The changing consulting industry: Opportunities and risks of technological disruption
Whether it’s the steam engine, microprocessors or smartphones, history is full of so-called disruptive technologies. What do they have in common? They are innovative, ground breaking, and capable of bringing current developments to a halt and displacing products – or even entire market players. In other words, they simply change everything. And with the ongoing digitalization and spread of technology in all areas of the economy, the danger companies face of being left behind is growing.
Table of contents
- Customer needs are changing
- Technology’s influence on the business model
- Shifting competition
- Recognizing technology and digitalization as an opportunity
- Collaborations with technology providers are becoming increasingly important
- Maximize your success with our flexible partner program
- Looking ahead
Customer needs are changing
The consulting industry isn’t immune to the advance of technology, of course. Digitalisation has long had a major impact on the way consultants work and is changing the industry for good. In the expert talk The Modern CFO from LucaNet Partner Day 2021, Sebastian Hartmann, chief technology strategist at KPMG, describes what this change looks like in concrete terms for consulting firms: "The upheaval is already taking place, but may not yet be generally visible or recognised. From my own experience, I can say that I sold big data analytics projects to big, listed companies in Germany not even seven years ago, and when I look at the sale of those projects today, they have practically disappeared from the scene. They have been completely automated."
Hartmann cites changing customer needs as one of the causes of this radical change. "Our customers are much smarter today and there is much better access to knowledge and methods, so there is often a much clearer picture on the customer's end. They want to know specifically where the journey is going, what we are bringing to the table and what the solution might ultimately look like."
Technology’s influence on the business model
Secondly, he says the general evolution of technology is having a huge impact on the consulting industry. "With the use of technology, the business model is changing, so we're no longer just talking about selling hours; we’re talking about smart managed services, knowledge as a service, business processes as a service, and even software as a service or other forms and platform-based models.” In general, it's no longer so much about "selling a few smart people, but about delivering solutions," Hartmann offers in summary.
However, it’s not only the industry itself that is changing; the competitors are changing as well. More and more consulting work, such as in data services, software implementations or technology consulting, is now being taken on by providers themselves. "Very often, there is an established industry, along with alternative industries that are growing underneath or alongside it. In our case, it's technology vendors that play that role, or vendors that have grown out of the technology business into the service business," Hartmann says. And this is precisely where the risk of losing out lurks.
It's no longer enough to just look left and right. It’s more important than ever to think outside the box. Technology providers with consulting services must be seen as competitors in the same way as other consulting firms, as Hartmann warns: "You have a lot of competition that you might not traditionally view as such because they used to be customers or alliance partners, but they actually invade your market space." The conclusion is that if you don't acknowledge this new competition quickly enough and take it on with a clear concept, you will lose customers with technology-related needs to the up-and-coming crop of technology providers in the long run.
Recognizing technology and digitalization as an opportunity
As dangerous as these challenges may sound, they also present huge opportunities to consulting firms clever enough to take advantage – through new provision models in the context of digitalization, for example. "A very clear plus point is that, for the first time, this frees us from the constraints of the time-and-materials model, which is simply not very scalable. If every extra euro you want to earn depends on how much staff capacity you have, there are clear limits to how much you can grow. With the use of technology, that changes," Hartmann explains.
By integrating technology into their portfolios, consulting firms can now scale the services they offer much more effectively, reduce internal costs, and attach a flat price tag to certain services to increase transparency for customers. New technologies thus hold enormous potential for the industry. The key challenge in the coming years will be to realize it effectively.
Collaborations with technology providers are becoming increasingly important
A crucial step in achieving success here involves entering into cooperation with technology providers. Whether they operate in cloud hosting or software or system integration, these providers have many faces. That's why a broadly diversified and well-developed partner landscape is all the more important for consulting companies: It sets the stage for getting the most out of the technological potential at hand. Hartmann also sees this as an opportunity that "promises a lot of growth and complementary possibilities for both sides."
Large consulting firms already have a large number of collaborations with technology providers in a wide variety of areas – and the trend is increasing. In this context, Hartmann also mentions the criteria that software must meet in order to make a cooperation successful: "It’s important to think about how scalability can be achieved and how software can be provided quickly. The natural choice is a scalable, cloud-based SAAS solution."
In the area of financial intelligence, KPMG works with LucaNet as a top technology specialist and provider of cloud-based software. The strengths of this partnership, which currently exists in Austria and Germany, lie in the two firms’ ability to solve complex financial challenges together.
Maximize your success with our flexible partner program
As a software provider, LucaNet opens up access to the world of digital financial solutions for consulting firms and thus helps shape technological change. With our customized partner program, we offer various forms of cooperation – from a pure referral program to a global Youniversal partnership. Among many other advantages, LucaNet can be implemented quickly and requires no prior technical knowledge, and thus no lengthy training. With us at your side, you can offer financial consulting on a digital level in the future, carry out software implementations and expand your technology portfolio as an ideal complement to your range of consulting services.
It’s already apparent today that technologies will play an increasingly important role in the consulting industry in the context of digitalization. Customer needs and services will change, as will the market participants and professional profiles. This trend can also be seen in the upcoming expansion of ESG sustainability reporting in the EU:
- The significant expansion of reporting requirements that is expected through the Corporate Sustainability Reporting Directive will bring with it new consulting services.
- For example, external auditing of sustainability information will be required.
- It will also give rise to new technology offerings on the market due to the requirement for digital and machine-readable sustainability reports.
- This is another area where an interplay of intelligent software solutions and professional expertise will become inevitable in meeting future customer needs.
Find out how you too can equip yourself for the future together with us, benefit from our many years of experience in financial performance management and enjoy the advantages of our software solution. Join our international partner network with more than 100 existing partners!
Digital accounting offers many benefits for various companies. However, many financial professionals have still not digitalized the accounting process and rely on error-prone manual accounting.