Will the big winners in digital transformation be strategy firms?

That’s the question we ask in our new report on the digital transformation market, which is based on data from 150 very senior executives in the US.

Digital transformation is big business: we estimate that $1 in $6 spent on consulting now goes on this, a trend that’s cannibalised demand for traditional consulting services of all types (though some more than others). By itself, the global digital transformation consulting is now worth more than most local consulting markets (it’s twice the size of the entire UK market, for example, and five times that of China).

To date, clients have tended to use digital technology to facilitate and accelerate existing priorities, like cutting costs or creating a better customer experience. Yes, the shift has moved from front- to all-office, but much of the work that’s been done has changed the status quo, rather than re-invented it. Because this approach impacts many different parts of an organisation, it has benefited different types of consulting firms. We estimate that the largest ten firms in this space account for 59% of the total market: of that 59%, 22% has gone to strategy firms; 21% to the Big Four (a picture that’s skewed by the strength of Deloitte’s lead); and 16% to technology firms.

For the last few months, our working assumption has been that the convergence between digital and business transformation, together with clients’ impatience to see results, would favour technology firms at the expense of strategy ones. But this most recent research suggests we were wrong, that we stand at the threshold of a new phase in the evolution of the digital transformation story—a phase that will be characterised by clients using digital to change not only how they do things, but what they do, and even who they are.

Seventy percent of all organisations, and 86% of the very largest say their focus in the future will be using digital technology to change their underlying business model, significantly more than those who say their priority will be better customer engagement or improved operational efficiency.

What will matter most to clients in this phase of the market’s evolution will not be a consulting firm’s technological capabilities, but its relationship with their board. Strategy firms look as though they’ll be the clear winners here. The challenge for everyone else is how quickly and effectively they can emulate strategy firms’ advantage.