Is Digital Transformation an opportunity for Management Consultants with SMEs?

Submitted by karol.s on

All sectors and industries face a non-return path due to Digital Transformation (DX): the development of AI, machine learning, mobile, IoT (Internet of things), office and marketing automation robotics and so on are in full swing. The purpose of this article is to consider the emerging opportunities for management consultancy within DX, removing the idea of technology and data science as the most critical parts and highlighting the skills required and the potential opportunities to work with small and medium-sized enterprises (SMEs).

DX is not only technical: skills required?

Research demonstrates that the failure rate for DX is between 68%[1] and 70%[2]. To reduce the pitfalls of DX implementation, the first question to consider is whether DX is exclusively technology-based. This view is now considered a ‘technology fallacy’ as it is based on the incorrect assumption that, since high-tech innovations are causing business challenges, the solution will come from tech too.  The second question is how managing consultants can become protagonists in supporting DX, avoiding failures and enhancing opportunities for success.

Organisations are experiencing disruptive change as a result of digital transformation. In this context, consultants need to use an objective process, which includes a range of consultancy activities [3]:

  • New or improved business strategies, including business models.
  • Change management in the organisation to adopt modern technology.
  • Business process modelling: changes in processes that are impacted by digital technology.
  • Supporting a cultural shift towards transparency, accountability, and experimentation that will help the business to build capability and get the job done.
  • Next-level adaptations and changes in leadership style.
  • Integration of IT and digital solutions into new organisational structure.

The above activities are related to the following skills[4][5]:

As for those skills that can be described as ‘hard’, CMCE research [6] has highlighted that becoming tech-savvy in combination with the other consulting skills will be required in the future, as shown in the table below.
 

It appears, therefore, that traditional consulting skills do not change in DX.

Clients’ target: SMEs?

Another common misconception about DX is that it is only suitable for large companies and corporations.

It has been already acknowledged that SMEs often have limited resources, thus being more vulnerable to Volatile, Uncertain, Complex, and Ambiguous (VUCA) situations and finding it difficult to keep up with the changes caused by VUCA. 

What can work in favour of SMEs using DX?

SMEs have flatter and less formal organizations than large firms. Their employees are often the ones who come up with new, innovative ideas to make up for the lack of financial resources. And for DX, it is not always a top-down process, which is common in large companies. In SMEs, DX can start with a bottom-up approach, from a single or a couple of use cases, and then extend to others. [7] Finally, today's digital technologies are flexible and accessible, so they may be good for SMEs.

To operate in such a challenging and risky environment, SMEs need to develop the DX capability to be combined to innovation and relational capabilities, acquiring flexibility and organisational agility.[8]

Conclusions

It can be said that management consultants offer knowledge that ties digital technologies and client strategies together, helping to reduce the pitfalls of a project and increase value, growth, and support the achievement of ROI and superior performances. Even though, so far, there has been no ‘standard’ for a digital transformation consultant[9].

Another necessary consideration is how to make the work of consultants valuable in DX, as highlighted by Forrester[10]:

  • “Put skin in the game as a transformation partner”. Going beyond bold statements and keywords and accepting to be a true partner for customers.
  • “Combine industry, technology, and organisational expertise into outcome delivery”. The trend from vendors is to offer single or multiple capabilities without being fully able to provide a single holistic transformation solution. The risk of this is that the implementation cannot be fully complete.  

Combining several aspects is a must-have requirement, well expressed by the concept of holism or holistic view, which includes many, if not all, of the management consulting skills mentioned above. And this is not a new requirement.

It can be concluded then, that the value of consultancy in DX is a growing opportunity to serve SMEs.

 

Luca Collina MBA, a Transformational and growth management consultant, the founder of Transforage TCA, a member of WCoMC and a champion of CMCE work.

 

References

[1] BCG. 2020. A Digital Strategy Roadmap to Drive Transformation. Available on:

https://www.bcg.com/capabilities/digital-technology-data/digital-strategy-roadmap#collapsible--1

[2] McKinsey. 2018 Unlocking success in digital transformations. Available on: https://www.mckinsey.com/business-functions/organization/our-insights/unlocking-success-in-digital-transformations

[3] Popovic, J., & Miloševic, D. (2021). Key Skills Of Consultants And Managers

[4] Jan vom Brocke, Jan Mendling Editors  Business Process Management Cases  Digital Innovation and Business Transformation in Practice

[5] Bandara, Wasana, Amy Van Looy, Michael Rosemann, and Lara Meyers. "A call for ‘Holistic’Business Process Management." In Proceedings of the International Workshop on BPM Problems to Solve Before We Die (PROBLEMS 2021) co-located with the 19th International Conference on Business Process Management (BPM 2021), pp. 6-10. Sun SITE Central Europe (CEUR), 2021.

[6] Sutton, C. and Fenn, M., 2019. Consulting Skills for 2030. Management Consulting Journal, 2(1), pp.22-25.

[7] Popovic, J., & Milosevic, D. (2021). Key Skills of Consultants And Managers

[8] Troise, C., Corvello, V., Ghobadian, A. and O'Regan, N., 2022. How can SMEs successfully navigate VUCA environment: The role of agility in the digital transformation era. Technological Forecasting and Social Change, 174, 121227.pag 1-12

[9] Popovic, J., & Miloševic, D. (2021). Key Skills of Consultants And Managers

[10] The Forrester Wave™: Forrester, 2020. Digital business transformation Services Q 4 2020. [Online]  Available at: https://reprints2.forrester.com/#/assets/2/1878/RES157466/report [Accessed 9 01 2022].