Trends for Virtualisation in Consultancy: where is your business heading?

The recognition that COVID-19 has been a disruption for many industries, Management Consulting included, can open a different view of the next steps to align clients’ expectations with different Value propositions from consultancy.

Market trends and technology

While the technology now looks to develop incrementally and expand, the management consulting industry is already in the disruption process.

In 2005, with the utilisation of online tools, Czerniawska hypothesised that some services and some stages could have fewer risks to be delivered online, however, the utilisation of online tools could have inevitably created a distinction between commodities and personalised services: standardised services vs bespoken ones.

Christiansen and O'Mahoney already introduced the concept of disruption for management consulting brought by technology in 2013 with a shift from bespoke to commodities, also required by the clients, through technology development.

Nissen in 2018 highlighted the fact that technology would shape consultancy and clients as well with the increased use of web channels to find information about consultancies, a trend towards looking for more modular services.

A Deltek research in 2018 discovered that clients’ trends consider consulting under the concept of Value-based performance, but with no fees increments. They expect to get high-value (personalised) services using technology.

In the convention of FEACO in 2019, Christensen predictions were confirmed: Increased disruption from new competition, new service models and sophisticated clients’ knowledge and technology creating significant opportunities and challenges for the growth of independent consultants and small firms.

Professor Simon Haslam’s article in January 2021 further clarified the current situation: “People are expecting an eventual bounce back in terms of market size, but not a full regression to the face-to-face delivery approach […]. The road ahead will favour consulting firms and individuals capable of virtual work on complex/ intimate client issues.”

In our research in 2021, fourteen interviewees out of eighteen believed that from the disruption brought by COVID’19, the technology of virtualisation drives the next steps for being competitive, following clients’ demand trends.

Where are we now?

Virtualisation and clients’ demand

It looks like that the last demand trend should require the development of more services with a high degree of innovation that, with technology, allows to migrate to gradual, incremental innovative steps, what is called the “process of virtualisation”. And this is not a one-off process.

An investigation in 2019 among consultancies’ preferences for being competitive shows the elements to be considered to build new Business Models in consulting

Specialised service. market segment (niche), rapid intervention capability, are the critical points to create a unique offer to stay out of the crowd. Professor Simon Haslam in his article (2021) prospects two main Business models can be hypothesised:

1. Traditional consultancy and Client demand for capacity.

2. Specialist area -Client demand for modularity and High expertise

The traditional consulting filling a demand for capacity is likely to present a Value proposition based on reduced costs (travelling) with semi or full automation of virtual tools and availability and support remotely for training, coaching and advisory.

On the side of specialism including modular services and or highly specialised services, the value proposition is likely to be based on reduced costs, training and coaching and advisory as in the traditional consulting, however with the difference in proposing flexibility with modularity and same high specialised services as before COVID-19 but remotely.

Another relevant component to be considered is the revenue streams and pricing: For traditional consulting, T&M project with a daily or hourly rate, there could have the risk to see a request for reduced fees: the reasons are related that they are considered commodities, where virtualisation is seen as a mean to have more efficiency but nothing of unique that can justify a premium price.

As for being recognised as specialists, many consulting firms looking forward to working remotely, are creating virtual consultancy platforms. The scope and the challenge are to demonstrate they can offer high-impact services (USP) as it was face-to-face or with a physical presence, removing travelling costs (about -30%) but keeping professional fees as it was before COVID-19. This approach is called Assets Based Consulting

Clients are also looking for modular services, and in the end, niches are the most favourite realities to be successful. This is expected to satisfy the requirement of agility: the current client’s markets conditions require either specialists for short term or contingency professionals.

Where is your business heading? Commodities or specialists? And what about Virtualisation development?

Thank you.