Data Analytics. The decade of the consultant?

A recent survey on Techrepublic[i] showed that businesses were using data analytics to increase revenue, better understand customers and assess markets. So… basically, it is relevant to every business on the planet. I wonder then what this means for traditional service providers of high-powered analytics?

Is this the beginning of the end for management consulting firms?

More and more businesses are gaining access to data analytics services that allows them to slice, dice and interpret data in increasingly intuitive ways. For instance, 70% of Techrepublic’s members will be using big data analytics by the end of the year! A management consulting analyst would previously spend one week, and several thousands in fees, creating a spreadsheet dissecting market shares of various players and segments. Now a company employee can access this data at the click of a few buttons.

Of course, the data still needs to be tailored to individual business needs, but perhaps the likes of IBM’s consulting arm are more suited to this growth market than traditional consulting firms? Perhaps McKinsey will be forced back to its roots; pure strategy consulting instead of implementation and operational improvement projects?

It’s a nice story, and many would cheer the demise of the high-priced consulting industry, but this narrative misses several important points.

First, talent cannot keep up with the data. The McKinsey Global Institute recently estimated that the United States is already short up to 200,000 workers with “deep analytical expertise” and 1.5 million “data-literate managers”.[ii] It will take years to retrain existing managers, and decades to adjust the education system to compensate for the increased analytical knowledge necessary in graduates. (I realize the irony of sourcing McKinsey to defend McKinsey…)

Second, the automation of some types of data analysis is offset by the proliferation of thousands of new data points and sources. This means that the type of analysis conducted by a typical consultant will simply change, to incorporate the automated data as inputs, and then synthesize and analyze new sources. Said another way, it is the business of management consultants to generate insights by cross-referencing data points and analyzing at the margin. When has that been easier than today?

If anything, the Data Analytics revolution is great news for traditional management consulting firms. The more data, the more complex the analysis, the more analyses that are possible, and the more difficult it is to synthesize conclusions. Oh, and guess who attracts the top analytical talent? Nice one, McKinsey.

Data Analytics are here to stay. So are management consultants.

For those of you disappointed in this conclusion, take solace in another trend: the amount of knowledge transfer from the top-tier consulting industry to corporates has been enormous over the past few decades; mainly because the proportion of ex-consultants in the workforce is multiples higher than twenty years ago. Gantt charts and profit pool analyses are now the norm. If this trend continues, and growth in Data Analytics slows (as it inevitably will), then there just might be a day when… well, probably not.


[i] Bill Detwiler, Techrepublic, 29 Nov 2012, ‘Beyond hype: 70 percent will use data analytics by 2013’, http://www.techrepublic.com/blog/big-data-analytics/beyond-hype-70-percent-will-use-data-analytics-by-2013/284

[ii] Steve Lohr, The Age of Big Data, New York Times, http://www.nytimes.com/2012/02/12/sunday-review/big-datas-impact-in-the-world.html?pagewanted=all&_r=0