Big is back

There have been a number of step changes in the consultancy market over the
last decade and I don’t think that many of us really anticipated the manner in
which it would evolve. As it is, the Big Four are now back in favour and
represent one of the most significant growth sectors in the consulting market.

I believe this rapid turnaround is down to the fact that the market has
effectively demanded the return of the Big Four to the consultancy space. The
rapid growth rates achieved by the returning members of the Big Four is
testament to that fact and proves this was not simply a case of well-timed

However, as we know from our own experiences at the turn of the millennium,
the rise of one player (or type of player) forces another to retreat. Just as
the Big Four were forced back by the rise of the technology-focused outfits, the
tables have now turned and those established players that focus on mass volume
technology offerings may find themselves squeezed out.

At the turn of the millennium, everyone seemed to be intimidated by
technology, painfully aware of their own lack of knowledge – whether it was to
do with the spectre of Y2K or how to establish completely new,
technology-enabled, business models. Businesses were nervous about trusting
advisers that could work on a technology business case but did not offer any
implementation service. Consequently, everyone, including the Big Four, became
systems integrators.

It was at this point that we recognised the systems integration market was
going to consolidate rapidly and we took the decision to exit, leaving the space
to the big, global technology players.

Since then, most people have become more comfortable with the role of
technology and what is involved in successful implementation. New players have
emerged, particularly from India, and standard coding and configuration has
become heavily commoditised. Many business leaders have become more savvy users
of technology in their own right, no longer merely delegating IT issues to the
CIO, but wanting to ensure they understand the key business drivers themselves
and how these would be addressed by the technology.

What I’m seeing is that many businesses want more from their advisers than
just a functional understanding of technology. They want advisers that can
leverage their greater knowledge of the regulatory, competitive and tax
environments in which businesses operate and that are not merely trying to sell
a new system or outsourcing contract.

And so the situation comes full circle – with companies apparently placing
greater value on the broader business-led advisory offering, rather than the
pure technology implementation offering, and preferring advisers who are not
looking to sell technology solutions, large volumes of systems integration or
outsourcing work.

In this middle ground of the consultancy space, where elements of strategy
and technology combine, the volume technology players may thus find themselves
squeezed by the returning Big Four on one front and the emerging offshore
providers (able to undercut them on price) on the other.

That squeeze shows no sign of abating just yet as the return to favour of the
Big Four continues; a trend which, I believe, will allow these organisations to
dominate the high-value middle ground of the consultancy market for the
foreseeable future.

Aidan Brennan is global head of performance and technology at KPMG

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