disruption in consulting and digital solutions approach

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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: [email protected]

June, 2015

OVERVEIW 1

ANALYSIS2

SOLUTIONS3

Contents

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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

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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

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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

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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


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1



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

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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

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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


2

1



2

1

Sales operations

C

Marketing

Go-to-market strategy

B

A

2

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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


1


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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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?

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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


2

1



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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disruption in consulting and digital solutions approach

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