Taking Stock of an Integrated Service Model
BY NATHAN SIMON
Y earend is opportune for stocktaking. ALM Intel- ligence introduced in mid-2017 a new taxonomy, which we internally referred to as the “wheel.” The
conceit was that management consulting was increasingly
being delivered as integrated services targeted at cross-functional transformations powered by digitization. The
wheel arrayed service spokes against client functions with
digital at the hub and risk embedded throughout. This was
a departure from ALM’s traditional conception of consulting as a loose collection of service pillars that rested on a
foundation of industry and geographic practices.
ALM analysts observe much micro-level anecdotal evidence for this integrated service model in their conversations with consultants and clients, but we also assess it at
a macro-level through our market sizing and forecasting.
Comparing the patterns of growth across the nine services
that make up the wheel reveals two distinct periods.
2013-2017: Front to Back Office Transformation
Here are the top and bottom-five of the 36 pair-wise cor-
relations of annual growth rates between 2013 and 2017
for the nine services that make up the wheel. The Top 5
are: R&D-Operations, R&D-Rewards Management; En-
terprise Strategy-Corporate Finance, Customer-Rewards
Management; and, Customer-Operations. The Bottom 5:
Operating Model-Supply Chain; Customer-Supply Chain;
Operating Model-Talent; Enterprise Strategy-Supply
Chain; and, Supply Chain-Operations. These correlations
measure the extent to which the growth patterns of two ser-
vices tracked closely or not.
The first thing to note is what stayed the same. Among
the top-five correlations, the close relationship between
Enterprise Strategy and Corporate Finance (M&A) is a
longstanding feature of strategy consulting. Turning to the
bottom-five, Supply Chain’s prominence as an uncorrelated market reflects its legacy as a highly-siloed service targeted at cost performance.
The second notable feature is the rise of the CMO buyer as reflected by four of the top-five growth correlations
linking front and back office services. Client companies
were squeezed between customer demands for personalization and better experiences, on the one hand, and slowing economic activity, on the other. CMOs moved into the
breach by orchestrating integrated, multistep programs
designed to free up resources from the back office and
reallocate them to the front.
2017-2021: Consolidating the Core
Here are the top- and bottom-five of the 36 pair-wise
correlations of annual growth rates between 2017 and
2021. The Top 5: Supply Chain-Talent; Customer-Operations; Supply Chain-Rewards; Rewards-Talent;
and, Operations-Talent. The Bottom 5: Corporate Fi-nance-Operating Model; Operating Model-Customer;
Operating Model-Operations; Operating Model-Talent;
Enterprise Strategy-Operating Model.These reflect one
year of actual data together with our forecasts for the
next four years. This analysis suggests two ways by
which the integrated service model is evolving.
While the linkage between front and back office services continues to be a feature of the market, with Customer and Operations ranking second in terms of the
strength of their correlation, the more striking development is the prominence among the top-five correlations
of Supply Chain paired with back office services as well
as cross-back office combinations. Replacing Supply
Chain as the least correlated service is Operating Model
(organization design and corporate services consulting).
If ALM’s forecasts are correct, one consequence will
be a shift of service integration from clients’ front office
to their middle and back office organizations.