Consulting & IT Services Markets are Rapidly Colliding

The consulting industry is now going through a time of unprecedented change. Management consultants are expected to provide more than just an organizational overview on who to hire and who to fire. Instead, clients are demanding an end-to-end solution for business insights and analysis. And these solutions aren’t possible without a specialized knowledge and understanding of data analytics and IT support.Tweet This

TechTarget’s annual IT survey predicted IT budgets would rise worldwide by nearly 7% last year – compounded by a simultaneous increase in technology budgets outside of the IT department. With these changing client needs, traditional consulting firms are increasingly overlapping with IT specialists and meeting this growing demand through partnershipsacquisitions, and other market entrances such as reorganizations, key hires, and new service lines.

Consultants Drive Data Science as a Tool for Big Business Growth

Data science is leading the way as one of the largest growth areas for the consulting industry. Over the next decade, spending on big data overall is expected to reach a total of $84 billion by 2026, up from $27.4 billion in 2014. This growth is creating consulting projects related to data warehouse optimization, data governance, data transformation and data pipeline creation.

Not limited to just one industry, data science and analytics is predicted to have significant impacts on vertical markets such as financial services, healthcare, retail and telecommunications. In their Field Guide to Data Science, consulting firm Booz Allen Hamilton predicts that tomorrow’s knowledge workers and consultants will rely heavily on expertise in data science, with companies offering expertise in both theory and techniques. They specifically cite the following “critical domains” where data science will play the largest role:

  • Cybersecurity
  • Healthcare
  • Internet of Things and Connected Devices
  • Customer Engagement & Personalization
  • Smart Infrastructure
  • Agriculture
  • Manufacturing
  • Human Capital & Organizational Analytics

Expect Continued Growth in Corporate IT Cloud Migrations

Corporate IT needs have moved beyond desktops and email. Fortune 1000 companies are now looking towards rapidly expanding fields such as social networking, mobile computing, online employee collaboration, cloud computing and data storage.

Traditional consulting firms are tackling global IT services such as migrating data and processes to the cloud. TechTarget found that 43% of companies that are increasing their budget are also increasing cloud services. Public cloud computing eliminates geographical barriers to services. This allows companies to conduct business on a faster and more international basis, which means the offshore IT industry is thriving.

And, it’s not just management consultants moving into IT – but IT firms offering full consulting services, too. IBM Global Services is one of the more frequently cited examples demonstrating the changing IT market. Once known for hardware and software, IBM’s consulting division now spends nearly as much time on prescribing technology solutions to business goals (like big data programs) as they do on manufacturing or installing hardware. In fact, IBM’s Global Business Services revenue for 2014 was $17.8 billion – nearly 48% of their total Global Technology Services revenue of $37.1 billion.

HP is another one of the larger IT companies that has made a similar split. Late last year they divided into two entirely separate companies: HP, offering traditional hardware & software products, and a new services division, called HP Enterprise. According to their 2015 numbers, their Enterprise Group and Enterprise Services business units generated $47.7 billion in revenue – just over 46% of the formerly combined company’s annual sales.

Not surprisingly, the acquisitions market is quite active for consulting firms on both sides. Ernst & Young, traditionally known for its accountants, just announced the acquisition of UMT Consulting, a former Microsoft Partner of the Year. The majority of acquisitions made by Accenture last year in Q4 alone were equally diverse, covering services like cloud migration (Cloud Sherpas), financial trading (Formicary), cyber security (Cimation), asset management (Beacon Consulting Group), healthcare marketing consulting (Boomerang Pharmaceutical Communications), energy management consulting (a division of oilfield services giant Schlumberger), and video services (S3 TV Technology).