The Rise Of Digital Consultancies

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The consulting world is undergoing a shift. Over the last four years, consulting firms have been rapidly launching new digital consulting divisions. What started off as an infatuation with product design and more engaging web interfaces has become a full blown movement towards digitalization…

A small interactive robot from IBM’s Watson department at the Digital Business fair CEBIT in Germany, on March 15, 2016. Photo: AFP / John MACDOUGALL

The consulting world is undergoing a shift. Over the last four years, consulting firms have been rapidly launching new digital consulting divisions. What started off as an infatuation with product design and more engaging web interfaces has become a full blown movement towards digitalization.

A quick scan of the consulting arena reveals an acquisition frenzy where design firms are being acquired by large management consulting and IT services firms. In 2012, Deloitte acquired Ubermind and then followed this deal with the acquisition of Banyan Branch in late 2013. In 2013, PWC acquired BGT, a digital creative consultancy. In 2014, McKinsey bought Agiliti, BCG acquired Strategic & Creative, a Sydney based firm and KPMG bought Cynergy. The same year, Cognizant acquired Pennsylvania based Cadient to augment its digital capabilities. In 2015, Accenture picked up London based Fjord, McKinsey purchased Silicon Valley based Lunar and EY bought London’s Seren. That same year, IT outsourcing provider, Wipro, bought Danish agency DesignIT, to launch its own digital division. So far this year, IBM has bought Germany’s ecx.io and U.S. based, Resource/Ammirati. And this is just a smattering of the deals that have taken place in this arena.

These acquisitions have given rise to new practices focused on digital transformation, interactive design, customer experience and product innovation. Under the common banner of “digital” these new services are being aimed at marketing, IT, finance and innovation leaders at corporate clients. It may look confusing to the average business person to see audit, strategy and IT firms entering these completely new disciplines, but there is method to this madness. Below are five market trends which are creating demand for digital consulting.

Design Appreciation

Perhaps this all began with the sleek look and feel of the iPod introduced back in 2001. Or maybe it was the ultra cool hotel designs of Philippe Starck during the 1990s. Regardless, people around the world have been increasingly exposed to modern, ergonomic and visually creative design in the last two decades. Everyday items which were once only valued for their functional performance are now built with more color choices, softer edges, curved screens and conveniently placed buttons and touch pads. One need only look at their kitchen utensils and appliances to see the shift in design. The bar for design has been raised in every business and every product, whether physical or virtual.

Visualization and Analysis

With the big data phenomenon, companies are now sitting on more data about themselves, their customers and the markets in which they play. To make sense of these datasets requires the right software, but also a keen sense of what to measure and how to measure it. Applications that can quickly visualize data to find outliers, trends or patterns help business managers to identify problems or opportunities and make decisions. The last five years has given rise to digital apps and online systems which can connect to older software systems and provide a layer of visualization, analysis and querying. ERPs and CRMs which were installed in the 1990s gave businesses the ability to collect and house data. Today’s digital apps, when connected and designed the right way, provide financial officers a way to gain quick insights. Consulting firms are being hired to clean and combine datasets into dashboards and infographics that can provide real-time analyses to management teams.

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Mobile Audience Growth

According to Gartner, by 2018, 50% of all users worldwide will adopt a mobile first behavior and turn to tablets or smart phones for their online activities. Smartphones, tablets and wearable devices are effectively the sixth medium for large companies to advertise, engage, sell and service consumers. Print, radio, TV and bill boards gave brands a one-way toolkit to promote their names and build familiarity. Websites allowed companies to engage in a more interactive way in what was usually a stationary setting inside a home or office. Mobile devices provide an interactive opportunity which moves with the consumer, in whatever geography or context they travel to, providing almost unlimited access to the consumer. Designing the right experience both online and offline requires a data driven and sophisticated approach that few have mastered. Companies need to draw expertise from those who can analyze the data and provide the most appropriate experiences for consumers at just the right moment on their mobile device.

Startup Entrants

Cloud technology has allowed startups to compete head on with large blue chip companies for a fraction of the cost. Startups have built services without having to sink large amounts of capital into servers, datacenters and software. Uber and AirBnB are prime examples of startups that use cloud technology to create services with very little physical infrastructure of their own. These companies focus their capital on the customer experience, the efficiency and speed of their services and creative marketing tactics which can target a customer with customized messages and offers. As startups in the robotics, virtual reality, sensors and wearables sectors eat into legacy market share, larger corporations will look to consultancies who can provide both front and back office support to help transform processes and build new products.

Marketing Evolution

Gone are the days when marketing was simply a brochure production department.Today’s CMO and marketing function are involved in customer targeting, market segmentation, advertising, social media messaging, content and editorial production as well as full fledged customer experience projects involved physical space design and virtual reality campaigns. The vast number of channels and content formats require variety of expertise and a unifying vision. Companies don’t have all of the necessary experience and technology in house. Digital consultancies can bring the right mix of design, technology and brand expertise to build a holistic plan and then execute on it as campaigns unfold.

The digital consulting era is still in its infancy. Consultancies are likely to launch even more outcomes-focused services as clients demand faster and more tangible results for their consulting spend. As execution speed becomes a defining factor in who wins, clients will pay less for slide decks and frameworks and more for actual products and solutions.

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