Separator

Consulting Firms Augmenting their Services with Technology Platforms

Separator
Ajay Kashyap, Co-Founder, Boxx.aiConsulting firms fill gaps for capabilities that their clients lack internally. Given that consulting firms get an opportunity to work with a large number of clients, they are able to bring the breadth of experience that clients find useful. Further, consulting firms bring an outside-in perspective that helps the clients literally think outside the box. Over a period of time, the consulting firms have developed well-tested frameworks to understand business situations and guide decision making; rich databases across channels to benchmark performance, etc. For these reasons, enterprises of all sizes find themselves frequently leveraging the services of consulting firms.
However, with the advent of the new era of technology of 2000’s, data and information has become more freely available and smarter algorithms are augmenting human experience in decision making. Would this lead the consulting firms towards disruption?

Consultancy, the then and the now


The late 1990’s can be considered as the blossoming point of the consultancy industry, driven by an array of factors including a strong global economy, increase in computing dexterity, infiltration of emerging industries, and privatization of organizations along with an upsurge in global outreach. A slew of consultancy firms mushroomed with a growth rate of 20% annually. This led to a huge demand for people workforce, and the consulting firms started recruiting aggressively on- and off- campus.

However, the scenario has changed in the wake of the recent technological revolution.

On one hand, technology has made the availability of data and information much easier. The data and information that only the consulting firms had earlier has now become public (and inexpensive). For example, earlier, consulting firms were hired to do a primary research study for understanding the customer sentiments on a product feature. However, with the advent of billions of reviews that customers are readily providing online, an analysis of that data provides much richer understanding of customer sentiments.

On the other hand, technology also brought in new concepts that allowed businesses to rely less on experience, and more on algorithms. These led business decisions to graduate from gut-based to data-based, from an art to a science.
As an example, customer segmentation and optimization of marketing spends was traditionally an experience- and analysis-led exercise. However, with the advent of Artificial Intelligence-led personalization engines, marketers can now personalize each individual customer touch, thereby helping the marketers to move away from customer segments to really a “segments of one”. Similarly, machine learnt marketing-mix models have replaced the traditional experience-led marketing spend optimization.

Consulting firms need to move away from the ‘build everything in-house’ approach to ‘partnering with the best’ approach and adopt platforms that a technology advantage


Adjusting to the need of the hour

We now have a situation where there are two strong competing forces – 1. Consulting firms bring to the table thousands of years of experience of business understanding, wisdom of ages on how to best respond to a business problem, and tried-and-tested frameworks on decision making, and 2. Technology firms that bring in the new-age weapons of data and algorithms to solve the traditional business problems. What is needed in this environment is a model that combines the art of the consulting firms with the science brought in by technology.

There have been multiple efforts from different players in this direction. Leading consulting firms have started adopting technology, and building practices around analytics and data science, that work in conjunction with the core consulting business.

However, it is proving inadequate. The DNA of all these organizations is business, and as they try to enter the technology/data science space, they are usually slow in adopting the latest technology, and further slower in upgrading as something even better becomes available. Their organization structures are also not optimized to foster the fast-moving industry. Further, since their core business is business, the technology/ data science practices remain supporting divisions, and hence struggle to attract and retain the best talent. Consequently, they are frequently left behind from other niche, agile new-age technology companies that have just the right the DNA to move much faster in this area.

To achieve the desired results, the only way it is going to work for the consulting firms is if they adopt technology platforms that enable them to compete in the new era. They need to move away from the “build everything in-house” approach to “partnering with the best” approach. They need to adopt technology platforms that bring them the technology advantage, while augmenting that with their unique advantage - years and years of business experience, wisdom of ages, and frameworks for decision making. All they need to keep in-house is the capability to identify the best platforms, small technology teams for integrating or white-labeling these platforms, and program management to get the maximum out of the engagements.

Win-win for all

In this fast-paced world which is defined by customer empowerment, reusable assets, and software as a service, consulting firms would significantly change over the next five years. While the digital disruption would make significant changes in consulting skills and projects, which include faster speeds, incremental deliverables and enable increased focus on agile deliverables, business process redesign, and on customer experience, it will also lead to consultancy firms to reinvent themselves by the technology-led business approaches of newer, younger competitors.