Why every consultancy is now a product business

Why every consultancy is now a product business

One of the really interesting trends that I’m seeing in the marketplace relates to consultancies.

Historically, the primary business model for consultancies was to sell their expertise and services. Every customer would get a unique service offering that was defined specifically for them. Now, analytical consultancies are shifting away from purely being body shops and starting to think about how to productize their business by offering pre-packaged solutions and managed services to their customers.

Why are consultancies pivoting?

This shift to offering pre-packaged olutions and managed services is happening for two reasons.

Firstly, customers are demanding more turnkey solutions. They don't want consultants to come in, start from scratch, and reinvent the wheel every time. They know that consultancies have the expertise in the market so they want them to come with a ready-made solution. 

Secondly, consultancies are seeing that they can gain a competitive advantage if they can walk into an organization with an analytical solution that is largely pre-baked. This gives them an advantage over a competitor who offers to build a solution for the customer.

By productizing their services, consulting firms have the ability to package up their intellectual property and take it to market in new and innovative ways. They can offer managed services that customers can simply turn on and get going with tomorrow. This is shifting the nature of the industry. 

Delivering data expertise

For a consultancy, the ability to package up their analytical expertise, whether that be insights into health or procurement, is powerful. They understand the data sources and data models that are required and they can bring this knowledge to their customer’s data and deliver ongoing analysis of their business. This means they’re not just giving customers reports, they can offer the customer invaluable insights and recommendations for their business going forward. This is a new way for consultants to become more tightly bound and strategic to that client than they would otherwise be.

Take the example of procurement analytics. A consultancy with a depth of experience in procurement can work with a set of technology providers to build the infrastructure around databases and front end tools. Then they can build a model to bring all of the customer’s data together and deliver that content back to them. Consultancies can then add value by analyzing the data and taking those insights to the customer, and that's the value that customers really want to buy. 

The customer benefit

A customer could analyze the data themselves but the organization may not have the skills, expertise, or desire to start from scratch. Consulting firms have the opportunity to deliver context around numbers far faster than someone starting from scratch internally and they can offer all the infrastructure and technology components to simply turn a solution on. If someone can walk in and operationalize that opportunity at a cost point that makes sense then a customer is likely to take it up. 

This will bring a significant change to the analytics industry. It means that organizations can shrink their time to insights dramatically without having to start from scratch each time. All that consultancies need to bring to the table is their domain expertise and the capacity and technology to build and take their new product to market.

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