sakkmesterke - stock.adobe.com

The Covid-19 crisis: Reinventing digital transformation

Digital transformation projects are returning as organisations realise that improvements in productivity and customer engagement are now even more important – providing that the work can be done remotely and there’s still cash to pay for it

Activity around digital transformation – the engine of growth in technology services over the past five years – had peaked. But the Covid-19 coronavirus crisis has pressed the reset button, with significant implications for the global consulting industry.

The number of organisations attempting to transform themselves through the adoption of new digital technologies has grown rapidly over the past five years. In 2017-2018, global demand for consulting support in this area increased by almost 40%, with growth of 7% across the UK consulting market. But this growth has come at some cost.

Client organisations have been frustrated by what, in their eyes, has been an over-reliance by suppliers on process and technology change. Not enough thought has been given to how people work and behavioural change. Moreover, evidence of tangible results has been thin on the ground, making clients increasingly doubtful of suppliers’ promises. At best, this would have resulted in a slow but inexorable decline in the rate of growth; at worst, it would have been yet another IT bubble that popped.

The Covid-19 crisis has highlighted many troubling issues to which businesses had become immured. Retail and restaurant chains that had managed to eke out an economic life, despite their lack of differentiation, have gone under. More positively, we’ve seen changes for the better happening with unprecedented speed. Business leaders will be seeing tangible transformation taking place around them – with technology at its heart.

In the first few weeks of the UK’s lockdown, much discretionary technology consulting was put on hold – and continues to be. But the very rapid shift many organisations had to make to support remote working has partly offset this. More recently, workforce planning – helping organisations use people, processes and technology in a more agile way, better suited to a prolonged period of uncertainty – is booming.

“We’ve seen changes for the better happening with unprecedented speed. Business leaders will be seeing tangible transformation taking place around them – with technology at its heart”
Fiona Czerniawska, Source Global Research

If we look at economies that are ahead of the UK in terms of reducing lockdown restrictions, such as Australia, demand for consulting work around cost-cutting and supply chain management is strong. More significantly, digital transformation projects, paused in the early days of the crisis, are returning as organisations realise that the improvements in productivity and customer engagement they were seeking before the crisis are now even more important. Providing that the work can be done remotely and there’s still cash to pay for it, these projects are starting to resume.

As a result, technology looks set to perform considerably better than any other consulting service. We predict that the market for technology consulting (excluding systems development and integration) will contract by around 8% in the UK over the course of 2020.

Large consulting firms will fare best because they cover a broad range of sectors and will therefore be able to concentrate their resources on the sectors least impacted. The technology market in the UK financial services sector is expected to shrink by just 2%, and in the pharma, public, high-tech and telecoms sectors it’s expected to grow. All of this is taking place against an overall consulting market that may decline by as much as a fifth. Large firms also benefit from having big brands – past crises have shown that clients shift to buying more from firms they know.

However, this situation is creating as many challenges as it is opportunities for the UK’s consulting industry. Firms that are perceived to lack a clear proposition and track record in digital transformation will find it hard to win new clients. Activity levels may be high in the public and healthcare sectors, but fee rates are low, which is going to chip away at firms’ profitability.

To be successful, consulting firms will also need to learn the lesson of the past two years – that transformation needs to produce concrete improvements. The only thing that’s changed in the crisis is that it has had to do that faster than anyone could have imagined six months ago.

Next Steps

Accenture enables Enel's strategic digital transformation goals

Read more on IT consultancy

CIO
Security
Networking
Data Center
Data Management
Close