• The largest US corporations invested $23bn in analytics in 2017

• The US analytics consulting market accounts for over half of global analytics consulting revenues

A new report published today reveals that US corporations spent $23bn on analytics work (excluding hardware and software) in 2017—either through their own internal teams or with external management consulting firms.

Investment in this area also looks set to continue, with 91 per cent of US senior executives stating that data and analytics work had generated substantial value for their organisations. At the same time, over two thirds (67 per cent) globally said that their expenditure on analytics consulting would increase in 2018-19, compared to 55 per cent across all consulting services.

These findings are published by Source Global Research, the leading research and strategy firm for the global management consulting industry. Source reveals that around $10bn was spent by US corporations on building up in-house analytics capabilities, in addition to a further $13bn spent on external analytics consultants.

The US analytics consulting market, which grew by 11 per cent in 2016-17, continues to be the largest in the world, and North America accounted for over half (53 per cent) of global analytics consulting revenues. However, much of the growth in analytics consulting work has come from cannibalising components of other consulting services - where traditional ways in which data is gathered for—say—strategy and supply chain projects might have been re-badged as analytics work.

The report says the extent of this cannibalisation only serves to reinforce how important analytics work is for all US consulting firms, not just some.

Fiona Czerniawska, Director of Source Global Research, said:

“There can’t be a consulting firm in the US that hasn’t been exposed to clients’ interest and investment in analytics in the last five years. Many firms have made a significant investment in this space; some would put it at the heart of virtually everything they do. Nobody—we think it’s safe to say—is complacent about the opportunities, perhaps the threats, that analytics represent in the future.”

The Source report also found that US executives are investing in data and analytics for a number of very positive reasons, with 90 per cent measuring its impact on new revenue growth, and 84 per cent on cost efficiency.

Chris Brahm, Global Practice Leader, Advanced Analytics at Bain & Company, added:

“Clients have been investing in this area for years; building teams of data scientists and running experiments. Now they want to know what the benefit is and establish how they take their investment to the next level.

In the last few years, we have seen clients start to innovate with analytics pilots and establish centres of excellence. That’s successful to a degree, but they find it challenging to scale things out to the wider organisation. We’re entering a new phase, and it's one where the scalability of analytical capabilities has become much more important.”

The Source report also found that although technology firms such as IBM and Accenture have the edge in the analytics consulting market today, clients see few differences between consulting firms in terms of the quality of their analytics work. Where differentiation does exist, it appears to be expressed in terms of three things: Whether analytics work is approached from a technology or business perspective, the extent to which a firm focuses on change management, and the extent to which importance is placed on sector-specific propositions.

The report concludes by highlighting that ecosystems are likely to play an important role in helping a consulting firm to offer a broad range of analytics services, but opportunities are being missed here. Most firms are focused on building relationships with technology partners, overlooking opportunities to do the same with less obvious organisations such as those that concentrate on a particular sector. Source found that the healthcare and financial services sectors may be an especially rich source of opportunity right now.

Fiona Czerniawska concluded:

“There are thousands of opportunities for consulting firms to create ecosystems with less obvious US based organisations, allowing them to quickly draw on a toolbox of solutions from multiple suppliers and match them to the needs to the client. Embracing the partnership model means that firms can avoid having to develop their own technology. It also partly mitigates the problem around competition from non-traditional players— from the likes of Google, Amazon, and LinkedIn.”

For more information on Source reports contact ella-sian.jolley@sourceglobalresearch.com or telephone +44 (0)20 3478 1204 or visit www.sourceglobalresearch.com.

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