Der “Trendradar der Unternehmensberatung” zeigt wesentliche Trends im Management Consulting aus Sicht der Kunden und Beratungsunternehmen auf.

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Beratung für Digitalisierung (Digital Consulting) oder Beratung mit Digitalisierung (Consulting Digital)?

Digitization forces all industries to change. To ensure their future viability, companies must rethink business models, customer relationships, products and services. Recently, this change has been generating high revenues for consulting companies that accompany their customers in their digital transformation processes. In addition, many consulting firms have built up (technological) competencies through acquisitions and cooperations in order to provide customers with the necessary skills for these transformation projects.

But what about the digitization of the consulting industry itself?

In the past, the consulting industry has not always been known being a pioneer in changing its own business models, but it is increasingly adapting to the new needs of its customers and therefore heavily investing in the digitization of its own processes and offerings. The integration of technology and software to support personnel intensive consulting processes offers various advantages for both customers and consulting companies:

• By using intelligent digital solutions, customers can take on more responsibility, work more independently and thus also carry out projects more efficiently and cost-effectively
• With the help of digital tools, expensive spend on consulting resources can be reduced and costs can be saved
• Consulting companies offer digitally supported offerings, services and products to create new consulting experiences and added value for customers, develop innovative revenue models, automate consulting processes and optimize internal costs per consulting project and resources.

Consulting made digital

The areas in which the potentials of the new media and digitally supported processes for consulting companies have so far mainly come to bear are:

• Data analysis (analytics, data mining)
• Data and knowledge sharing on client portals
• Support of consulting delivery processes with digital tools (e.g. process mining, collaboration, methodologies)
• Client communications, project management, and performance management (project controlling)
• Digital consulting delivery (online coaching, chats)
• Digital access to consultants and experts for clients.

Benefits for clients and consultants

The transformation of the consulting industry due to the new possibilities of digitalization is to be welcomed in many respects. On the one hand, digitization makes the consulting landscape more creative and diverse. On the other hand, digitization is contributing to the change in business models and consulting services, to the benefit of those clients who are looking for more personal responsibility, who do not want to outsource routine work to consultants or do not need permanent presence of consultants, but rather selective support in the form of expert assistance and impulses for change, and who are looking for shorter, more efficient projects with strong involvement of their own employees. Both clients and consultants have recognized the advantages of the new media and technologies. The consulting industry would therefore do well to "technologically upgrade" and follow the example of the major providers, who are already making considerable investments in the automation of consulting processes, analytics and artificial intelligence.

Choosing the right consultant can create tremendous value. This relation is confirmed again and again in studies. However, finding the right consultant is a challenging task: due to an ever-growing provider market with many spin-offs, takeovers and new entrants, the lack of transparency is continuously increasing.

Considering which consultant is suitable starts with the question about the right size and the consulting area or consulting market sector the consultants should be choosed from: Do you need a large consulting house or a highly specialized consulting boutique? Which type of consulting is right? Should it be a classic management consultancy? Or can it also be another service provider (e.g. advertising agency, IT service provider)?

Challenges also arise when checking the experience and quality of the consultant: What specialist knowledge must the consultant bring to the table? What experience of the consultant is required? What criteria and measures are necessary to verify the quality and credibility of the consulting firm and its consultants?

From long list to evaluation and final selection

Once the most important requirements towards a consulting firm have been defined in terms of size, type, required industry and functional competencies as well as "cultural fit" (= which consultant fits my company and my employees), the first step is to compile a "suitable" long list of potentially eligible consulting firms. Here, one can rely on one's own experience with consulting firms or recommendations from one's own personal network, but in most cases, additional market screening is necessary to ensure that no relevant consulting services and consulting firms are missing.

This phase of consultant selection then is followed by the call for and the evaluation of the submitted proposals. At this stage, it is important to assess whether the proposals reflect the problem, task and objectives correctly, whether the approach, project organization and the planned project schedule and timetable meet the expectations and whether the fees, the qualifications and credentials of the consultant or the proposed consulting team are shown clearly and transparently.

Those consulting firms and proposals that best match the requirement criteria are placed on the short list. However, the evaluation of the submitted proposals alone does not allow for a well-founded decision on the consulting firm of choice. Further criteria such as reliability, service and customer orientation, the "chemistry" between client and consultant, the flexibility of a consultant or the consulting team can only be evaluated based on a personal presentation of the consultants.

The final decision: The best price-performance ratio counts

Depending on the problem at hand, consulting firms can differ significantly in their basic characteristics, solutions, approaches and offered prices and fee structures. It is therefore recommended to first separate the assessment of performance and price criteria and to identify the consulting firms and offers that are best able to solve the problem at hand. Among these "best" it is necessary to judge which consulting firm offers the best price-performance ratio. This does not necessarily have to be the most favorable offer, but any price premium must be justified by a correspondingly higher added value of the consulting firm.

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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