usher in a new era of consulting procurement excellence.