Deloitte tops $23bn global digital transformation market, according to Source report
Deloitte holds 12% market share of the digital transformation market and carries out more work than any other global consulting firm
The global digital transformation market was worth around $23bn in 2016, according to a new report by Source Global Research, the leading research and strategy firm for the global management consulting industry.
The digital transformation market is a sector of high-growth that shows no signs of slowing down. Interestingly, while the US consulting and digital transformation markets are the biggest worldwide, the report revealed that digital transformation has made the biggest impact in the UK, representing 23% (£2.26bn) of the entire consulting market, compared with 20% ($11.79bn) in the US.
The report showed Deloitte to be at the helm of this shift, with 12% market share, and the firm carrying out more work than any other global consulting firm. The Big Four firms collectively hold around 21% of the digital transformation market.
What is the digital transformation market?
Digital transformation doesn’t exist as a service in its own right, but rather comprises aspects of other traditional services. As expected, the biggest share of digital transformation comes from technology at 45% ($10bn), with the second largest component being strategy at 27% ($6bn).
While the link between technology and the digital transformation market is evident, the impact of digital transformation on the strategy market has also been significant, with digital transformation now accounting for approximately 25% of all strategy work worldwide.
Edward Haigh, director of Source Global Research, commented: “Deloitte sits at the top of the digital transformation market for work, but towards the bottom of the ranking in terms of client sentiment – so it does a very good job of converting what positive sentiment exists into market share. Deloitte is not alone in pulling off this trick – it’s something that the Big Four, as a group, appear to do more effectively than anyone else. However, if we accept that client sentiment may be a leading indicator for future market share, then the Big Four firms have a serious challenge on their hands, while strategy and technology firms appear better placed.”
What are the factors driving digital transformation?
According to client organisations surveyed by Source, the driving factors of digital transformation were the need for growth, cited by 52% of respondents, and the need to be more efficient (47%).
The need for growth was of utmost importance to bigger organisations with annual revenue of over $5bn, with 73% of respondents highlighting it as the top driving factor.
Where are investments going?
As expected, across the board, organisations are making significant investments in launching new products and services, yet 70% of respondents said that their biggest area of investment in the next two years was in changing business models. These changes were likely to rely on the use of consultants and would benefit strategy firms, the report said.
Elsewhere, spending patterns differed quite drastically depending on organisation size. The most important area for investment for large organisations was responding to risk and regulation, while for smaller organisations improving underlying technology infrastructure and increasing efficiency and processes were of most importance.
Haigh said: “Although our research finds that the strategy firms are best placed for the next phase of digital transformation work, they have not yet asserted themselves on the market. Going forward, no matter which firm type you are, your reputation with the board and your ability to advise clients about their business model will matter most.”