4 Business Consulting Industry Trends To Expect In 2020
The consulting industry continues to grow substantially every year. It’s estimated that there are currently over 700,000 business consulting firms throughout the world. This shouldn’t come as a surprise when you consider the number of businesses that pop up every year. And as businesses rise, so does the growing dependence on business consulting services, from business strategy and operations to HR and IT.
One of the primary reasons that there has been such a boom in the consulting industry is because business itself has changed rapidly within the last few years. This disruption is what feeds the need for professional consultants. While disruption within the business world is a good thing for consulting firms, these firms must also keep up with the changes to remain relevant to the companies that are hiring them.
The Way Businesses Engage Consultants Is Always Changing
In the past, consulting firms would send one of their consultants to an organization to provide professional advice that would address their challenges or solve their problems. Even as the business landscape evolved in the past, consulting firms did essentially the same thing, whether it was to help develop a new strategy, find ways to reduce costs or implement new technology. This process has changed drastically over the last decade.
Businesses now have access to software tools that allow them to perform analytics, identify their problems, along with the possible solutions to those problems. These programs can also forecast trends that help guide business strategy and determine how to save money throughout their organization. This doesn’t mean that consulting services have grown obsolete — as previously mentioned, the consulting industry is booming. However, the needs of the clients hiring consulting firms have changed.
Businesses still need help when it comes to succeeding over the long term in competitive industries. However, their consulting needs are much more sophisticated. The way they are engaging with consultants has changed. Today most aspects of business are digitized and interconnected. Consulting firms must be able to keep up with the latest trends within the industries they serve to remain relevant and to continue to provide the services that modern companies need. With that in mind, if you’re thinking of hiring a consultant, you should consider the following four trends within the consulting industry:
1. Much Larger Focus On Technology-Based Solutions
Arguably the most significant change that businesses in the modern era have experienced is the use of technology. In the past, technology only supplemented business strategy and operations. In the present (and the future), business strategy and operations are wholly dependent on technology. As technology continues to evolve and advance, new business models emerge, and new legislation requires more care and attention to detail.
Consulting firms must be familiar with all of the latest technology and know-how to implement it within the industries that they serve. They must also remain up-to-date on all the latest technology trends and news to stay relevant. A few examples of technology that a consulting firm has to be familiar with in this day and age include:
Keeping Up With Google
There aren’t many businesses that don’t market their brand online, which means that understanding SEO (search engine optimization) and how Google ranks pages is essential. However, it’s not just a matter of “understanding” the rules and abiding by them. Google uses an algorithm that regularly changes to deliver better search results to its users. The way Google ranks pages has changed drastically over the years. Consulting firms need to keep up with how Google evolves so that they can implement the best inbound marketing practices for their clients.
Artificial intelligence (AI) was once science fiction, but today it’s found almost everywhere, whether in the form of self-driving cars and virtual assistants (such as Siri and Alexa) or chatbots and process automation. AI solutions are commonplace and can help businesses better understand their customers. AI allows businesses to make informed business decisions and identify trends as well as forecast events. A consulting firm that doesn’t understand AI or doesn’t know how to implement AI tools effectively is already falling behind the times.
While many companies are capable of using basic analytics (social channels such as Facebook even provide their own analytics tools), advanced analytics is even more challenging. A consulting firm needs not only to analyze data and to turn it into actionable insights but also to ensure that data is from all potential data sources and is accurate.
Cybersecurity is a growing need among businesses — especially smaller companies that may not have the in-house resources to implement an effective cybersecurity system. Smaller and mid-sized companies tend to be more vulnerable to data breaches as well because larger companies invest millions into their cybersecurity, making them difficult to hack.
A good consulting firm needs to be able to perform a security audit to identify potential vulnerabilities. They must also have a plan for addressing security breaches as quickly as possible to limit potential damage. Staying up-to-date on the latest cybersecurity measures and challenges is vital since cybercriminals are continually working on getting around existing measures.
A consulting firm needs to be familiar with new technology, but they also need to stay abreast of any new legislative regulations regarding these new technologies. Without knowledge of the latest legislative regulations, consulting firms can’t help their clients solve the potential liability challenges that emerge as a result of implementing certain new technologies.
2. Multiple Firms Hired In Conjunction
Traditionally, consulting firms have been able to address every aspect of a client’s business. While there are still many consulting firms out there that are capable of doing this, more and more consulting firms are focusing on more specific facets of consulting, requiring companies to hire multiple firms in conjunction with each other.
As a client, you may be hiring two different consulting firms at the same time because you have various projects that have different needs. Many consulting firms have specialized skills. You may even consider hiring freelance consultants in conjunction with larger consulting firms. You may also find yourself hiring two different consulting firms to work together on the same project. This approach is known as crowdsourcing.
Crowdsourcing is the practice of hiring multiple consultants from a network of freelancers and smaller consulting firms. The individual consultants combine their specialized skills to provide comprehensive solutions to their clients. It’s no longer uncommon to have several different consultants working on different aspects of the same project. Consulting firms, in general, must be capable of working with other consultants.
3. Commoditized Engagements
Although long-term relationships still exist between consulting firms and their clients, more businesses are opting to order consulting services using an “a la carte model.” Instead of a long-term contract in which the consultant addresses whatever needs their client has, the client chooses a specific service that they need for a particular project for a set timeframe. As soon as the consultant provides that service, the contract ends. This type of contract is known as a commoditized engagement.
4. Performance-Based Billing
With a consulting industry that’s as big as it is, you can imagine that there is a lot of competition. Competition benefits companies in need of consulting in a variety of ways, including cost. Before, consulting firms would typically charge a flat rate for their services. However, these days, many consulting firms offer performance-based billing. This payment method ensures that their clients receive value for their money.
Clients with a performance-based contract do not have to pay for consulting services that don’t have a positive impact on their organization. In turn, consulting firms must step up their game and not implement the same consulting blueprint for every client. Consultants have to tailor their services to the specific needs of each client to make sure that their services are beneficial or else they won’t get paid.
Consulting By Nature Is A Product Of Rapid Innovation And Change
Consulting firms exist because businesses are affected by rapid innovation and change and must adapt to succeed. There are more smaller and mid-sized companies than ever due to how easy it is to launch a start-up (compared to in years past). These companies have limited resources in-house to keep up with their ever-changing needs, which is why they turn to consulting firms for professional guidance. It’s one of the reasons the consulting industry has exploded recently.
However, as technology advances, the needs of companies change, and consulting firms must be able to adapt as well. Because the success of a consulting firm is dependent on disruption, it means that by nature, their own business is susceptible to disruption as well.