There’s no denying that digital transformation has reached buzz word status. It’s in the news, in commercials (the Dell commercials with Jeffrey Wright are great), and it’s at peak popularity in Google Trends. However, business leaders and consultants shouldn’t allow the over-saturation of the term to daunt them. There is real opportunity behind it and real potential for digital transformation in the consulting industry.
A conservative estimate from Zion Market Research estimates that in 2015, the entire digital transformation market (defined as cloud computing, big data, mobility and social media) was valued at $150B. According to Zion, “Global digital transformation market to top USD 431.71 billion by 2021, growing at a CAGR of 19.2% between 2016 and 2021.” That’s a significant driver of economic growth. Consultants have rightly established their own foothold in the area. In 2017, the digital transformation consulting market was valued at $23B globally roughly 18% of every consulting dollar spent.
But consultants have only scratched the surface of the opportunity for their clients and their business. With our Digital Transformation in the Consulting Industry Analysis, we set to out to learn whether consultants were adopting the same digital approach they espoused to clients. In our early findings we outlined the case for why being digital matters. As technologies and capabilities evolve, businesses are still learning how digitization will impact their industries. In consulting we’re starting to see that many firms have bought into the idea that they should change. Yet many are not yet making substantive changes, including changes that would reflect in company culture.
Digital Transformation in the Consulting Industry Executive Summary
It’s not if digital transformation will impact your business, but when.
Ninety-four percent of respondents indicated that digital transformation will have an extreme or near extreme impact to the business world in the next five years. This year, senior managers of consulting firms are championing the transformation of their firms. 62% of respondents felt senior management is promoting a digital approach to an extreme or nearly extreme degree. This is a large change from last year, when senior management was a significant hurdle to a digital approach. Consulting leaders are recognizing the need for a more digital approach both so that they are credible service providers and so they can realize the benefits they are providing to clients.
Transformation presents opportunity.
Firms that view transformation as an opportunity will have more business available. And they will position themselves better for growth in the future. In the short term, the digital transformation consulting market is, according to Source Global Research, already valued at $23B, nearly 20% of the total market. According to our research, 78% of respondents are offering those services to clients, an increase over last year. Longer term, the most forward-thinking firms are already testing new models for delivering value to clients and identifying new adjacent revenue streams.
Consulting firms have a long way to go in their own transformation.
The changes that firms are making in response to digital opportunity are still largely surface level. The most selected changes included changes to value proposition and the consulting portfolio. In addition, respondents self-rated their firms’ digital maturity with modest scores. And they further indicated that company culture only partially embraces digital capabilities. If firms are to truly digitally transform their business, it will be through transforming culture that they do it.
Digital transformation will impact every practice area.
The results make clear that the impacts of digital transformation will not be confined to a single practice or functional area. Respondents, when defining digital transformation, believe the impact to day-to-day activities is real. Impacts across the business include those for innovation, customer experience, connecting data and decision-making.
Finally, for the full analysis including background and every chart and graph, you can download the full report here: