Even in the digital age, implementing new technologies can be a complex and time-consuming process. Organizations must have an effective change management strategy to successfully introduce new technologies into their businesses. This is a major challenge for many companies. In the past, consulting firms such as McKinsey, Boston Consulting Group and the Big Four had exclusive knowledge and advice on best practices, making their offer invaluable.
However, much of this information is now available online for those willing to investigate. In addition, former students from top-tier consulting firms are now widespread, meaning their experience has spread across the industry. As customers are more willing to seek consulting services, they understandably have more influence than in the past and demand greater value and flexibility at lower prices. In a Deltek survey, 54% of chief operating officers said that their biggest challenge caused by “the change in customer behavior” was to deliver more value at the same cost.
In another survey conducted by Deltek, researchers surveyed consulting executives about how they think they could increase the profitability of companies. Increased scrutiny over cost control came first, followed by the improvement of working capital through better management of inbound and outbound flows, and the limitation of the number of project budget overruns, especially in the case of fixed-price projects. Driven by new innovative technologies that allow them to do more with less, new players are entering the consulting market and alternative, digitally savvy business structures are being deployed. In the Deltek survey, 55% said that addressing growing competition in the sector was a top business priority, while 33% of chief operating officers said that “defining competitive advantage was one of their top three priorities for the next five years. Boutiques and specialty firms aren't the only form of competition that's on the rise.
The increase in the number of independent consultants is also proving to be an important competitive force. In the UK, there are now more than 2 million self-employed workers and that number will continue to grow. The majority of these independent consultants operate in the field of professional services, consulting and project management. They are putting pressure on prices, because they operate without the same overhead as larger companies and can charge far below what established consulting firms charge. At the top of the market, the biggest players are only getting bigger.
The ten largest consulting firms in the world now have a 56% share of the industry, while the top 200 hold around 80%. Both percentages have been increasing since the turn of the century, driven by the four major companies and the growing number of operations in the industry as a means of growth. As a result, the professional services sector is facing an increasingly “tight middle ground”, as companies too large to be considered specialists and too small to compete at the front table are under significant pressure. Poor positioning affects every marketing action: every message, every publication and every participation. There is no single, clear message that all members of the company communicate and work to reinforce.
While the diversity of the sector means that it is able to weather changes like few others, a Deltek report suggests that it still faces myriad challenges in this era of digitized business. The company's software automates the identification of inefficiencies in supply chains or manufacturing processes, a job traditionally done by management consultants. It presents project managers with the challenge of staying on top of their projects within a more dynamic data environment. Celonis is one example; this German software company specializes in process mining and is revolutionizing process management consulting. Consultancies support their clients in many ways; from helping them formulate business models, reduce costs, predict risks and innovate products; to strengthening their talent management processes; complying with regulations; and hiring staff. By better understanding these challenges your IT consulting company faces, you can become more resilient and adaptable. It makes it more difficult for project managers to plan ahead; which means that volatility in resources has increased.
Looking ahead; more than half (52%) of consultants surveyed believe that increasing complexity in projects will be their main challenge for project management over the next five years. This can create even more challenges for a company without experienced project managers or technological solutions to aid in management processes. I have now brought together all my experiences; knowledge; research; reading; successes; difficulties; and failures from consulting management and counseling over recent years. With any implementation; change management is essential; as it allows your team to accept change. As more IT consulting firms embrace AI to improve efficiency and scalability; a challenge for many companies is how to successfully introduce new technology into their businesses. While all organizations must adapt to these abrupt changes; global consulting firms must strive to be innovative in this fast-paced environment.