viders need to retool their
offerings to keep pace with
an activity increasingly defined by the convergence of
physical products with software and services wrought
by embedded Internet of
Things (IoT) technology.
This requires consultants
to reconceive traditional
engineering along system
lines, inject design thinking
for simpler solutions, shift
from linear to agile governance, and transform product lifecycle management
ALM’s Vanguard ratings
research evaluates consulting providers based on
their combined capabilities
across the R&D consulting cross-service discipline. (In
addition to identifying providers that are best in class
in particular consulting capability areas, it rates providers in terms of their overall capability to create impact
for their clients. See chart above for a summary of providers covered by ALM and which achieved Vanguard
Leader ratings in one or more of the underlying topics.)
What’s the outlook?
The overall R&D consulting market is expected to experience relatively low and stable growth over the next
four years, but this masks important changes in the underlying segments.
• Innovation strategy: The market has been experiencing secular growth, but is highly volatile and
growth is forecasted to downshift in the short term
as companies prioritize shoring up the core business.
Following this period of recent growth, the market is
undergoing a period of transformation that is spurring
supply-side strategic moves.
While new design specialists are entering the
market, consolidation is the overriding trend as pro-
viders with scalable execution capabilities acquire
design resources to bolster their innovation bona fi-
des. The market is also becoming tougher to serve
because client demand for measureable outcomes
raises the cost of doing business, and competition
from large providers that buy their way into the mar-
ket limits pricing power.
• Product development operations: Market growth
is stable but changing as demand churns away from
stabilizing operations through better governance
towards more transformative cross-functional objectives. While outwardly stable, the product development operations consulting market is undergoing
significant internal changes linked to shifts on both
the demand and supply sides.
At a macro-level, there are few incentives for consolidation or new entrants, given sector-specificity
and specialized downstream adjacencies. But mi-cro-level changes are yielding winners and losers.
Technical skills are winning the day, as providers
with information and operations technology capabilities capitalize on the demand for new markets.
Procurement-oriented providers are also gaining
Nathan Simon is Director, Lead for Strategy &
Operations Consulting Research. He can be reached