RSS feedsThere have been a number of step changes in the consultancy market over the last decade and I don’t think that many of us really anticipated the manner in which it would evolve. As it is, the Big Four are now back in favour and represent one of the most significant growth sectors in the consulting market.
I believe this rapid turnaround is down to the fact that the market has effectively demanded the return of the Big Four to the consultancy space. The rapid growth rates achieved by the returning members of the Big Four is testament to that fact and proves this was not simply a case of well-timed opportunism.
However, as we know from our own experiences at the turn of the millennium, the rise of one player (or type of player) forces another to retreat. Just as the Big Four were forced back by the rise of the technology-focused outfits, the tables have now turned and those established players that focus on mass volume technology offerings may find themselves squeezed out.
At the turn of the millennium, everyone seemed to be intimidated by technology, painfully aware of their own lack of knowledge – whether it was to do with the spectre of Y2K or how to establish completely new, technology-enabled, business models. Businesses were nervous about trusting advisers that could work on a technology business case but did not offer any implementation service. Consequently, everyone, including the Big Four, became systems integrators.
It was at this point that we recognised the systems integration market was going to consolidate rapidly and we took the decision to exit, leaving the space to the big, global technology players.
Since then, most people have become more comfortable with the role of technology and what is involved in successful implementation. New players have emerged, particularly from India, and standard coding and configuration has become heavily commoditised. Many business leaders have become more savvy users of technology in their own right, no longer merely delegating IT issues to the CIO, but wanting to ensure they understand the key business drivers themselves and how these would be addressed by the technology.
What I’m seeing is that many businesses want more from their advisers than just a functional understanding of technology. They want advisers that can leverage their greater knowledge of the regulatory, competitive and tax environments in which businesses operate and that are not merely trying to sell a new system or outsourcing contract.
And so the situation comes full circle – with companies apparently placing greater value on the broader business-led advisory offering, rather than the pure technology implementation offering, and preferring advisers who are not looking to sell technology solutions, large volumes of systems integration or outsourcing work.
In this middle ground of the consultancy space, where elements of strategy and technology combine, the volume technology players may thus find themselves squeezed by the returning Big Four on one front and the emerging offshore providers (able to undercut them on price) on the other.
That squeeze shows no sign of abating just yet as the return to favour of the Big Four continues; a trend which, I believe, will allow these organisations to dominate the high-value middle ground of the consultancy market for the foreseeable future.
Aidan Brennan is global head of performance and technology at KPMG
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