M&A and simplification work for management consultants predicted to be in demand…
The demand for technology-related consulting will drive growth in 2014 with a quarter of organisations expecting to increase spend on this area by more than 10 per cent. These findings, based on interviews with over 600 senior users(1) and buyers of consulting services, are published today (3rd February 2014) by Source Information Services. The report found that around half of organisations will increase their use of consultants to either improve existing technology or exploit new technology
The Source report also found that the next biggest area for growth is operational improvement, but while strong, interest is more measured, with only 19 per cent predicting that the rate of increase will be higher than 10 per cent. Almost half (43 per cent) of organisations expect business strategy to grow.
M&A and simplification work predicted to be in demand
Advice on M&A – historically one of the key drivers of growth in the consulting industry but hugely overshadowed by the financial crisis in recent years – finally shows some signs of life. In 2013, less than half of organisations claimed to be actively looking at this area, but this has jumped to almost two thirds (59 per cent) in 2014 – the biggest increase of any of the client needs asked. Simplification is also a buzz word across organisations as they plan to strip out the complexities accrued prior to the financial crisis and left unchallenged. The majority (81 per cent) of organisations say they plan work around this issue in the next 12 months.
Fiona Czerniawska, co-founder of Source and an author of the report commented:
“Our sense is that the growth agenda is being slightly eclipsed by the technology agenda, and specifically the digital technology agenda, as the majority of organisations tell us that they want to take advantage of digitisation, mobile and other new technology.”
“That clients are planning to do more and on more fronts than they were in 2013 can only be good news for consultants but we shouldn’t automatically jump to the conclusion that this will result in greater use of consultants. However, understanding which activities are more likely to drive consulting work and why gives us some sense of how clients will spend in the coming year.”
Public Sector remains depressed
The reasonably positive picture for consultants in the private sector contrasts with the more depressed public sector market. The proportion of organisations expecting to spend more is substantially smaller than in the private sector and the proportion expecting it to shrink is much larger – almost twice the size.
Retail is set to be the boom sector
Virtually no one in the retail sector expects their use of consultants to shrink in 2014 – with half expecting their expenditure, which grew in 2013, to stay at broadly the same level, and half think it will grow further. The report says that two factors account for this buoyancy. First, interest in business transformation and productivity is high to exploit the opportunities and mitigate the threats entailed in the shift to online expenditure and multi-channel retailing. Second, a similar proportion of people say that taking advantage of new technology, including digitisation and mobile, will absorb time and effort this year.
Commenting on the demand in the retail sector, Edward Haigh said:
“The focus on transformation, digitisation and globalisation doesn’t mean that retailers aren’t interested in keeping their costs low. They’re actually considerably more interested in productivity gains than other sectors. But they’re still more likely than average to rely on consulting input, despite the high costs – especially where regulation and looking at new opportunities for growth are concerned.”
(1)The extensive survey interviewed 664 senior users and buyers of consulting services from Europe, the Middle East and the USA. Three quarters (75 per cent) of respondents work in organisations with more than 1,000 employees and almost half (over 49 per cent) work in organisations with more than 5,000 employees.
For more information on Source reports contact Alice Noyelle or telephone +44 (0)203 700 5462/visit www.sourceforconsulting.com.