Louise Fletcher, Partner at PwC, says the last 12 months have seen a strong demand across many industry sectors. “However, it was a little slower than we had anticipated in some areas, such as oil and gas.” Louise predicts growth from a number of areas. “There’s demand for many core PwC offerings. However, we’re seeing renewed commercial caution among clients right across sectors given global market uncertainties.”
Nevertheless, the financial services sector, in which Louise specialises, continues to show consistent demand for consulting. As has been frequently observed, the sector was a substantial consumer of consulting following the 2008 financial crisis. However, much of that demand was ‘defensive’ in character, with banks and other institutions rebuilding asset bases, cutting costs, restructuring and complying with new regulatory and related systems requirements. “Now demand relates more clearly to customer-facing issues. The sector is not completely out of the woods, but the major players are examining growth.
“Some of this demand for consulting support re-orientates the cost reduction agenda to something more strategic. Even achieving regulatory compliance is seen as an opportunity to differentiate and attract consumers. Financial institutions are simplifying product portfolios and systems, focusing on what yields revenue and differentiates them, what helps retain customers and sustain profitability. They are removing complexity, determining what they can outsource, off shore or discontinue. Their aim is to work out what their identity should be, what they should focus on.”
Key drivers here are customer power and digital. In the concluding event of the MCA’s Year of Digital, we examined financial services. Contributors suggested the sector, historically conservative and suboptimal in customer engagement, had been slow to embrace digital’s customer-facing possibilities. “Now a huge proportion of discretionary spend in financial services is digital. We’re going to see extensive disintermediation. Consumers already have a lot of power in their hands and they want more. Forward-thinking institutions are responding. Cloud processing of mortgages is one example. Consumers will be more experimental. They can research financial products easily. They want it to be just as easy to use them. This threatens traditional business models like high-street banking, which will dwindle. There will still be customers who want a face-to-face experience. But even that may be served up by virtual people and avatars in the future.”
These new emphases are driving demand for a full range of PwC’s digital capabilities, from cyber to data analytics. “We have real expertise in operationalizing data insights. And we’re expanding that capability. Over the next two years, we will be recruiting a thousand data scientists.”
Louise suggests this is a revolutionary shift from the core consulting capabilities, frequently commoditised, of the last decade. “We’re investing
in R&D and becoming increasingly intellectually self-aware. This is in part a return to consulting’s roots: clever people for hire. But there’s a link to the capability and delivery focus of more recent times in the emerging emphasis on collateral and assets. Businesses want advice services backed by proprietary technical capabilities and market insights. To satisfy a large bank’s board and produce a bespoke solution, we must triangulate our own expertise and assets (as well as those of our partners), our understanding of the market, and our assessment of the bank’s need. Indeed, that’s how a consulting firm’s claim to uniqueness should now be framed: the organisation of raw capabilities, partners, assets and research. It’s the whole approach now that differentiates firms.”
This demands trust between consultants and clients, and potentially new value-creating commercials. “Our clients maximise value through agile ecosystems of supplier and partner relationships. We try to position ourselves within those systems. This allows us to bypass traditional procurement obsessions with costs and day rates and to focus on outcomes.
“Much of this is about risk and reward. In some cases, the related outcome goals are project-specific: transfer of knowledge to a client, improved customer feedback, speed of execution. But on other occasions what good looks like is more long-term – and more subjective. We make conscious efforts each year to align our activities to the organisational goals of our larger clients. We enter dialogue with them about what they think we can add – in effect what their vision of Consulting Excellence is. This anchors both how they commission us and what we ultimately do for them in a common understanding of value.”
Louise says this approach to generating value demands time and investment. “As a large consulting practice, we have the necessary capacity. That doesn’t mean there isn’t a role for smaller consulting firms, either as freestanding experts or as partners. However, they will face challenges. Medium-sized firms in particular must decide whether they will become niche specialists or achieve the scale needed for the sort of multifunctional and comprehensive offerings a firm like ours can deploy.”
Louise Fletcher, Partner at PwC, was interviewed as part of The definitive guide to UK Consulting Industry Statistics 2016.