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The changing face of digital transformation
Every now and then, we’ll find that one of our blogs takes on a life of its own—reaching a far wider audience than we’d anticipated, and prompting discussions and commentary for months, if not years, after its publication.
One of the best examples of this is a piece we published at the tail-end of 2018, exploring the changing face of the digital transformation market; by any metric, it was one of the most popular blogs we’ve ever featured on this site. But of course, the world has moved on a great deal since we published that blog. So, we thought that now would be an ideal time to revisit the topic, and look at what’s changed—and what’s stayed the same—about the market for digital transformation consulting.
Let’s start with what hasn’t changed. The market for digital transformation has continued to grow at an impressive pace—and, in the process, has continued to cannibalise other parts of the consulting industry. By our latest estimations, digital transformation work now represents 34% of global consulting demand. Concerns back in 2018 that we might be close to reaching a point of “peak digital” proved to be largely unfounded. If anything, the chaos of the last year and a half has only served to push digital transformation even higher up clients’ agendas. In a recent survey of US-based businesses, for example, we found that 86% claimed to have increased total spending on digital since the start of the pandemic.
Nonetheless, there are a number of key differences between the digital landscape of today and that of 2018—of which, three stand out as perhaps the most salient for consulting firms. First of all: clients have become a lot more mature in how they think about transformation. Increasingly, they tend to see it not as a linear “A to B” process, but instead understand it as something more like a mindset—the willingness to engage in a continuous cycle of optimisation and reinvention. Historically, clients tended to take the view that effective digital transformation meant you had to start by building a solid foundation of technology infrastructure, and only then could you embark on the more ambitious steps of digitising your operations or exploring new digital business models. But today, more and more clients have started to adopt the view that they ought to be investing in both foundational and more ambitious digital initiatives simultaneously.
Secondly, these changing client attitudes have had a knock-on effect on the types of consulting capabilities required to deliver effective digital projects. Back in 2018, we noted that clients have always seen digital transformation work as an area that required a balance of strategy and technology expertise—but it seems that, of late, the balance may have shifted somewhat towards the strategy side of the equation. With clients launching more complex and more ambitious digital programmes, the role of consulting firms necessarily becomes less about granting access to specialist technology expertise, and more about providing a level of strategic oversight and direction-setting.
Finally, we come to the question of how firms market those capabilities. In 2018, we commented on the way in which some firms had managed to give themselves a head-start in the market by creating dedicated digital sub-brands (as in the case of Deloitte and Deloitte Digital). But today, these kinds of sub-brands don’t seem to be quite as in vogue as they once were. Clients now expect every consultant they deal with to have a certain level of digital know-how; they don’t want firms to seal that expertise away within specific siloes. Some consultants now tell us that their firms are reluctant to launch a digital sub-brand, precisely because they worry that it will carry the unfortunate implication that there are parts of their business that aren’t sufficiently digital in nature. And many of the firms that already have digital sub-brands are looking for ways to build bridges between those sub-brands and the rest of their organisations—and to facilitate the digital upskilling of consultants who don’t sit within the sub-brand.
The market for digital transformation has certainly changed a great deal over the past three years—and no doubt, it will continue to evolve at a healthy pace. No-one back in 2018 could have predicted the seismic societal changes that were on the horizon; who knows what events are waiting around the corner that could lead to a complete overhaul of clients’ priorities. But if one thing has remained constant over the past three years, it’s that the digital transformation market has been a vitally important puzzle piece in the wider jigsaw of consulting—and carving out a position as a digital leader is still essential for any firm with lofty growth ambitions.
In a follow-up blog coming soon, we’ll take a closer look at who those digital leaders actually are, and which firms have been most successful at expanding their slice of the digital transformation market over the past few years.