Following the recent publication of the Source Information Services UK consulting report, Edward Haigh, a director of Source and an author of the report, speaks to TechRadar Pro about some of the findings.
TechRadar Pro: The UK market for technology consulting has just hit £2billion. Is this as a result of a sudden spike in demand for a particular service, or do you see a long term trend developing in using external consultants for tech advice?
Edward Haigh: In general terms this is the continuation of a trend which has been in place for many years – technology is one of the biggest drivers of consulting work and has been for some time.
It comes at a time when the UK consulting market as a whole is doing well, too, so although technology consulting is outperforming the market as a whole it’s a little hard to see it as a spike.
TRP: What is increasing the demand for these specialist technology consulting skills?
EH: For many years tech consulting has been about providing advice around choosing and integrating big, enterprise software solutions (of which SAP is perhaps the best known example) but that’s an area in which skills have largely become commoditised.
Where specialist knowledge is now sought is around new developments: cloud, social media, mobile, big data and analytics. Organisations want to speak to people who really understand these technologies and who can interpret their potential within a business (not an IT context).
Indeed, that’s another big driver of demand: technology is no longer confined to the IT department – it’s something that underpins so much of what an organisation does now, so demand for advice isn’t just coming from the CIO, it’s coming from the CMO, the COO and the CEO.
TRP: Which industry sector is using tech consultants the most, and why?
EH: The highest growth at the moment is probably to be found in the retail sector, where companies – spurred on by data from the festive season – are clamouring to ensure that they’re keeping up with the likes of Amazon: that they have a multi-channel strategy and are digital businesses in the fullest sense of the word (rather than simply having a digital front end).
But because it’s such a massive part of the UK’s consulting market, financial services is where most demand is coming from: organisations there are using regulation as a platform for broader transformation of their businesses, and technology plays a big part in that, particularly where interfaces with customers are concerned.
TRP: Is all of this investment in new technologies, or old fashioned IT?
EH: It wouldn’t be right to suggest that demand for old-fashioned IT had dried up completely, but it’s new technologies that are driving most demand for consulting at the moment.
TRP: Which types consulting firms are doing the most in tech?
EH: The traditional tech consulting firms – the likes of IBM, Capgemini and Accenture – are still doing very well here, and have quite clearly defined propositions around things like digitisation, big data and analytics, but the shift in demand for tech advice away from the IT department and into other areas has led to other type of firms, like the Big Four, growing their share of the market.
Non IT functions want to come at technology from a business perspective and are often critical of the capability of tech consultants to do so. They often prefer to use consulting firms with which they’re more familiar. Small, specialist firms are also doing well – even if they struggle to win work around big transformation initiatives.
TRP: Your report says that the Big Four grew twice as fast as the rest of the market. Is this due to growth in their technology services, and if so, what IT services are they offering?
EH: Technology is a part of it, but the vast majority of these firms’ growth is likely to be driven elsewhere (from regulatory-driven work in financial services, for example). But all are winning tech work and all are keen to increase their (often quite considerable already) capabilities in this area.
TRP: To grow their tech practices, where are consulting firms investing the most?
EH: Digitisation, big data and analytics.
TRP: Are consulting firms launching new services?
EH: They are, but most of the focus at the moment is on changing what consulting means, rather than on specific innovations in certain service lines. McKinsey Solutions is a good example of this – as it’s an attempt by a firm which is strongly associated with strategy work, to shift its model of consulting.
Tech plays a big part in this, allowing firms like McKinsey to embed analytical tools within their clients and, through doing so, to have an ongoing relationship with them.
TRP: Which industry sectors will provide tech consultants with the greatest opportunities this year?
EH: Financial services and retail look set to be strong growth markets once again in 2014.
TRP: From the consulting firms operating in tech, who is your hot tip for rapid growth in 2014, and why?
EH: Picking which individual firm is going to do well in any given year is, of course, a tricky business, but Accenture looks as good a bet as any at the moment. Its ability to combine the magic triumvirate of consulting, technology and outsourcing is well established and – critically – it appears to be managing to convince people outside of the IT function that its people can talk the language of business at the same time as understanding technology.
What’s more, against the backdrop of a consulting industry that is going through a period of change more profound and far reaching than it has ever faced in the past, Accenture has a good track record of being able to respond to the market and change itself – something that other firms, whether because of their culture or their structure (or both) find considerably less easy.