Italian consulting market grows marginally to 1.1 billion

03 August 2015

The Italian consulting market has grown last year, yet with a mere 0.4%, bringing the market value of Italy’s management advisory landscape to just under €1.1 billion. The outlook for 2015 and beyond remains challenging.

Over the past years the consulting markets of Southern Europe countries, including Spain, Portugal, Italy and Greece, have been impacted severely by of the financial crisis. In Italy’s case, at the height of the crisis years (2008 – 2010) its consultancy industry contracted by an estimated 5% to 10% per year. By 2012, the Italian consulting industry was according to data from Source Information Services (Source) worth €1.11 billion, comparable to the size of the Spanish consultancy market.

On the back of a recovering economy Italy’s advisory business returned to growth in 2013, growing 0.6%, and new data from Source reveals that in 2014 the market has been able maintain the positive momentum, although growth continued to flat-line. Last year the industry grew by 0.4% to €1.06 billion, which equates to roughly one-fourth the size of the French consulting market and one-sixth the size of the UK consulting market. Growth is constrained primarily by the lacklustre state of the Italian economy, which has created “unhealthy buying conditions for clients” say the analysts, and spend on consulting is therefore suffering.

Italian Consulting Market

Industry and functional areas
Financial services is keeping the market afloat – the sector grew by 2.7% to €335 million, in a large part following the need for regulatory compliance due to both domestic legislation as well as European regulatory burden (e.g. ECB stress tests). The largest beneficiaries of the increase in financial services work have been the Big Four firms, which according to Source have a combined revenue of €412 million, making them the runaway leaders in terms of market share. Looking ahead, banking is forecasted to remain a growth driver, explains Danilo Viviani, President of Gruppo Coreconsulting, an Italian consulting firm with six offices across the country. “Banks had a lot of requirements to meet around regulation, which impacted demand for anything else. Italian banks have improved their stability now, so we think that demand will improve.”

From a functional perspective the financial management and risk service line experienced the best levels of growth in 2014, expanding 2% to €290 million. The analysts state that this was largely due to regulatory compliance work, and a growing interest in cyber-security as Italian clients recognise that they are not immune to threats from hackers. However, operational improvement, which is the biggest service line in Italy, suffered a poor year, shrinking by 2.4% to €301 million. This was due to the fact that cost reduction and process improvement opportunities have been largely exhausted, and large-scale transformation programmes are few and far between.

Danilo Viviani, Alfredo Arpaia and Zoe Stumpf

Digital, an area which is thrusting growth elsewhere, is on the rise, yet not yet taken hold in Italy to the degree that it has in other markets. An analysis of qualitative data form interviews with executives / partners in the industry reveals that the Italian market’s attitude toward exploring new digital solutions is often reactive rather than proactive. “For the majority of clients, their focus of interest in digitisation is more likely to be around defensive questions like, ’How does it hamper my business?’ and ’How will we survive the disruptors?,” says Alfredo Arpaia, Partner at Roland Berger.

The outlook for the coming years remains challenging, say the researchers, stating that “although the volume of work is holding up reasonably well, margins are being squeezed. In combination with the fragmented market structure at the client end – with few major consulting buyers – and with those clients now used to low prices with no compromise on quality, “it is difficult to see how the market can recover,” comments Zoe Stumpf, Head of Research  at Source. She concludes: “The prospects for 2015 do not appear particularly rosy, though with a slowly improving economy, pent-up demand, and some interest in digital, the market may achieve modest growth.”

Earlier this year German consulting firm goetzpartners opened its first office in Italy, Milan, its 12th globally.


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.