Why mid-tier advisory firms struggle to compete against the larger players
Advisory firms in the mid-tier segment of the market are facing growing competition from the large firms, who are expanding their traditional focus from corporates and large mid-market businesses to the mid-tier segment. In this competitive landscape, mid-tier firms often lose out, finds research from UpSlide.
The research from UpSlide surveyed 400 senior accounting and advisory professionals from the UK and US, with respondents working at both mid-tier and large firms. The survey revealed that large firms are increasingly targeting the mid-tier market, and in a concerning trend for smaller players, they tend to struggle in this competition: less than 2 out of 10 mid-tier consultancies have strong win rates when competing against the industry’s giants.
In fact, 25% of mid-tier firms report competing with the Big Four on three-quarters of their deals. And when they go head-to-head, only 12% of small to mid-tier firms uphold a strong win rate against the Big Four – meaning winning over 75% of their bids.
So, what is denting the competitiveness of mid-tier advisory firms? To explore this further, we discussed the matter with Julien Villemonteix, CEO of UpSlide, who shared the top four reasons identified in the report behind mid-tier firms’ struggles to compete.
Tech challenges
The report identified a number of weaknesses that are currently impacting mid-tier firms. When asked what barriers they’re currently facing, 32% identified outdated tech as an issue. “The solution to this is more complicated than simply upgrading tech stacks, however, as the firms we spoke to are also facing an adoption challenge.”
“While nearly all firms we surveyed use a document automation tool, just a third say they’re getting maximum usage from this tool. In fact a quarter said there is low or no use of their automation tools across the business, representing wasted budget and wasted opportunity.”
Brand risks
Alongside technical challenges, a further concern amongst mid-tier firms finding themselves more regularly competing against the Big Four is poor brand equity. 13% of those we spoke to identified this as a challenge, especially when up against household name businesses like PwC and Deloitte with brands valued in the tens of billions.
When it came to the specifics of what’s impacting brand value, inconsistent branding across global/regional subsidiaries or departments was voted the primary obstacle (43%) with brand inconsistency creating confusion and weakening credibility.
Workflow weaknesses
Another key challenge in the competitive advisory market is complicated and inefficient workflows. “Just 25% of the firms we surveyed are confident that their deliverable creation processes do not harm their ability to compete. Smaller firms are expected to produce the same high-quality deliverables as their larger competitors with fewer resources and leaner teams. Efficiency has never been more key,” said Villemonteix.
Automation and AI
Given increased competition and the need for efficiency, emerging AI and automation tools are front and center in the corporate strategies of many advisory firms. In the UpSlide survey, the majority (85%) of firms said they believe AI/automation is key to remaining competitive – echoing a recent survey from Deltek that reached a similar conclusion.
Alongside automating and rationalising workflows, the respondents cited using technology to boost and streamline data analysis, document building, text generation, and financial management.
Developing beautifully crafted pitch-decks and presentations is another area of improvement, says Villemonteix. “Smart tools can help mid-market firms stand out in their sales and delivery processes, which is essential when trying to compete more effectively against the Big Four.”
Despite the benefits, nearly half of the mid-tier firms are currently not looking to invest more in tooling. On the disconnect, Villemonteix says: “Previous negative experiences may be the cause of this hesitation, with 34% of respondents stating that historic issues in implementing tools are stopping them from investing in new software. Clearly, those who have failed in the past are reluctant to embrace innovative technology despite being aware of its advantages.”
“However, with the right training, integration, and internal alignment, automation solutions are powerful catalysts for growth. Firms just need to ensure that they have the strategy, processes and the right technology partner in place to gain every advantage from their tech investment.”
