Danish management consulting industry enjoys strong growth

03 February 2016 Consultancy.uk

The Danish consulting industry has maintained its growth momentum in 2014, finds a study by the Danish association of consulting firms. Growing demand across the industry, in particular from the private sector, combined with improving financial and tactical operations at firms, stand at the basis of the continued recovery. 

Every two years Managementrådgiverne (MR) – the Danish association for management consulting firms (the counterpart of the MCA in the UK) – conducts research into the state of the Danish industry for management consultants. Its study reviews the performance across the industry, spanning large firms (defined by MR as firms with >70 employees) to medium-sized advisories (between 10 and 70 professionals) and small consultancies (<10 employees)*. Firms assessed in its latest review had a total turnover of 2.3 billion krone (based on full year financial data from 2014), which according to the association represents roughly 15% of the industry’s total revenue base.

The data shows that Danish consulting firms have recovered well from the financial crisis and its aftermath. While revenues dropped between 2009 and 2010 by just under 5%, from 2010 onwards the industry managed to break the downwards spiral and across the board book growth. Comparing to 2010, total turnover in 2014 was 20% higher, while levels of export even grew by 40% in the same period, although the latter has a relatively modest impact on overall operations with around a 15% share.

Despite the financial growth of the Danish management consulting industry, interestingly the number of employees active in the sector between 2010 and 2014 remained relatively stable. Ten years ago around the sector generated just over 100,000 jobs, and following the ‘golden years’ between 2004 and 2007, in par with international developments, the employment base rose to nearly 150,000*. Since, the number of jobs rose by just 1% according to MR, an indication of better margins on engagements (e.g. higher average fees) as well as improved levels of chargeability (less consultants ‘on the bench’).

The shifting ratio between financials and employees can too be attributed to improving management of internal operations, says Søren Lund, CEO of TimeLog, a Danish IT services provider which provides the solutions for many of Denmark’s largest consultancies. “The rise of technology allows consulting firms to get much more grip on their operations, from business development and sales to resource management and project delivery,” he says. “And similar to other markets, consultancies have embraced the trend and are using the power of state of the art systems to grow their key financials.” Although it is still too early to come with clear fact-based statements, Lund says that the figures on TimeLog’s around 500 clients in the country do reveal upwards causalities in efficiency, ultimately suggesting that consulting firms “can do more with less”.

Service breakdown
A breakdown of the services in the market shows that IT consulting is the largest functional area for Danish management consultants, at almost 20% of the market, followed by operations management and transformation, at respectively 16% and 15%. Compared to 2010, the demand for operations consulting has grown significantly (+6% in market share), riding off the demand wave for topics such as lean, agile and business process management, a movement which is in line with global developments. The share of pure strategy consulting services has to the contrary fallen, by 2% to 15% today, however clients have upped their call for strategy execution, which in the model of MR sits within the transformation segment.

Similar to other countries, the private sector is the largest buyer of management consulting services, accounting for 58% of total spending. Manufacturing, financial services, transport and health & pharma are in terms of volume the largest sectors. The public sector, which consists of the government and local municipalities, hold a 29% share of the spending market, although their role has on the back of government austerity programmes seen throughout Europe been on the decline in recent years (in 2010 their combined share was 40%).

Scandinavian consulting market
According to data from Source Global Research, a UK based analyst firm that examines the advisory industry, the Danish consulting market enjoyed 5.5% growth in 2014, taking the industry to a value of €652 million**. Denmark’s industry is ranked second in Scandinavia, trailing Sweden by just over 20%, ahead of Norway and Finland by a margin.

* As it stands, 85% of the employees are consultants, of which around 10% are partners at their respective firm. The remaining 15% of the workforce span among others back office functions and administrative staff.

** Note that the studies have different calculation models and therefore are difficult to compare. The assessment of Source Global Research focuses mainly on large consulting firms: consultancies with more than 50 employees serving large clients.

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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.