Disruption in the professional services sector:

The barbarians are almost at the?gates

What do we mean by disruption? Christensen effectively defined it as the mass movement of customers from one supplier to another, encouraged by?new technology?(the iPhone) or a new business model (Uber).?

That’s?hard to do in the consulting industry because the type of work is so varied. Yes, we can see that some parts of consulting—data gathering and visualisation on due diligence, for example—can be revolutionised by?new technology, and that the management of a technology company’s digital rights can be transformed by?providing?not advice and recommendations, but a managed service. The way consulting firms work with senior business leaders on complex problems can be improved by embedding smart tools in the process, but the latter are point solutions to specific issues, stars in a consulting galaxy?that’s?remained fundamentally unchanged. And if we want proof of this, we need only look at the extent to which the big firms are getting bigger at the expense of countless smaller ones. No one has an approach?that’s?created a wholesale switch of clients from one major firm to another à la Uber.

But our on-going research, combined with?numerous?conversations with clients and professional firms is making me wonder if things are changing. Over the last 2-3 years, when we ask clients about the?firms?they might use for a given service, the number of different firms they list has increased and diversified. Incumbent firms still dominate—unquestionably—but other firms are appearing, and more often.

There are several?possible reasons?for this. Especially where large-scale projects are concerned, the decision about who to hire is being taken by a wider range of people on the client side. Some of these people will be experts?in the area of?the project and?regularly work?with external firms specialising the relevant space, but others will be those whose departments will be?impacted?and who?don’t?tend to hire external support in this area and may suggest non-specialists with whom?they’ve?had?a good experience. The nature of the work may be being changed by technology:?We’ve?written?elsewhere?about the extent to which technology-enablement in the financial audit potentially opens the door to new, high-tech competitors, for instance. Clients’ experience of working with entrants may be different—the latter might work faster than incumbent players, for example. That starts to colour clients’ choices, slowly to begin with but exponentially over time as more clients have the experience of working with them.??

All of this has come to the fore due to?Azets’ purchase of Baker Tilly’s accounting practice in Ireland.?Azets?was formed?as a result of?a three-way merger of Visma BPO, Blick Rothenberg, and Baldwins. It now boasts 160 offices, delivering accounting, tax, audit, business and advisory services in the UK and the Nordics, “digitally and at your door”. Not bad for a company that?didn’t?exist seven years ago.

If I?was?to find an analogy here,?it’s?a sense of barbarians—if I can unfairly characterise the new or renewed firms as such—massing. Not at the gates: These firms still some distance to travel, but certainly on the horizon.?

Fiona Czerniawska