Things to think about for 2013: (2) Technology consulting firms

This is the second in a series of blogs I’m doing which look at the prospects for different segments within the consulting industry.

The consulting practices of technology firms haven’t performed particularly well in Europe over the last year or so: growth in 2011 was negligible and 2012 seems to have been only slightly better.  Pockets of activity exist (consumer products, life sciences, natural resources) but some of the biggest markets (notably financial services) have been weak of late.  Certainly examples of large-scale IT transformation projects, focused around the implementation of new technology, are scarce.  Prices are falling everywhere – and the fact that this is due to a combination of factors makes it unlikely that the trend will be reversed – and the focus of much work continues to be cost-cutting.

But we equally sense that this is an industry on the cusp of change: whether you think the focus of the future will be on big data, digital transformation, cloud computing or mobile apps, most would agree that the face of corporate technology is going to look very different.  But there’s less consensus about what that means for the consulting industry.  Indeed, our research suggests that consulting firms break into three quite distinct camps.  One side (‘builders’) believes that this wave of new technology, because it has to sit on top of a foundation of integrated software and data will trigger a new round of ERP-like consulting; another, that this will be a much more specialised, fragmented market going forwards and that the role of consultants is to orchestrate the inputs from different fields.  This second group – the orchestrators – is made up of two sub-groups: the ‘business orchestrators’ start from the premise that this new technology is a business opportunity, so success depends on understanding what an organisation wants to achieve and working out how the technology can help; the ‘technology orchestrators’ think that the technology opens up new, unexpected opportunities and therefore drives change.  Neither view is right or wrong; they’re simply different.

So there are two questions for technology firms going into next year:

• Which model / strategy do they espouse (builders, business or technology orchestrators)?  This will have a significant impact on how the firm makes money.
• Who will they be competing against in their chosen space?  It’s not just technology firms who aspire to be business integrators...

If you missed our recent webinar on technology consulting firms, you can get a recording of it and the slides by emailing Alice Noyelle.