Consulting around business and digital transformation markets accounts for around a sixth of all consulting in the world today, fuelled by clients’ deep-rooted desire for fundamental change and technology that’s making new things possible. At the same time, we hear senior executives being increasingly concerned about the need to deliver concrete results. “Transformation is all very well in theory,” they tell us, “but we want more proof about what it can deliver in practice", writes Fiona Czerniawska of Source Global Research......



None of this is surprising: Every “new” consulting service passes through a stage in which consultants need to make good on their glorious promises, and the failure to do so heralds decline and eventual extinction. As a service, digital transformation has technology on its side: There’s plenty of evidence of tangible change all around us, but the challenge for consulting firms is to demonstrate whether these changes have translated into the substantial increases in business performance that organisations are looking for.

Given the huge amount of activity that’s going on, why is there such a marked shortage of hard data?

One reason is timing. For all the talk about agile development, many transformation projects are slated to last years. That’s a problem in its own right, but in the short term it makes it harder to point to results achieved. Other reasons include confidentiality—client organisations engaged in transformation rarely want to admit how overdue change was—and accountability—just because improvements have been delivered it’s not always clear why they happened or who made them happen. Put those two together and you end up with an undignified scramble to take credit: Certainly, clients have told that they’ve had several firms claiming credit for the same success.

But I’m increasingly wondering, first, whether one of the reasons why we don’t have much—anywhere near enough—hard data lies in the breadth of services you typically find in a large-scale transformation project, and second, whether that points to a much more serious issue.

We’ve written a lot in the blog about the widening gap between low-cost consulting services and high-value ones. This gap exists in clients’ minds and is important for that reason, even though many firms would dispute whether it’s actually the case. It explains why clients, despite wanting to consolidate their consulting expenditure to a smaller number of players (in our research, three quarters tell us that’s what they’d like to do), continue to use different firms. As far as clients are concerned, low-cost and high-value consulting isn’t just a marketing nuance, but reflects deep-rooted differences in capabilities, price, and business models. One firm, in clients’ eyes, simply can’t be in both places at once. At the same time, transformation projects often involve both low-cost and high-value elements, so to be successful in this market, consulting firms need to convince clients that they can, in fact, be in both places at once. If the solution to this was down to some clever marketing, everything would be fine, but it’s not: Clients are asking firms to explain precisely how they can pull this off in practice. Most firms don’t have a convincing and coherent answer to this: When we ask, they look uncomfortable; they fidget; they stare at their shoes. And, not surprisingly, that fuels clients’ sense of doubt.

Data about the impact of transformation is hard to get because both clients and consulting firms keep low-cost and high-value work separate. The ideas about industry disruption may sit in the high-value space, but making that aspiration a reality may well depend on being able to perform some standard, low-costs tasks far more quickly and cost-efficiently. You can only quantify the results if you have a joined-up approach.

There’s a parallel here with an issue that used to dog the French consulting industry (I’m told it’s less of a problem now, but my personal jury remains firmly out). In the past, French clients talked a lot about the differences between “maître d'œuvre” and “maître d'ouvrage”, essentially between strategy and design, and implementation. Consulting firms were classed as one or the other, but rarely both. The impact of this—and this is where a lack of data raises more serious, longer-term concerns—was to depress growth in the French consulting industry (even today, a lower proportion of GDP goes on consulting services in France compared to other developed markets).

The inability to bridge the gap between low-cost and high-value consulting doesn’t just make it hard for consulting firms to generate the type of evidence clients are increasingly demanding. It could also constrain growth in that all-important transformation market.

Original article can be viewed here


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Fiona Czerniawska is a leading commentator on the consulting industry and a co-Founder of Source who provide specialist research on the management consulting market to consultants and their clients.