Five trends shaping the future of the consulting industry

28 September 2020 5 min. read
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Disruption is hitting businesses of all kinds, and the consulting industry is no exception. With the Covid-19 crisis having resulted in the deepest recession since the Second World War, consultants will need to adapt to the data, digital and strategy needs of clients if they are to survive amid the chaos.

As a client-driven industry, with clients’ needs changing constantly, the consulting sector must adapt quickly in terms of services, structure and operations. This has arguably never been more apparent than during the unprecedented global crisis in 2020, where a pandemic has coincided with a global recession. The combined situation has subjected many businesses to a unique set of pressures which they are turning to consultants to help address.

Relating to the unfolding crisis, a survey by German consulting firm umlaut has shown the future of consulting is currently being reshaped by several major trends. umlaut surveyed both consulting clients and consultants, as well as academic experts in order to distil five key changes firms need to adapt to in the coming period.

Future of consulting

Trend 1: Create tailor-made solutions

While one of the key strengths of consultants is that they work with many clients and thus can bring best practices to the table, at the same time they have a notorious image for bringing ‘off-the-shelve solutions’ which have been tried and tested before, but are not specific to a client’s needs. Umlaut survey found that such offerings increasingly fail to meet the customer requirements, against a backdrop of shifting client demands, meaning that clients now expect tailored services, or will look elsewhere.

“One-size-fits-all is a diminishing business model,” stated Thomas Reisenweber, CEO of Consulting & Management at umlaut. "Consultants are expected to know the operational reality of customers, and offer adapted services that meet industry, functional and client context. This in turn enables consultancies to add more value to clients."

Trend 2: Industry know-how

“Any concept falls short if the value chain specifics of the client are not sufficiently considered,” continued Reisenweber. “Our take is that an in-depth understanding of our clients’ industries’ vertical is a prerequisite, if we are to apply methodology and technology in an efficient and targeted way, while meeting a client’s set objectives.”

As industries become more complex, so do the needs of the businesses tapping consultants. This means while generalists have historically thrived in consulting, advisory work needs to be more industry specific than ever before. It is not for nothing that many industry consultancies are thriving, despite having been thought of as niche previously. This growth has been reinforced by the acceleration of digitalisation – as new technologies are often industry specific, consultants who specialise in particular industries will be best positioned to help build them into a business strategy.

Trend 3: Link strategy and transformation

Following on from this last point, consultants need to re-evaluate how strategy work is carried out. Traditionally, strategy consulting was all about making long terms plans, looking at all factors, scenario planning on environment and trends, and coming to most beneficial decision. However, in an age of constant evolution, strategy has to be more agile; a 10-year strategy won’t work in a context where it can be rendered irrelevant in a matter of months – so strategies must be more fluid and flexible to meet growing market dynamics on a short-term basis.

Meanwhile, clients are increasingly asking to see tangible benefits of strategic work. This means consultants need to find ways of bringing strategy to life, and making sure that it can be aligned with operational reality in a demonstrable way, with quantifiable results. This means even the globe’s top strategy consulting now have large implementation and change arms, which deploy metrics to help measure and demonstrate the results strategic changes yield – while just a handful of strategic consultancies still purely focus on strategy advisory.

Trend 4: Become a sparring partner

Consultants in the past were temporary advisors – they would bring expertise, develop solutions, implements them, and then go. Now, however, clients are often more interested in sharing the risk of change programmes by partnering with consultants. To be a really trusted advisor, consultants need to also keep up with what’s happening when they are not fully involved, building multi-year relationships, because this gives deeper insights needed to enable transformation.

For consulting firms, this means pivoting their own models. They must be less geared towards quick wins and chasing new opportunities, and more committed to building a value-oriented business models, putting long term client relationships at their heart. Illustrating this, a growing number of strategic partnerships between clients and consultants (particularly in the digital domain) are taking off, alongside joint ventures between clients and firms.

Trend 5: Enable the data treasure

Many consultants swear by the received wisdom that data is the new gold, however many are struggling to transition into adding value with data insights. For organisations of all sizes, using data can improve their customer experience, enhance their internal operations, streamline processes and bolster innovation with fact-based strategies. Consultants bring in a lot of supplementing skills and services such as AI to pave the way for a real automated decision making. If consultancies cannot adapt to the data expectations of their clients on these terms, they will find life increasingly difficult.

Reisenweber concluded, “Data-based decision-making is becoming a commodity… however, accessing and mastering data is becoming a crucial growth factor. For umlaut, analytics is just a puzzle piece within a broader digitalisation context. Consultants must bring in a lot of supplementing skills and services such as AI to pave the way for a real automated decision making.”