Consulting 4.0 – The consulting market is changing and responding to the digital transformation. Today’s consulting landscape is clearly different from that of a few years ago. The magazine Consultingmarket said: “Digitalization has captured the consulting industry. Meanwhile, every management consultant talks about Industry 4.0, Digital Transformation and Big Data.” So what exactly does this mean? Since I myself work as a management consultant in addition to this research project, I regularly observe changes in my daily work and therefore also mesme in the text some of my own impressions.

Consulting 1,2 and 3.0

The first justifiable question that comes to mind as a young management consultant is: What was actually before? What has Consulting 1,2 and 3.0 characterized? Unfortunately, I cannot give a clear source here, because I had to gather the information from various sources.

Consulting 1.0 is thus the classic solution consultancy for specialist questions. Questions are answered with expertise by the consultant.

Consulting 2.0 is now also intended to focus on communication and interpersonal processes. Customers and consultants continue to come together.

Consulting 3.0 is the consulting as we know it right now. So with a high social complexity and the consultant as a specialist and process consultant. One realizes his goals hand in hand with the customer and is more involved.

Consulting 4.0

As a consultant, you have recently received many requests for tenders such as: Consultant Digital Transformation, Data Scientist or Expert Industry 4.0. The customer’s requirements seem to have changed abruptly and the digital transformation has the industry firmly in its hands. Consulting 4.0 seems to be the response of the consulting firms to this circumstance.

Good times for specialists?

It was not so long ago that the competences were clearly defined: a proper management consultant had to be fully educated; he needed special methodological knowledge, of course, but above all he had to be able to demonstrate experience and expertise across industries and disciplines .Magazine Brand Eins in the issue Consulting 4.0). According to this quote, expert knowledge is required first and foremost. Deep know-how and expert knowledge in an industry. The magazine provides many examples of highly specialized advice such as agricultural and forestry advice or crowdsourcing advice. The magazine also features voices from major consulting firms such as McKinsey: “In the past, we negotiated the margins together with the customer’s purchase. Thanks to our expertise in a niche, we are unrivalled and no longer have to negotiate margins.”

According to most voices, the focus is currently on digitalization. The consultant as an expert for digitalization in the customer’s industry. So the questions are “What is digital transformation? ” to “How do I lead my business into this new digital world?”

“Pairing Time”

So what exactly does a new company look like after this “Consulting 4.0” trend? There are few answers here, but the tendency is likely to be a strong specialisation in-house and the permanent acquisition of partners, who are also highly specialised.

Risks and criticism

What could such specialisation mean? On the one hand, for a consulting firm, you can mean that we have the following disadvantages:

  • Dependence on a few customers,
  • high demands on quality as well as new employees and
  • Danger of competition.

If we enter a niche there will be few customers and as soon as 1-2 competitors also operate in this one, it will be tight. Also, high demands are placed on employees every day and I see little opportunity for newcomers to the profession.

For companies, this specialisation may also lead to a greater need for coordination, as more service providers are needed. Specialization could quickly reduce employees’ interest in the job and the rate of change could be very high. Also, specialists are said not to have the view for the Big Picture.

The traditional medium-sized company in danger?

I see many medium-sized consulting companies that have been producing individual software for customers for more than 30 years, increasingly in danger. Smaller houses are already in the red, and larger ones are increasingly switching to “loan work.” I don’t think it’s consulting when I hire an employee full-time with a client all year round. I think that traditional medium-sized companies in particular have extensive expertise and should now prepare them for the customer in internal workshops. In this way, specialization could be achieved quickly. One thing is certain, however: if I lend my employees to the customer all year round, they will change in the medium term. Either to the customer or to another service provider, who has already made the transition to Consulting 4.0. I have also noticed a heated discussion here in which many employees ask themselves: Is this still consulting or already temporary work? This means that it should now be made a credo: maintain expertise and train high potentials.

Already temporary work or even consulting?

So the question arises: temporary work or consulting? It is striking that, due to a lack of expertise, medium-sized enterprises in particular are fundamentally inclined towards temporary work. This is mainly known from software development. Here many of my interviewees have expressed themselves in such a way that they actually do a normal job as a developer at the customer. Wikipedia says:“Employee hiring (also called temporary work or to ANÜ) is used when employees (temporary workers) are transferred by an employer (loaner) to a third party (borrower) for a limited period of time.’ This seems to be absolutely the case. Especially medium-sized companies apparently do not have to be careful at the moment not to become a personnel service provider from a consulting house, because the internal knowledge is lacking. The formula is obvious: you get a consultant to the customer if he has more expertise in a topic than the customer. As a rule, you get a temporary worker to the customer as soon as they have as much knowledge as the customer. The third form, which is a kind of mixed form, is called service (often in time & material) in which a consultant supports a client with various tasks from consulting and normal activities. In most cases, these are positions such as the support of a manager or a project manager.

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The eternal dilemma with travel time

Each consultant knows the following scenario: “The working time itself lasts at least 40 hours per week, as the customer pays five days a 8 hours in almost all cases. Actual working time is usually higher. The travel activities of about six to 16 hours per week without daily commuting times between the hotel and the customer increase the free time available to a minimum. Through additional activities for the customer or a service for an internal project, usually also the small rest of leisure time in the hotel goes flute (source: Computerwoche). It is also clear that travel is not good for health and social life. Many of my colleagues complain of a lack of fitness, weight gain and a desire for socializing outside the business. Actually, after almost 3 years, they actually want to “just leave”. Due to the many jobs, it seems quite easy to get a job in a consulting company at the moment. But many of my respondents don’t really want to go back to consulting, but “do something internally.”

Digitalization has been carried out in consulting for years in customer projects, but the company’s own industry has so far eluded digital change. For this reason, the buzzword :Consulting 4.0 has developed.

Regionalization against travel stress?

The problem with many consulting companies I have spoken to is that many applicants cancel due to the high travel time or do not want to start at all. The aim is therefore: regionalisation. Consultants from Munich should stay in Munich, etc. But somehow that answer wasn’t enough for me, and I also think it has little to do with digital transformation.

The digital consultant

The research area of the August Wilhelm Scheer Institute includes topics such as: eConsulting Stores, virtual Consulting, Crowd Consulting, Consult-Yourself Services and eConsulting Social Networks in response to the digital transformation in consulting. At the moment there is little concrete on both topics, but I would like to present the basic idea of Consultling 4.0.

The central question is why the consultant supports numerous digital projects and is supported by even more digital tools, but is not yet digitized. As a result, the consulting service is still highly dependent on the individual consultant. If the company leaves, this will result in extensive damage to the project at the customer’s site.

New target group: SMEs advise SMEs

Small and medium-sized enterprises have demonstrably significantly lower R&D budgets compared to large companies and can hardly bear the costs of the required traditional advice themselves without a economies of scale. This is a promising future, especially for small and medium-sized enterprises. It can reap the benefits of consulting in a new way that is more suitable and compatible for this type of company (Werth and Greff IM+).

Thanks to digitalisation, consulting will be much more efficient for small and medium-sized enterprises to use in the future. The central questions in this context are how advice has been used by German SMEs so far and how their use can be fundamentally optimised by digitalisation instruments. In particular, it is important to refer to the diverse software potentials that arise from topics such as remote consulting, platform markets, self- or crowd-consulting (Werth and Greff IM+).

Consulting 4.0
Typologization of digital services (Based on Leimeister 2012, p. 39, taken from Werth and Greff 2016, p. 58, own design).

Consulting Yourself Service

Consult-Yourself Services transfer self-service technologies that enable the customer or end user to use services independently into the consulting industry.

The consulting industry is a cost-intensive, low-scalable industry. A consultant can only provide a consultancy at a certain time. Consult Yourself Services in management consulting can help to overcome these limitations of scalability and thus make a significant contribution on the way to digital consulting.

EConsulting store

The eConsulting Store is the online shop of management consulting. More specifically, it is a fully integrated web solution that enables both the sale and handling of digital consulting services. During the purchase process, the customer is continuously supported by the switchable online sales advice. Virtualized consultations are then activated in the form of links to the remote session in the ECS Dashboard on the scheduled date. The links will also be sent by e-mail in a timely manner to the appointment as a reminder.

Summary

Take these two examples show 2 different use cases for digital transformation in consulting. I think the trend is towards “remote” and flexible work, where the consultant decides for himself how he works. The approaches are there and the question now arises: Will the customers of such consulting companies accept this? Since I myself have been a consultant for almost 3 years, I appreciate that the consultants themselves would be willing to do so and so would the staff. I see the strong process more in the hands of the “customer”. He always has the luxury of choosing from 100 different consulting companies, all of which are almost equally well qualified. That is why the question would be justified: why would they want to get used to a new system? In any case, I look forward to the further results of the study.

What do you think?

In summary, every consulting firm is required to specialize and to prepare services transparently for the customer. The traditional medium-sized company for individual software will no longer be able to exist in this form. But whether it’s specialists or generalists become state-of-the-art. I believe that, as always, healthy mediocrity will prevail. Perhaps it is enough to set up a consulting house a little more agile and react to trends in a timely and correct manner. Almost every senior consultant has industry knowledge and certifications are often available in large numbers. So the core is really only in this consultant now to bring practices of digital transformation, Industry 4.0 or Big Data closer. Or what do you think and whether the consulting industry is changing to Consulting 4.0? Have you noticed any changes in your work as a management consultant or as a manager when working with management consultants?

Genderhinweis: Ich habe zur leichteren Lesbarkeit die männliche Form verwendet. Sofern keine explizite Unterscheidung getroffen wird, sind daher stets sowohl Frauen, Diverse als auch Männer sowie Menschen jeder Herkunft und Nation gemeint. Lesen Sie mehr dazu.

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Reading tip: Consulting 4.0 white paper

Verwendete Quellen anzeigen

Werth, D., & Greff, T. (2016). Consulting 4.0 – The digitalization of management consulting. HMD Practice of Business Informatics – p. 55-70 – Volume 53 (1)

Werth, D., & Greff, T. (2016). Digital consulting, a model for small and medium-sized enterprises. IM+io Journal of Innovation, Organisation and Management. Issue 1 – March 2016

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I blog about the impact of digitalization on our working environment. For this purpose, I present content from science in a practical way and show helpful tips from my everyday work. I am a manager in an SME myself and I wrote my doctoral thesis at the University of Erlangen-Nuremberg at the chair of IT Management.

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