Tuesday, September 17, 2013

How Big Data is Disrupting the Management Consulting Industry

In a article entitled Consulting on the Cusp of Disruption, HBS professors Clay Christensen, Dina Wang, and Derek van Bever, discuss how multiple forces are disrupting the management consulting industry led by the heavyweights: McKinsey, Bain and BCG.

A chief factor at work is technology, particularly big data. Some pertinent snippets from the article on this topic:
As BTG’s CEO, Jody Miller, puts it, “Democratization and access to data are taking out a huge chunk of value and differentiation from traditional consulting firms.”
Scores of start-ups and some incumbents are also exploring the possibility of using predictive technology and big data analytics to deliver value far faster than any traditional consulting team ever could. One example is Narrative Science, which uses artificial intelligence algorithms to run analytics and extract key insights that are then delivered to clients in easy-to-read form. Similar big data firms are growing explosively, fueled by private equity and venture capital eager to jump into the high-demand, high-margin market for such productized professional services.

Only a limited number of consulting jobs can currently be productized, but that will change as consultants develop new intellectual property. New IP leads to new tool kits and frameworks, which in turn lead to further automation and technology products. We expect that as artificial intelligence and big data capabilities improve, the pace of productization will increase.
The steady invasion of hard analytics and technology (big data) is a certainty in consulting, as it has been in so many other industries. It will continue to affect the activities of consultants and the value that they add. Average costing and pricing analysis have been automated and increasingly insourced; now Salesforce.com and others are automating customer relationship analysis. What’s next? 
Consider the disruption that technology has already introduced. The big data company BeyondCore can automatically evaluate vast amounts of data, identify statistically relevant insights, and present them through an animated briefing, rendering the junior analyst role obsolete. And the marketing intelligence company Motista employs predictive models and software to deliver insights into customer emotion and motivation at a small fraction of the price of a top consulting firm. These start-ups, though they lack the brand and reputation of the incumbents, are already making inroads with Fortune 500 companies—and as partners to the incumbents. 


  1. The evolution of big data (still in progress) will lead sellers to fine tune very specific algorithms for specific industries. soon the consumer will have less power in the decision making. however, nothing is stopping consumers to collude/collaborate forming predictions from the other end of the table and capturing more seller's surplus. interesting game to observe and be part of.

  2. Big data is changing the way we generate knowledge and value to companies. Management consulting firms have been driving their hypotheses using business models whereas big data now are used more and more to drive hypotheses. Combining these methods can bring tremendous value to companies; management consulting firms have identified the 'disruption' of big data and are investing heavily to develop that expertise which will change the way value is created.