Global client spending on analytics consulting hits record $43 billion

11 June 2018 4 min. read

New research indicates that the global analytics consulting market is worth around $43 billion, including both in-house data analytics teams and external consulting costs. Though the US accounts for more than half of the revenue, analytics consulting is evolving quickly as a distinct field in the UK market.

In 2017 the world’s largest corporations spent $43 billion on analytics – a multi-dimensional and evolving field that harnesses statistics, AI and other tools to identify meaningful patterns in large data-sets. The capacity to use analytics can dramatically advance an organisation’s understanding of both its own internal systems and broader trends involving its customers, clients and industry.

A survey from Source Global Research found that 91% of executives believe their company’s use of analytics had “generated substantial value” for the firm. They also revealed that expenditure on spent on analytics consulting was almost evenly split between developing in-house capabilities and contracting external consultants.

More than two thirds (67%) of the executives polled said they expect their organisation to increase analytics consulting spending in 2018-19. This is significantly higher than the 55% who expect a spending increase across the spectrum of consulting services.

Global client spending on analytics consulting hits record $43 billion

It is, however, important to stress that analytics consulting is not generating entirely unique revenue. Instead, with the advance of technology and changes in terminology, consulting projects which may once have been placed in the strategy or supply chain boxes are now part of the analytics puzzle.

For the Director of Source Global Research, Fiona Czerniawska, the advance of analytics consulting both in terms of revenue and annexing other consulting fields, reflects its importance to the industry.

“Many firms have made a significant investment in this space; some would put it at the heart of virtually everything they do”, she said. “Nobody—we think it’s safe to say—is complacent about the opportunities, perhaps the threats, that analytics represent in the future.”

Executives seem far more excited by the opportunities analytics investment can bring to their organisations, rather than worried by the threats. Nine in ten of those polled are keen to measure the impact on new revenue growth. A similarly large majority expects concrete results in terms of cost savings.

“Clients have been investing in this area for years; building teams of data scientists and running experiments,” said Chris Brahm, Global Practice Leader, Advanced Analytics at Bain & Company. “Now they want to know what the benefit is and establish how they take their investment to the next level.”

“In the last few years, we have seen clients start to innovate with analytics pilots and establish centres of excellence. That’s successful to a degree, but they find it challenging to scale things out to the wider organisation. We’re entering a new phase, and it's one where the scalability of analytical capabilities has become much more important.”

Analytics Gold Rush

For Czerniawska, opportunities for consulting firms without considerable analytics pedigree to enter this lucrative market are rife. Her firm’s report concluded that, among corporate clients, little distinction is made between technology consulting firms on the strength of their analytics work. Rather they are concerned with how their consultants plan to leverage analytics to help them achieve particular goals.

Czerniawska points to the ecosystem model as the best hope for non-tech consultancies to advance into the analytics space. Consulting firms without the deep expertise and deeper pockets of IBM or Cognizant should “create ecosystems with less obvious organisations, allowing them to quickly draw on a toolbox of solutions from multiple suppliers and match them to the needs to the client,” she argues.

“Embracing the partnership model means that firms can avoid having to develop their own technology. It also partly mitigates the problem around competition from non-traditional players— from the likes of Google, Amazon, and LinkedIn.”

Whether her advice will be taken up by smaller and boutique consultancies without a substantial tech offering remains to be seen. In the UK one foothold gained by analytics consulting is in the internal audit game, although consulting firm Protiviti still believes the role of Big Data analytics in audit is in its infancy.

Last year PwC UK appointed Neil Hampson leader of its rapidly growing data and analytics team. French technology consulting giant Capgemini now offers a UK-based Analytics Consulting Academy, while specialist firms which concentrate solely on analytics – such as Data Consulting and the recently bought Big Data Partnership – continue to make inroads.