Client Investments in CX and Security Are Likely to Keep Consultants Busy

In the complex and fast-moving digital technology space, the support a provider can offer through strategy and consultancy is invaluable. As we uncover in this report, now more than ever, clients are pulling in subject matter experts and service professionals to help them navigate through the turbulent digital market. However, while most engagements provide enormous value to clients – either in support of broader IT service engagements or through direct point solutions – there are some that fail to hit the mark.

Using candid buyer feedback and the results of an extensive survey, this report seeks to uncover some of the hidden dynamics at play in the digital technology strategy and consultancy space, where key players in the space are getting it right, and where they need to improve.

The Stats, Part One: Over 300 Global 2000 Clients Shed Light on Professional Services

The first section of this report analyses the data captured in our expansive client survey. This data helps us understand the direction modern enterprises are moving, shows us the areas where consultancy services will support them, and highlights coverage areas where this market is likely to find growth based on buyer demand.

Security, Customer Experience, Cloud, and Analytics Top the List of Investment Priorities

Enterprise leaders have a clear list of IT investment priorities for 2017 – with security and compliance, customer experience, Cloud, and predictive analytics topping the list for many (see Exhibit 1). For the digital technology strategy and consultancy space, this is encouraging news, as many of the key priority areas are challenging to navigate without strong professional services support. Many organizations are gearing up to profit from and make better use of enterprise-wide data analysis in end-to-end decision making.

The increased demand for consultancy support is a key trend highlighted in the recent Digital Technology Strategy and Consultancy Services Blueprint report; providers seek to expand their professional services teams to provide the capacity to lead engagements across IT Services. Let’s take analytics as an example. While many would emphasize the technological side of the engagement, there is still a considerable need for consultants and experts to drive the engagement by understanding the client business, highlighting challenges, and designing and deploying the most suitable solution.

From improvements in IT operations and service management to the less frequently mentioned investments in machine learning and AI, there is a requirement for high quality professional services, which is something many clients interviewed in this research could identify with.

Perhaps one of the most interesting enterprise IT investment priorities is simply preparing for digital, as firms bring in experts and advisors to help direct their digital technology strategy and ensure the enterprise is fully ready for the digital marketplace, from core business processes to the IT infrastructure that keeps the business running.

In summary, the investment priorities of leading enterprises reveal an optimistic future for the consultancy market, as clients demand effective professional services support to help them navigate their myriad investment priorities and an increasingly complex digital marketplace. Customers are looking to consultants to help ensure technology projects encompass wider business context and help drive more tangible business benefits.

IT Investment Priorities for 2017

Exhibit 1: Top IT Investment Priorities for Global 2000 Enterprises

Source: HfS Research 2017, n=302 IT Services Clients

Quality and Innovation Are What Buyers Want from a Consultancy Engagement

First on our list is to understand what influenced buyers to select the provider they’re working with in the first place. The market digital technology strategy and consultancy for is highly competitive, leaving buyers to choose from an enormous pool of providers, which includes large traditional consultancies increasingly expanding their digital coverage, technical IT providers building up professional services capabilities, and the core of providers that have long been developing digital services and solutions.

Exhibit 2 shows the broad range of influences clients have reported as key factors when making a selection. Some factors are clearly more influential than others; the overall quality of service delivery takes top billing with 15% of clients advising that it was the main influence for them. It’s unsurprising to see a provider’s ability to provide innovative solutions follow closely in second place. Increasingly, it is an enterprise’s ability to intelligently deploy innovative digital solutions that supports its ability to compete in key markets. Therefore, evidence that a provider has the capability to support an enterprise in finding and providing the right solution to suit their business is a key factor to consider.

Of course, in the professional services space, the skill and expertise of staff is a critical consideration for a potential buyer and a vital component in delivering services of sufficient quality. With 10% of clients advising this was their key influence, it is evident that talent is a vital building block of a provider’s consultancy capabilities – a topic we’ll discuss in more detail later in this report.

A final key influence worth highlighting is the absolute price of service. Significantly, 10% of clients are somewhat cost sensitive and highlight pricing as a key factor in their selection process, which is an important consideration for providers who wish to remain competitive in the space. While value and cost calculations can shift perspective and deliver different outcomes, it’s interesting to see buyers isolating potential providers based on the absolute price.

Exhibit 2: External Service Provider Selection Criteria

Source: HfS Research 2017, n=302 IT Services Clients

Driving Down Cost, Developing Flexible Services, and Making Better Use of Data Integral to IT Strategy

Investment priorities are one thing, but we also need to understand what’s critical to the modern enterprise’s strategy. For many, cost reduction is mission critical, with very few advising it’s not a strategic directive on some level. Making better use of data through the implementation of innovative solutions is the second most common strategic imperative, followed by the need to develop flexible and scalable services.

As with the key investment priorities of enterprise leaders, many of the key strategic imperatives are likely to require the involvement of digital technology strategy and consultancy services, whether it is to support businesses in locating areas where solutions can boost efficiency and reduce costs or assist in the development of customer-centric products and services.

If there’s one theme that stands out from this data, it’s that digital technologies have a vital part to play in the strategies of many of the world’s largest enterprises. In many instances, it will be robust professional services talent that supports engagements in selecting the right technologies, to be deployed in the right way.

What’s Critical to an Enterprise’s IT Strategy?

Exhibit 3: IT Strategic Directives

Source: HfS Research 2017, n=302 IT Services Clients

Where Providers Are Getting It Right

So, now we know that digital consultancy services are likely to be in strong demand both now and in the future, but where are current engagements succeeding and what will we need to see more of if future engagements continue to add value to client businesses?

The following information is taken from candid qualitative feedback provided by clients as part of the Digital Technology Strategy and Consultancy Blueprint process.

• Flexibility to get involved and understand business requirements: A key sign of a successful engagement for many clients is the flexibility and enthusiasm a provider exhibits, particularly in the initial part of the engagement as a provider gets to know their client’s business in more detail. The willingness of providers to get involved with the business to develop a strong understanding of business requirements and the desired outcomes they are trying to achieve is a clear strength for some clients.
• Commitment to the account: Some clients valued the commitment that providers exhibited throughout the engagements. Clients have highlighted some providers as showing a clear commitment to the account, either through the initial involvement of senior members of the team, easy access to resources, or an adapted approach that pushed passed a transactional approach and into a more collaborative partnership. For some clients, this strength has led to a broadening of the scope of the original engagement as the sense of partnership pushed the provider to the top of the list in other selection processes.
• Willing to invest in gaining knowledge: Understanding business requirements is one thing, but to capture and develop knowledge across the engagement can add significant value. Clients recognised the time and resources their provider was investing in gaining knowledge both from their business and the wider marketplace. One client advised that their provider had even gone to the extent of pulling in external experts to support the engagement and supply the team with the knowledge and expertise they needed to drive the engagement forward.
• Engaging with the business early: A promising sign for some clients was the eagerness of providers to get started on the engagement as soon as possible. There are several examples from clients of providers engaging with their clients and business leaders early into the engagement to build the relationships necessary to build a smooth foundation for the rest of the work. One client advised that their provider sent key professionals to take part in workshops across the client’s business at the start of the engagement, providing both parties with valuable knowledge to support the rest of the project.
• Dedication and desire to be embedded with the business: Clients appreciated the measures some providers employed to get a better understanding of their businesses and challenges by becoming an embedded team within the business. This enabled them to be more responsive and in tune with the business.
• Evolution from a technology provider to real business partner: One client lauded the noticeable shift from a transactional and technical approach to that of a more collaborative partnership. The provider showed many of the strengths already noted, which allowed it to support its client’s business and drive it forward throughout the engagement. Approaching the project in this way led to a raft of other IT Services engagements being included in the deal as the client sought to leverage the initial consultancy engagement into an end-to-end solution.
• Agility and flexibility: Finally, multiple clients valued the flexibility and agility of a provider that was able to provide extra resources when necessary or that altered the direction of the engagement when the client’s mission changed. One client advised that its provider’s ability to recognise the need to make a change or bring in new resources was uncanny, with the client only needing to make a few small hints to get changes made.

Where Providers Need to Improve

While there is certainly a plethora of encouraging signs coming from client references, there are undoubtedly some areas where providers can improve. Similarly, clients noted the following challenges and improvements in the candid and qualitative interviews conducted as part of the Digital Technology Strategy and Consultancy Blueprint.

• Become more decisive: While it’s always good to provide clients with what they need, one client advised that they often feel like their provider is unable to say no. This limits the productivity of some conversations as providers agree to provide services, solutions, or information that they are, perhaps, ill-equipped or unable to provide. The call for more decisive providers is echoed by other clients who expect transparency and clarity from consultancy engagements.
• Clients are looking for proof: Linked to the first point, clients are looking for consulting partners that have proof points for the solutions being suggested. Sometimes blind innovation is appropriate to break in genuinely new ground, but for most work, clients need to know that the consultant is advising a solution that has worked elsewhere and that its application is appropriate, or clients need good reasons to believe that the solution will be effective and that they won’t be a guinea pig.
• Senior professionals only involved at the start: Some clients mentioned their disappointment that an engagement had begun with senior professional and key stakeholders in the driving seat, only for the same professionals to become unavailable or uncontactable later in the project.
• Retaining talent throughout the project: A theme that has carried throughout the IT Services industry, particularly professional services, is the challenge of attracting and retaining the right talent to drive services forward. Clients have advised they have encountered serious challenges when attempting to build lasting relationships with key provider talent, as staff either rotate out of the engagement or leave the provider before the project is complete.

Bottom Line: Consultancy services will be in demand long into the future, but providers must still ensure they provide quality and innovative services to deliver value to clients.