Digital transformation consulting market accelerates to $44 billion

22 May 2018

The global digital transformation market has almost doubled in size over the past 18 months. According to the most recent figures available, revenues of the consulting service line have increased by more than $20 billion since 2016.

While the service offered by consultants to assist clients with their digital transformation is still a relatively new aspect of the industry, efforts to integrate new, innovative technology with business operations have become so essential to the survival of modern businesses that it is one of the most talked-about aspects of consultancy today. Last year it was found that the global digital transformation market accounted for £2.26 billion of the UK’s consulting market, then worth £7.31 billion. The trend was repeated round the globe, with digital transformation consulting taking off in the USA and Australia in a big way – rapidly breaching the 20% mark of both respective markets.

To say that since then digital transformation consulting has boomed would be an understatement. According to the latest data, the market has grown to $44 billion, almost doubling in size since mid-2016, when it stood at $23 billion. As the need to digitise remains at the top of the agenda for most large businesses, keen to fight off challenges from new digitally savvy competitors, the market is only expected to continue on its exponential growth trajectory, and presents a major opportunity for consultants to grow their revenues in years to come.

Digital transformation consulting market accelerates to $44 billion

The trend presents a notable opportunity for the largest management consultancies, first and foremost. Due to their multidisciplinary nature, firms including the Big Four of PwC, DeloitteKPMG and EY, host talents of all shapes and sizes, as well as compartmental teams necessary to oversee a digitalisation process successfully from start to finish. As digital transformation plans require breadth of consulting services to be truly transformational, it’s particularly big news for big firms – something which if anything boosts the concept’s notoriety as a result, as smaller firms looking to emulate top consultancies follow suit.

Top strategy firms also stand to benefit from digital transformation in a major way – as they are well positioned to help clients anticipate the potential pitfalls and shortcomings of projects, while building innovative technology into a business plan, rather than digitising for digitisation’s sake. Top strategy firms McKinsey & Company, Bain & Company and BCG (known collectively as the MBB) have each invested heavily in their digital lines in anticipation of this.

Opportunity for mid-tier firms

According to a recent poll by Source Global Research among consulting industry clients, however, the trend does not freeze out smaller players either. Businesses tend to speak very positively about mid-sized strategy firms’ digital transformation capabilities. According to the study, mid-market competitors are not being left out of the action either, with the likes of L.E.K. and A.T. Kearney sitting alongside much bigger firms when it comes to the quality of their digital transformation work, despite their breadth of digital services rarely being as wide as the biggest firms. The flexibility and nimbleness of mid-sized strategy players compared with their larger peers was considered a major selling-point by clients polled.

This is to some extent because of changing client behaviour, driven by cost-pressures. In the past, mega IT projects were engaged as bigger was often assumed to be better. Now firms are keen to seek more cost-effective, agile strategies amid an uncertain economic environment in the UK and US particularly, prompting clients to focus on value for money. While digital transformation is indeed big, some clients want to attack it in smaller chunks. Pilots, proof of concepts, and rapid prototyping in small engagements is increasingly popular – in part because some clients are also unwilling to place responsibility for such a key business aspect in the hands of one firm – with companies moving toward larger overall aspirations of a digital transformation via small, quick steps, handing smaller, more agile consultancies an inherent advantage.

Related: ranked a top 100 news publication on digital transformation.

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Accenture's push into the creative sector is an identity crisis

18 April 2019

In its latest push into the creative sector, Accenture Interactive acquired New York and London-based ad agency Droga5 earlier this month, adding illustrious clients such as HBO, Amazon and The New York Times to its roster of clients. With the latest in a long line of similar purchases, Accenture Interactive further demonstrated its ambition of becoming the globe’s leading trusted advisor to chief marketing officers. Yet according to Ben Langdon, Chairman of Class35, Accenture’s strategy may be heading in the wrong direction.

A press release on Accenture’s website announcing the acquisition sits next to a quote stating that “brands aren’t built through advertising” – a huge contradiction from a consultancy firm hell-bent on becoming the ‘CMO agency of choice’. It’s not alone of course. The entire consulting industry wants a piece of the creative pie right now. In addition to Accenture Interactive, recent acquisitions by PwC Digital, IBM iX, and Deloitte Digital meant that in 2017, for the first time ever, four of the world’s ten largest creative agencies were consultancies.

So just what it is that Accenture wants to achieve from this? For one thing, it’s clearly trying to be a digital transformation business. A one-stop creative shop rivalling more traditional models, it wants to lure CMOs in with the promise of lower ad spend and a “more impactful customer experience”. At the same time, though, it’s still in thrall to those same slinky, shiny branding and advertising agencies it’s attempting to disrupt. The Droga5 acquisition and that of Karmarama a few years before are both testament to this.

There’s a fundamental problem with this, though. Digital transformation businesses don’t sell to CMOs. These people have enough on their plates trying to transform their own marketing skills in order to keep up with an ever-changing market – they just don’t have the time or the energy to concern themselves with digitally transforming a whole business. If Accenture’s purpose is digital transformation, then going after creative agencies is barking up the wrong tree.Is Accenture's push into the creative sector an identity crisis?

Worlds apart

Perhaps more importantly, these two industries are worlds apart in terms of the way they think. Creative agencies are all about ideas, campaigns and consumers. Digital businesses, on the other hand, are customer-driven – they think in terms such as lifetime value, measurement, and efficiency. Customer-led thinking is an entirely different beast to consumer-led thinking.

The reality is that the arrival of digital and an all-encompassing obsession with technology, measurement and social has led to the death of agencies in a reductive, zero-sum, efficiency-focused battle with brands. Indeed, agencies have become so obsessed with the latest tech fads, they’re beginning to forget how brands work. Worse still, they’re beginning to forget how brands are built. And, by forgetting, they’re destroying their own values.

Killing creativity

All things considered, it really feels to me as though Accenture is a chip leader in a game it doesn’t understand. Expensive acquisitions like these show that they’ve got the big money, but they don’t appear to have any idea what they’re doing with it. Take talent, for example. The best talent in the creative industry right now is out in the market; it’s not tied to any one agency. Both agencies might well be at the top of their game, but why would a consulting firm waste so much money on buying them when they could hire high-quality creative talent on a contingent basis instead?

As their presence in the top 10 creative agencies shows, there is a growing trend in which Accenture, like many of the other big players, are buying up agencies as if they were nothing more than keywords. What they’re really buying, though, is a collection of credentials, clients and IP. Unfortunately, the talent that created those credentials aren’t going to stay at the business, the clients that hired the agency in the first place won’t be interested in buying what is basically just another part of Accenture, and the IP never really existed to begin with.

Droga5, for example, was one of the few agencies that did great brand work the old-fashioned way – undoubtedly something that made it attractive to Accenture in the first place. The irony, though, is that by leading it further away from the way of working that made it so special, the consulting giant will kill its creativity.

“Accenture Interactive has been dazzled by its ambitions to become the CMO agency of record…. But, in flashing its cash, it is spending millions on acquiring nothing of any value.”

If pressed, the recently acquired agency staff at Accenture will tell you just how dysfunctional the new arrangement is. They’re largely unfulfilled. Rarely do they feel their work has any sort of meaning or purpose. What’s more, the different disciplines have found little or no common ground, and find it hard to work together as a cohesive whole. It’s not surprising, then, to see talented people leaving in droves.

Beyond the window dressing 

It’s clear, then, that consulting firms and creative agencies are no easy bedfellows. But in his company’s defence, Accenture Interactive’s Senior Managing Director for North America, Glen Hartman, described its culture as being “far, far away from what a stereotypical consulting firm would look like. Our office and studios look a lot like Droga5’s.”

In demonstrating a belief that office design equates to workplace culture, this statement serves as an illustration of how confused Accenture is right now. It wants to justify its new strategy so badly, it’s started dressing like a creative agency. But if you look beyond the window dressing and see that you and your partners are speaking a different language with a different purpose, selling to different people in a different market, there’s no getting away from the fact that you’re different.

Accenture Interactive has been dazzled by its ambitions to become the CMO agency of record, and it wants to dazzle others with its new direction. But, in flashing its cash, it is spending millions on acquiring nothing of any value.

Related: Space between consulting firms and creative agencies is converging.