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Quo vadis traditional management consulting? Current changes in the consulting industry and their impact on client organizations

The consulting business model under challenge?

One can observe a series of business model innovations that could reshape the way consulting firms engage with clients in the future. Management consulting’s fundamental business model has not changed in more than 100 years It has always involved sending smart outsiders into organizations for a finite period of time and asking them to recommend solutions for the most difficult problems confronting their clients. Demand for classic strategy work is decreasing, in recent years, there has been more pressure on the oligopoly of the large strategy houses. Competition is also arriving from newcomers to the market leading to significant price pressure on incumbents.

What's next?

There’s one major thing that currently happens: the emerging «modularization» of the consulting industry, i.e. a shift in consulting’s competitive dynamic from the primacy of integrated solution shops, which are designed to conduct all aspects of the client engagement, to modular providers, which specialize in supplying one specific link in the value chain – at a fraction of the costs of traditional consulting, with greater speed and beyond the traditional project-based model.

The consulting market offers new possibilities and chances to buy new types of consulting services

Today, the consulting market offers more than just «classic» consulting services. Many consulting firms are offering innovative business models and solutions for a variety of clients’ challenges and needs. The emergence of «disaggregated» services leads clients to seek „best-of-breed“ expertise and approaches, reducing their reliance on solution-shop providers and enabling them to choose the most effective and efficient solutions, in terms of time and money. Whereas consulting firms have traditionally relied on talent to drive success in client engagements, technological innovations available today augment and in some cases replace manual effort with tools and software that allow for new business and delivery models, automation, and cost-efficient consulting services.

How can client organizations benefit from these new possibilities?

Consulting companies with different backgrounds, specializations and delivery models provide opportunities for solving business challenges in innovative ways. Clients have to screen the consulting market to identify innovative solutions available and find incumbent providers or newcomers which provide relevant, specialized and cost-efficient offerings for them:

Identifizieren Sie neue verfügbare Lösungen durch eine umfassende Analyse des Beratungsmarkts, um Anbieter zu finden, die für Sie relevante, spezialisierte und kosteneffiziente Angebote bereitstellen:

  • Software and technology-based analytics and tools (asset-based consulting)
  • Digital platforms that directly connect external consultants with clients’ internal projects and teams
  • Alternative professional services firms which assemble leaner project teams of freelance consultants for clients at a small fraction of the cost of traditional consulting and with more-experienced consultants.

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Cardea AG

Author Since:  December 4, 2020

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