Management consulting market of Nordics grows 6% to €2.8 billion

29 May 2018 Consultancy.uk

Growth in the Nordic consulting market accelerated through 2017, ramping up by 5.7% to reach a value of €2.77 billion according to the latest available data. All the countries in the region grew at a faster rate than in 2016, with the region’s largest market of Sweden seeing the strongest growth rate of all to hit a market size of €944 million.

The impressive performance of the Nordic economy, as well as the consulting industry of the region has seen a number of consultancies arrive in the area over the past year alone. Capco set up for business in Sweden, while Alvarez & Marsal continued to strengthen their own Stockholm locale. Elsewhere, Analysys Mason entered the Nordics through the acquisition of Nexia Management Consulting, while strategy firm EY-Parthenon (then Parthenon-EY) also recently expanded into the region with the purchase of Danish consultancy Box Associates, however it was not only one-way traffic.

Reflecting the growing confidence of consulting firms in the Nordics, Nordic-origin firm Qvartz – a rival to the traditional strategy consultancies – began a campaign of international expansion of its own via new partnerships that provided it with access to both the Dutch and Indian advisory markets.

The Nordics consist of four European nations; Sweden, Norway, Finland and Denmark. According to analysis of data gathered by Source Global Research, which examines the market for consultancies of a certain staff count and revenue size, all four nations have enjoyed strong growth. Of those nations, Sweden’s consulting market enjoyed the strongest performance, with 6.9% growth seeing it reach revenues of almost €1 billion. The Swedish consulting scene was worth €800 million in 2015, and now sits at €944million – over a third of overall Nordic consulting revenues.

Size of the Nordic management consulting industry

Finland – the smallest market of the Scandinavian countries accounting for 16% of revenues – grew almost as strongly (6.8%). The growth rate in Denmark was markedly slower, with the market estimated to be around €740 million – a projected increase of just 4% – as was the case in Norway – which climbed 3% to €626million – however both industries still witnessed increased opportunities, and are in strong positions going forward.

Digital transformation

As is the case with the majority of mature consulting markets, the growth of the Nordics was driven by digital transformation – a $44 billion global consulting line – boosting growth across all service lines in 2017 as transformation programmes encouraged multi-disciplinary approaches to upgrading the business plans of clients. However, as a standalone service, it was undeniably digital transformation consulting which raked in the highest proportion of revenues.

Revenues from digital transformation work in the Nordics are fast approaching the €1 billion – more than a third of all Nordic consulting market revenues – thanks in part to the region being viewed as a global digital leader. Beyond this, technology was the largest area, riding on the back of the digital transformation wave. There was also a strong strategy component to this work, as the digitisation of the customer experience persisted as an area of high demand across the Nordics. On top of this, data & analytics became a fundamental part of many digitisation projects – a trend which has been replicated in consulting industries around the world as clients seek new ways to harvest and utilise their data to retain and win customers.

Sector

In line with nations such as Australia, the UK and Germany, digitisation was also a key theme for public sector consulting. This was driven by both central governments and regional legislatures focusing on delivering e-government initiatives, in order to cut costs and improve accessibility for citizens to key services, changing both the interface and also the back office processes supporting service delivery in the process.

The consulting industry of the Nordics

As a result, the public sector is the Nordic region’s largest domestic revenue stream for consultants – consulting to the public sector represents around a quarter of the total market in the Nordics. Consulting fee income however grew fastest in healthcare – the region’s smallest sector – with clients coming under increasing pressure from an ageing population and funding pressures, in line with many health systems in Western Europe. In this setting in particular, organisations are being forced into streamlining services via technology.

The public sector is followed by the financial services sector – the second fastest growing sector. In this case, clients were looking for consulting support around compliance, dealing with new competition, and digitising their end-to-end operations.

Looking forward

One of the key issues the Nordic consulting market will have to face in the immediate future is talent. Again, as with the bulk of Western Europe, an ageing population means that a large portion of the skilled workforce is reaching retirement age, without the sufficient number of young workers to replace it. Combined with a booming independent and start-up scene, a talent crunch resulting from large firms scrapping it out for a diminishing pool of talent could limit growth.

Overall, however, consultants remain upbeat about the state of the market. A continuing upsurge in work relating to digital transformation, fuelled by the reputation of the Nordic nations as technological leaders, will likely continue to spread through every sector of the economy, meaning the Nordic consulting industry looks to be very well positioned to expand throughout 2018 – benefitting both larger multifaceted firms, and smaller, more agile challenger consultancies in the process

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

18 April 2019 Consultancy.uk

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.