It seems no organisation is safe from disruption, not even the companies guiding the rest of Australia through it. While advising some of Australia’s largest firms on how to adopt and implement the latest enterprise technologies, huge consulting agencies such as Deloitte and PwC have been facing their own very private battle to stay relevant in the digital age.
It’s a shift that’s largely been kept out of the public sphere. While consultancies are more than happy to talk about incoming trends and change, they are wary when it comes to talking about their own industry. It’s telling that out of the six consultancies Business Spectator approached for this story, only two accepted a request for interview.
But it’s a tale worth telling. Earlier this week, Business Spectator presented a set of graphs defining the size and make-up of our near $4 billion consulting industry. We are home to one of the largest consulting markets in the world and an increasing demand for business transformation as a result of digital change may see it grow even further. Due to the size of the sector, the shifts and trends affecting the consulting industry may end up having an indirect impact on both business and government in Australia.
Consulting’s disruption story differs from other industries, in that it has not been triggered by one single piece of technology. The sector’s main players are being pincered by a number of factors, all driven by the overriding theme of digital change. For starters, where they were once two very separate products, strategy consulting is increasingly moving into the realm of technology consulting.
“What we're seeing now is many more blurred strategy and technology teams jointly tackling issues like digital and data,” says managing partner of Deloitte’s consulting arm, Adam Powick.
At the same time, technology consulting has moved well beyond the realm of just giving advice. According to Powick, Deloitte now focuses as much on managing and implementing new technologies as it does on consultation.
This shift towards technology implementation has also led to the emergence of smaller bouique consultancies focused on particular elements of digital strategy. For instance, boutique firm The Hiser Group -- which refers to itself as a 'design house' -- focuses on digital design and user experience consulting.
Hiser’s acting managing director Angie Born suggests the rise of boutique consultancies may be tied to workplace culture of the larger firms. Long hours, for instance, are common in the consulting industry.
“They [larger consulting firms] all have their funny little value statements around how 'people are our main assets', but they don't treat them that way,” Born says.
“The younger workforce coming up is going to be much less patient,” she adds.
Contrary to Born’s take on the sector, Deloitte’s Powick suggests the market is stable, and if anything, is consolidating. Tough market conditions and a demand for globally-focused solutions are fuelling this shift, he says.
Deloitte has played a part in trying to consolidate the Australian technology consulting market. Last year the firm purchased several specialist Australian IT consultancies in a bid, Powick says, to expand its global-capabilities rather than a defensive play.
To an extent both Powick and Born are right about the Australian consulting landscape. The recently released Source for Consulting report on the Australian consulting sector suggests that mid-size generalist consulting firms are the most threatened by changing market dynamics. Major firms will capitalise on globalisation, while boutique firms will also find a market due to their specialist approach, the UK firm says.
The Australian consulting market is getting more crowded -- but not in ways that many wouldn’t suspect. As a means to improve their product offering and standout from competitors, major technology companies are now throwing in business consulting as an add-on service.
“Clearly every organisation is looking to expand into adjacencies, and yes, technology organisations are trying to move upstream into the consulting space,” says Powick.
“Personally, I welcome that; it forces more traditional consulting services organisations like ourselves to make sure we differentiate and ensure that we are one step ahead,” he adds.
Born however questions the trend.
“I actually think it’s a threat to the idea of consulting,” she says.
“If you have a technology company that is not technology agnostic, say someone like SAP who operates a product suite, it is a bit of a conflict of interest,”
The idea of offering impartial advice may emerge as a key challenge for the industry and the businesses it consults going forward. For example, Deloitte has a commercial partnership with construction firm WorleyParsons for the sourcing of engineering expertise. If the goal of consulting is to offer independent advice, then are commercial partners a conflict of interest?
Powick says this idea of a ‘conflict of interest’ with advice is “a very traditional and historical view of consulting firms”.
He says that the demand from the market to deliver “concrete business outcomes” requires an ability “work closely with client personnel and relevant commercial and technological partners”.
“The best consulting firms can do this as a core competency,” he adds.
Born however says this approach may leave companies at a disadvantage.
“If you look at the really big things that have happened in the company space over the past couple of years, sometimes it really was the small disruptor technology firms -- the ones that nobody knew about yet -- that made the most difference to a company,” she says.
“As a neutral consultant, I should be going in and making an assessment from scratch.”
These are just some of the issues mulling around in the consulting sector, and due to the sectors reluctance to talk about itself their development will likely be discussed away from public and the businesses that they serve.
Despite flying under the radar, its importance and reach of this industry shouldn’t be underestimated. This is perhaps why Australian businesses should be aware -- and perhaps a bit worried -- that Australia’s oracles of disruption are well and truly being disrupted.