Introduction of 5G, augmented analytics, and the Internet of Things sensors fueled the new age of enlightenment based on data-driven insights. IoT devices themselves will generate 79.4 ZB of data by 2025, so businesses need to take this into account during strategic planning.
It’s obvious that most companies have finally realized that data is a strategic business asset, as valuable as the company’s intellectual property or human capital. And it can soon even be included in the balance sheet as well. Those companies that neglect data are limited in their possibilities to make the right business decisions today.
In this context, management consulting companies are getting a new role: they guide businesses on the way of digital transformation and teach companies how to work with the data in particular.
Now the majority of top players in management consulting companies follow the way of digital transformation. The reason is obvious: 25 % of management consulting requests are connected to digitalization. The truth is businesses do not need a digital transformation strategy. They need to get ready for the digital age, which is dawning. COVID only accelerated these processes making most businesses head for digital transformation.
Traditionally the paradigm of digital consulting consisted of 4 key elements:
- Data accumulation
Each element is being transformed due to the rise of new challenges and the wide implementation of top-notch solutions, such as Computer Vision or the Internet of Things, and the overall change of paradigm of management consulting.
Data Collection: From Observation to Technology – Powered Data Collection
Data collection has always been the most important part of management consulting services. At the beginning of the management consulting era, young professionals spent the lion’s share of their time collecting data. If they need important information about the retailer’s revenue, they could literally go to the supermarket and count all the people with shopping bags for several days.
That was before the era of AI. This technology brought data collection to a new level. According to the Deloitte Report 2020, accelerated adoption of artificial intelligence and analytics solutions hit the globe. McKinsey has a team of data scientists who work with customers directly, while BCG has a full department of data engineers. Today data collection and analysis are impossible without the Internet of Things or Artificial Intelligence, for example. These technologies dramatically improve the quality of the data accumulation, analysis, and insights received.
Computer Vision, for example, can help to collect an enormous amount of data from photos and videos inside a retail store or on the shop floor of a factory. Harvard Business Review says that AI can soon replace even the most elite consultants explaining this shift by cognitive bias pertinent to people. Who knows, maybe these predictions are not that futuristic.
Special attention should be paid to augmented analytics, one of the prominent Gartner trends of recent years. The technology utilizes “machine learning and AI techniques to transform how analytics content is developed, consumed, and shared.” Augmented analytics technology allows for making sense of huge amounts of data, and, what is more important, it reduces to the minimum the threat of bias or human errors.
Expertise: From Intuition to Effective IT Ecosystem
For a long time, management consultants relied heavily on niche experts. The experts, in their turn, managed to gain some serious industrial experience in a particular business sector before switching careers and going to management consulting.
When making business decisions, these experts often relied on their experience, experience, or even intuition. This approach got outdated because businesses need to make data-driven decisions in a data-driven world, however cliche this phrase may sound.
It means the effective development of a company will depend heavily on the ability to build a coherent IT ecosystem that will generate accurate and reliable data non-stop with the possibility to process and analyze it correctly. Management consulting companies are getting a new role in this context: helping companies in developing these ecosystems.
Experts, in their turn, will be responsible for asking the right questions. The decision-making will depend mostly on the quality and the timeliness of the data companies manage to accumulate. In this context, management consulting experts will be able to understand how to use this data: which segments can be utilized for internal purposes and which data will help increase the company’s revenue.
- How can a construction company decrease risks at the building using IoT technology?
- How can a retailer use gamification to increase the level of retention?
- What should a pharma company do to optimize the utilization of thousands of warehouses?
Management consulting specialists should be ready to formulate the right questions in order to receive the right answers on the basis of the data they have.
Another important issue is digital transformation inside the management consulting company. According to Forrester: “Professional services firms must go through their digital transformation before they can truly help their customers. Traditional management consulting partnership models and their silo-practices are unlikely to deliver CIOs the most appropriate solutions for a digital age. CIOs do not need a digital strategy. They need the right support to survive and thrive in a digital economy”.
Insight: From Consultants’ Insights to Innovation Inside Companies
Insight is the most desirable moment during a long consulting process. It is the moment when the quantity is finally transformed into quality. The insight presupposes that the analysis of the data and the application of expertise is converted into valuable and radically new conclusions that help to deal with the company’s challenges more efficiently.
Today in digital transformation consulting, less digital transformation projects have accurate and tangible goals and often look for unexpected insights instead of reaching the goals they have in mind. More and more projects resemble lab experiments with challenging hypotheses that they aim to explore. The way pharma companies experiment with new formulas and business experiments with digital transformation ideas.
More than that, insights ceased to be the privilege of management consulting companies. Companies tend to build separate innovation departments, internal labs, and open positions such as disruptors or chief innovation officers to stimulate the spirit of constant research and transformation.
Their desire to experiment with technologies leads companies to embrace practical rather than theoretical approaches to insights generation. That is why innovation departments do not stop at ideas. They initiate all sorts of speedboat projects, MVPs, and proof of concept challenges.
These experiments or speedboat projects are characterized by stand-alone teams, absolute freedom in the choice of tools, fast results, and independence from all other projects. In other words, companies are ready to spend time and money testing ideas to generate precious insights.
ALM Consulting report says that management consultants are no longer regarded as unique exclusive experts, and they are also encouraged to work with multiple vendors to meet the needs of the customers.
Modern management consulting companies powered by vendors are capable of giving clients a much more extended perspective on what can be done to solve this or that problem.
In this context, it is crucial to understand that to take a leadership position. A business must be ready to experiment and work with as many hypotheses as necessary to find the one that will actually work. Insights take time and resources, but the outcome is worth all the possible efforts.
Execution: From Global to Step-by-Step
There is a big difference between offering a strategy and helping in its execution. Management consulting companies know it for sure. Execution has always been a stumbling block of consulting. In recent years, the gap between strategy and execution has been getting even wider with the growth of digital transformation requests and the complexity of the execution of the strategy.
Innovations rule this world, which means that transformation is a constant process of changes in business as well. Years ago, we could expect ready-made software solutions to match any big company: complex ERP systems could be installed once and for all to attune all the internal processes and operations.
Today the pace with which IoT/XR/AI technologies evolve is opening new possibilities for businesses. That is why the time of giant projects is in the past. There are no systems that fit all the companies today, and the development of unique custom solutions takes time.
That is the reason why businesses should accept the value of the step-by-step execution approach.
Companies that really want to go the way of digital transformation need to be ready that this process has become longer and more puzzling. Taking a step-by-step approach will lead companies to more efficient execution.
The very paradigm of management consulting is transforming from within: key elements of management consulting, such as information accumulation, expertise, insight, and execution, are evolving under the pressure of clients’ requests and the rise of technologies.
The majority of companies have realized that the data they generate is a valuable asset, and they need experts to collect, work, and process it correctly to make data-driven decisions. New tools, technologies, and approaches, such as AI & IoT for data collection or innovation centers, are getting deserved appreciation and popularity.
Management consulting should guide companies to the new era of digitalization using their deep practical understanding of technologies and the opportunities they open to businesses.