Post on 15-Apr-2017
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Responding to disruption threat in consulting business
This presentation is confidential and should not be reproduced (in whole or in part) nor summarised or distributed without the prior written permission of Sharad Gupta. The recipient(s) of this report agree(s) to keep its contents strictly confidential and undertake(s) not to disclose the information contained herein to any person other than those of its/their employees.
Sharad GuptaT: +65-98626347 E: sharad_gupta90@yahoo.com
June, 2015
OVERVEIW 1
ANALYSIS2
SOLUTIONS3
Contents
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3
Past reflecting in present And future is already here• CRM, HRM, ERP Multi-year multi-million transformation
and system integration – Huge consulting component – Years and months to complete
• Cost+, experience based, subjective, survey based static pricing
• Survey based annual marketing planning and subjective multi $$ marketing budget – No ROI estimates
• Standard term and trade finance Micro SME, SME loans from Banks with high interest rates
• Cloud based CRM, ERP, HRM systems transform the process in minimal upfront payment– Minimal consulting support required– Weeks and months of implementation
• Dynamic real time pricing– Segment specific discounts– LTV driven pricing– Real time market driven pricing
• Real time bidding and data driven Omni-channel budget allocation & optimization– Optimized ROI across channels – Maximized acquisitions
• Sellers credit limits, loans crowd funded based on transaction history and market place rating
MASSIVE DISRUPTION ACROSS INDUSTRIES CHANGING THE MASSIVE DISRUPTION ACROSS INDUSTRIES CHANGING THE FUNDAMENTAL WAY OF DOING BUSINESSFUNDAMENTAL WAY OF DOING BUSINESS
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FOUR FORCES ARE DISRUPTING THE CONSULTING AS WELLFOUR FORCES ARE DISRUPTING THE CONSULTING AS WELL
Innovative tech driven solutions and products• Dramatic top line or
bottom line impact across functions delivered via tech. & analytics( Machine learning, Big data etc.)
1 Digitization & IOT wave
• Mobile, web based apps to help customer, employee and suppliers
• B2B, B2C and intra company process digitization
• Massive amount of data is generated and collected
2
Emergence of new consulting models
•Network of independent Consultants*A-connects etc.) offering large scale transformation and strategy projects at much lesser price
•New pricing model( profit sharing etc)
4
Traditional Consulting model
Growing client sophistication
• Clients getting sophisticated as many ex-consultants joining the industry and in turn these ex-consultant demand more advanced and specific solutions in lesser price
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OVERVEIW 1
ANALYSIS2
SOLUTIONS3
Contents
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KPMG SHOULD PROBABLY FOCUS MORE ON DIFFERENTIATION & LESS ON KPMG SHOULD PROBABLY FOCUS MORE ON DIFFERENTIATION & LESS ON DIVERSIFICATION TO MANAGE THE DISRUPTION THREATDIVERSIFICATION TO MANAGE THE DISRUPTION THREAT
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High
LowHigh
Diff
eren
tiatio
n
Diversification
1.KPMG need to select one path between diversification and differentiation to avoid stuck in middle2.Diversification may bring additional revenue but its not a defense against disruption
ConsultingDifferentiation
Proprietary Tech. Driven
• Web and or Cloud based solutions to provide scalable solutions
• Big data solutions to ensure large scale automated data driven decision making
Proprietary Data & Analytics
• Proprietary data & Analytics (e.g. Machine learning) driven solution which is difficult for other companies to replicate
Distinctive client impact
• Solutions which have strong need are either not currently available or available at very high cost
Network effect, scalable & well structured problem• Solutions which become
more valuable as more clients join due to network
• Add large number of new customers with incremental cost
• Structured problem & data
FOUR ELEMENTS DEFINE THE DEGREE OF DIFFERNTIATION & SCALABILITYFOUR ELEMENTS DEFINE THE DEGREE OF DIFFERNTIATION & SCALABILITY
1
2 3
4
Goal Options Pros Cons
New products and solutions
• Best way to build new capabilities
• Cost effective as its built internally
• Build distinctive and proprietary capability
• Time consuming and may take long time in developing
• High product * market fitment risk as product may not work out well in the market
• Execution risk
Organic route(Build internally)
• Quick capability addition without much of investment risk
• Knowledge development at low risk
• Alliance partner may go independent and compete once acquire certain scale
• No internal capability development
• Reputation risk in delivery and quality
Mid path(Strategic alliances)
• Quick capability additions( IBM has taken that route in building analytics capability)
• Low product risk as viability of product is already tested in the market
• Low execution risk
• High cost of acquisition• Integration of culture,
people and process in company is always complex and time consuming
Inorganic route( Acquire capabilities)
THREE GROWTH OPTIONS CAN BE EXERCISED FOR RESPONDING TO THREE GROWTH OPTIONS CAN BE EXERCISED FOR RESPONDING TO DISRUPTION THREATDISRUPTION THREAT
Digital products
Benchmarking services
Diagnostic services
Research services
Examples Pros and Cons
• Implementation of innovative, proprietary or alliance partners products e.g. Pricing, security assessment, Fraud detection software data modeling software etc.
FOUR TYPES OF BROAD SOLUTIONS CAN BE DEVELOPED TO PLAY WELL FOUR TYPES OF BROAD SOLUTIONS CAN BE DEVELOPED TO PLAY WELL THE DISRUPTION THREAT & INCREASE REVENUE DRAMATICALLYTHE DISRUPTION THREAT & INCREASE REVENUE DRAMATICALLY
Disruption threat mitigation
HighQuick implementation, Strong differentiation and distinctive client impactHigher risk of product failure and longer development time
• Data base driven benchmarking of industries and functions e.g. sales force effectiveness in retail
• Cloud based product
Network effect, transformative, unique quick and impactfulGetting sign up of initial few clients could challenging
• Well defined and standard outcome and time bound functional diagnostic services e.g. Digital marketing, sales, pricing, Operations, finance control, HR etc.
Quick turn around, impactful and low price for customerMight cannibalize other consulting projects as diagnostic generally a part of full consulting studies
• Time bound research on client specific questions, problems e.g. key market players and tax issues
Quick turn around and low price for customerBottom end hence pricing and margin will be in pressure
Focus of the document
OVERVEIW 1
ANALYSIS2
SOLUTIONS3
Contents
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11
Marketing
Pricing
Sales
Companies observed
•
Key issues and multi billion $ product opportunities
• CFO,CEO and CMO has no channel , Campaign ROI transparency & optimization
• CMO’s assertiveness drives multi-million advert. spend
• Static pricing, RRP and
discount driven pricing• Manual and non-uniform
pricing across channels & regions
• Non-targeted discounts• Sales force effectiveness is
not tracked & optimized properly
• No visibility of customer LTV• Life cycle of customer is not
managed by design but by default
Functions observed
CRM
MULTI BILLION REVENUE POTENTIAL PROBLEMS OBSERVED ACROSS MULTI BILLION REVENUE POTENTIAL PROBLEMS OBSERVED ACROSS FUNCTIONS AND COUNTRIES (1/2)FUNCTIONS AND COUNTRIES (1/2)
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HR
Finance & risk management
Companies observedKey issues and multi billion $ product opportunities
• Employee life cycle in organization is not managed i.e. no idea on which employee is at high attrition Risk
• No mechanism of automatic financial fraud detection by employee or customer
• Money collection from delinquent account is generally not managed
Functions observed
MULTI BILLION REVENUE POTENTIAL PROBLEMS OBSERVED ACROSS MULTI BILLION REVENUE POTENTIAL PROBLEMS OBSERVED ACROSS FUNCTIONS AND COUNTRIES (2/2)FUNCTIONS AND COUNTRIES (2/2)
IT• No mechanism of automatic
cyber security breach• minimal real time transaction
fraud detection
Customer experience
• Customer experience is not tracked by digital channels, offline channel etc.
• Build Analytics & tech driven solution involving three steps– Attribution: Quantify
the impact of each marketing channel
– Optimization: Maximize ROI
– Allocation: Redistribute marketing budget based on optimization step
Resolution
• Cross channel(Facebook, Search, TV etc.) marketing making it even harder to attribute performance to channel, promotions etc.
• Offline spend affect online sales and reverse
• Marketing ROI is not tracked & optimized
• Marketing budget allocation is unbalanced i.e. low performing channel gets higher budget and high performing gets lower budget
Complexity
• Clients spend millions of $ on offline and online marketing to
– Increase brand awareness
– Increase product awareness
– Increase sales, subscriptions
– Many others
– Decentralized country marketing function leads to sub optimal marketing
• Most of the Marketing spend is gut driven with no clear ROI management
Situation
MARKETING EFFECTIVENESS SOLUTION CAN PRODUCE 10-30% MARKETING EFFECTIVENESS SOLUTION CAN PRODUCE 10-30% REVENUE OR COST IMPACTREVENUE OR COST IMPACT
At least 10% increase in sales with same budget
Impact
MVP Development Marketing
& Sales
Delivery
Improve
• Develop Sales & marketing strategy
• Go-to-market Sales strategy
• Decide on pricing• Run marketing
campaigns
• Design a minimum viable product or make an acquisition
• Incorporate new product features to strengthen the product
• Deliver initial start up team with 1 manager and 2 associates
• Offer heavy discounted products to initial few for learning and improving the product
MINIMUM VIABLE PRODUCT WILL BE TESTED AND IMPROVED TO MINIMUM VIABLE PRODUCT WILL BE TESTED AND IMPROVED TO SHORTEN THE GO-TO-MARKET TIME AND REDUCE THE EXECUTION RISKSHORTEN THE GO-TO-MARKET TIME AND REDUCE THE EXECUTION RISK
• Improve solution, and delivery based on initial projects feedback
• Build sophistication using latest techniques e.g. machine learning
1
2
3
4
1 2& Covered in detail
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Significantly better risk measurement
Credit policy and process redesign
Risk reporting and IT implementation
MVP WILL HAVE FOUR KEY FEATURESMVP WILL HAVE FOUR KEY FEATURES
Details
2
3
1 • Cloud based spend, marketing, competitors, sales time series variable feeding for B2B and B2C
• ‘As-Is’ situation automated report generation along with diagnostic report
• Features to edit initial data feed
• Run large scale cross correlation with spend and variables entered
• Generate sensitivity analysis report• Generate Diagnostic report with the help of Marketing
Analytics and Management team
• Share % sales improvement possible with the current situation
• Sell the solution to client on agreed pricing & terms• Run the pilot with client for training and initial impact
generations • Train client on optimizer for on going running and advance
planning
Significantly better risk measurement
2
1
Credit policy and process redesign
Significantly better risk measurement
2
1
Optimizer
C
Attributor
Spend vision
B
A
3• Run advance marketing planning workshop with clients• Run quarterly diagnostic check of the tool and processes and
provide feedback to client• Share the results and testimonials with other clients
Planner
D
1
16
Significantly better risk measurement
Credit policy and process redesign
Risk reporting and IT implementation
SALES AND MARKETING OF THE PRODUCT WILL INVOLVE THREE ASPECTS SALES AND MARKETING OF THE PRODUCT WILL INVOLVE THREE ASPECTS ( 1 of 2) CONTD…( 1 of 2) CONTD…
Details
2
3
1 • Get initial few clients by generating leads through cross selling, workshop, sharing the product material and broucher
• Incorporate the learnings from initial few studies in the product• Decide module wise pricing strategy e.g. Minimal upfront investment
for diagnostic service using spend vision and later on % sharing of top line, bottom line impact.
• Try to upsell other features of the product e.g. planner etc.
• Share the introductory material with existing and past clients• Run workshops on the topic with existing & new clients.• Educate CMOs and P&L owners on the solution and try for
cross sell• Scale up marketing to digital channels for this product and run
content marketing campaigns in HBR and other relevant content sites
• Run SEM campaigns for selling this product online• Run email marketing campaigns for lead generation
• Just like a start-up, built an initial small start-up team to deliver initial few engagements
• Use cloud based lead/CRM management system to track and manage leads
• Have specific # of lead and # of lead conversion targets
Significantly better risk measurement
2
1
Credit policy and process redesign
Significantly better risk measurement
2
1
Sales operations
C
Marketing
Go-to-market strategy
B
A
2
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Significantly better risk measurement
SALES AND MARKETING OF THE PRODUCT WILL INVOLVE THREE ASPECTS SALES AND MARKETING OF THE PRODUCT WILL INVOLVE THREE ASPECTS ( 2 of 2)( 2 of 2)
Details
1 • Share the progress with all stake holders• Reach out KPMG Partners in the region and run internal workshops
to build product awareness and referrals for clients• Develop products champions across the region to generate WOM
and new leads
Significantly better risk measurement
1
Significantly better risk measurement
1
Sales operations
C
2
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APPENDIX
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Consulting GrowthStrategy
Details
Value proposition deepening(McKinsey &Co.)
• Innovative products, solutions which dramatically increases the value proposition or build new value prop and create high impact
• Generally suited for one time engagements with lower cost and higher margins with exception to Periscope
• Rapid proto typing of Digital solutions/applications• Big data, cloud, Analytics driven Tech solutions• Usually focus on unique proprietary tools• Acquire companies which are unique and fit in
existing service line offerings but can be offered independent of bigger consulting assignment
Value propositionbroadening( Accenture)
• Build product, solutions & services to capture and cover most of the needs of all clients
• Build recurring revenue stream with lower margins but overall revenue could be big
• Longer term tech, outsourcing contracts with implementation of few proprietary tools
• Acquire companies which broaden the service offerings
• Mostly require broader client engagement
Disruption threat
High
MCKINSEY AND ACCENTURE ARE ADOPTING TWO DIFFERENT STRATEGIES MCKINSEY AND ACCENTURE ARE ADOPTING TWO DIFFERENT STRATEGIES TO GROW & MANAGE THREAT OF DISRUPTIONTO GROW & MANAGE THREAT OF DISRUPTION
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Significantly better risk measurement
Credit policy and process redesign
Risk reporting and IT implementation
PRODUCT INNOVATION, DIGITAL TECH AND BIG DATA ARE BIGGEST PRODUCT INNOVATION, DIGITAL TECH AND BIG DATA ARE BIGGEST DISRUPTION THREAT TO CLASSICAL CONSULTING MODELDISRUPTION THREAT TO CLASSICAL CONSULTING MODEL
What and Why?
2
3
1 Disruption of consulting value chain due to product innovation•New entrants might capture significant part of the value chain and incumbents will not have capability to compete e.g. MarketShare.com
Significantly better risk measurement
2
1
Credit policy and process redesign
Significantly better risk measurement
2
1
Emergence of new consulting models
3
Digitization & IOT wave
Innovative tech driven products
2
1
3
Growing client sophistication
4
Disruption Threat
High
Threat of obsolesce classical consulting model due to rapid tech. changes in Digital tech•Incumbents present capabilities may become obsolete and hence new entrants may offer better value proposition in growth area e.g. Companies demanding digital and big data solutions and implementationThreat due to network of independent consultants & profit sharing models•Risk is low due to the fact that bigger consulting form offer proprietary knowledge and well proven consulting model and Brand promise which is difficult to match by independent consultant networksThreat due to diminishing value proposition •Estimated 50k alumni from top consulting firm alone is working in Industry and now these ex-consultants demand higher value.•Lot of these ex-consultants carry out projects internally
MULTIPLE SOLUTIONS CAN BE BUILT/ACQUIRED ACROSS MULTIPLE SOLUTIONS CAN BE BUILT/ACQUIRED ACROSS FUNCTIONSFUNCTIONS
WeakStrong
Impact & NeedDescription
• Cloud based analytics product to attribute, optimize and allocate marketing ROI
• Benchmarking & Diagnostic solutions
• Tech driven customer journey analyzer across multi-channel.
• Experience Survey and Benchmarking
Portfolio of solutions
( Not exhaustive)
Saleseffectiveness
Security & operational risk
Organization effectiveness
Finance & Tax
Marketing effectiveness
• Benchmarking and Diagnostic solutions for B2B, B2C sales management & ops.
• Sales force analytics solutions
Pricing• Cloud based, big data driven B2B and B2C
pricing tool to analyze benchmarks, competitor price, promotions sensitivities etc.
Customer experience
• Diagnostic solution to asses security and operational risk across organization
• Survey, proprietary data driven organization health( ability to deliver above par financial and operational performance)
• Balance sheet bench marking and problem analyzer to improve financial performance and lower the balance sheet risk
Focus of the section
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