Digitalization offers the consulting industry many opportunities: data-driven decisions are more informed & platforms offer new business models.
“No business success without digitalization” has long been the mantra of consulting professionals, including the experts at the Center Strategic Projects (CSP). We use it to address our client Deutsche Telekom and recommend that they take further digitalization steps. But I often ask myself: what about the consulting industry itself? What about our own digitization? Are we setting a good example?
In my opinion, there is a need to catch up: some consultancies automate only minimally and neglect other aspects of digitalization such as performing data analyses. This is also the conclusion drawn by the market research company Lünendonk. In its study "Consulting 4.0", it determined that digitalization and the use of digital tools and methods is rarely considered a key factor for successful consulting.
But digitalization is a necessity, as consulting firms benefit greatly from it. It enables them to identify options in business fields and possible changes in organizational structures for their clients more quickly. In addition, digitalization accelerates the implementation of strategic decisions.
The range of topics, however, is very broad, so it makes sense to narrow it down. Three aspects of digitalization that are particularly important for business practice are automation, decision support and platforms as a new business model.
Tools for digital cooperation
Automation facilitates the everyday work of consultants: it makes teamwork easier, the preparation of information faster and documentation and verification tasks less time-consuming. And it does not require costly or time-consuming investments: even simple digital tools such as Statista make everyday consulting work much easier. It supplements empirical knowledge with up-to-date facts and figures.
Many digital tools provide additional services and have been particularly useful during the COVID-19 crisis. In our capacity as internal consultants, we are particularly good at pioneering these tools and then “whetting the appetite” for them throughout the corporation. Our teams, for example, were able to quickly get on with their work without any major interruptions because they used modern video conferencing tools (Zoom), enterprise messengers, project management tools (Trello) and chat tools (Slack). These allowed them to seamlessly continue their work despite home office and travel restrictions. All consultants and all representatives of the client have access to the same information. This makes communication easier, as everyone can look up any piece of information at any time.
Other digital tools provide additional features for collaborative work, such as the smart cloud service Miro. It transfers familiar work tools such as magnetic boards and moderation cards to a virtual whiteboard. The tool facilitates teamwork and makes it possible to hold workshops with customers. Long trips to the offices of client teams or business trips are therefore not as necessary as they used to be. The many positive experiences with these tools have made it clear that digital collaboration is here to stay. It was especially us consultants, who normally travel halfway around the world, that were able to adapt to the digital world very quickly and continue our work with client teams.
Data analytics as a basis for consulting work
Using data analytics to support decision-making is much more advanced than these digital tools. This involves collecting numerous process data and deriving a data-based decision from it. The results can help make hidden correlations or long-term developments visible, for example when data on customer relationships is analysed and used as a basis for better communication. The analysed data supports consultants in developing measures and strategies for their clients. To put it simply, data analytics replaces gut feeling with empirical evidence.
A good example of this is a question that came up at Deutsche Telekom some time ago: does the cooperation with smartphone manufacturers improve the performance of mobile devices in its network? What this partner programme hopes to achieve is to use extensive testing and certification procedures to ensure that the connection quality in the Telekom network is always optimal for our customers.
The success of this technical cooperation has so far only been estimated. Because, on the face of it, it makes sense to coordinate the hardware of smartphones in order to offer customers the best network at all times. Eventually, this would reduce the number of customer support requests, both for Deutsche Telekom as well as for the manufacturers. However, so far no one has measured the partner programme’s success, even though it is a cost factor.
Data-driven consulting in practice
The CSP has taken on the task of measuring the success of the partner programme to help decide how to proceed with it. This project is a good example of how digital consulting in combination with data analytics works. The key is to have a basic set of data sources, because data that is relevant for drawing empirical conclusions is often widely dispersed. First, consultants have to determine which data is relevant and where it is located. The next step is to access the data via its owners and then analyze it.
The data from the Deutsche Telekom project was fed into an analytics application, analyzed for correlations and then presented on a dashboard. The results are benchmarks, such as the reliability of the network connection for members and non-members of the partner programme. The main advantage for Deutsche Telekom is that it now has an objective, qualified basis for making a decision.
This example shows that digitalization helps to make the work of consultants more precise and easier. It enables them to gain insights that could not be obtained without digital technologies such as data analytics. After all, a lot of data is never analysed because it is not possible to do so manually. But it often holds clues to new sales opportunities, efficiency gains and ways to optimize products.
Digital business models for consulting firms
Purely digital business models in consulting supplement data-driven consulting. New opportunities are emerging, especially in the platform economy. A platform is first and foremost a cloud service that brings different actors together and achieves added value for everyone involved.
One example is a platform for experts who are asked to contribute to specific projects when needed. It comes in two variants. It can serve as a procurement platform for consulting services or as a two-sided market for the public: specialists meet in the cloud and are referred to consultancies based on their skillset. A similar model would be, for example, a platform for cooperation between different consulting firms on a global level.
These simple examples show that digitalized processes have the potential to take consulting work to a new level. Everyday work is already changing today, and this trend is set to continue. In the long run, digitalization will change the entire consulting industry. Personal consulting will continue to be a focus in this industry in the future. However, data-driven consulting will play a major role as a complementary and expanded service.
Does the collaboration run smoothly when working from home? Do the networks remain stable and our customers solvent? And in the long term, will digitalization become a catalyst for the digitalization of our work and education? In this three-part series, we're talking about the impact of the pandemic - on Deutsche Telekom (Part 1), the telecommunications industry (Part 2) and our society (Part 3).
