Quo Vadis Business Intelligence Consulting Industry - The Business Intelligence Services Market in 2021 – Two Perspectives

2020 is almost over, as unbelievable as it sounds. The 'year with no end’ has clearly been unprecedented in all aspects. After a series of pandemic lockdowns, a chaotic US election, and the slow realization that global warming is now a reality, we cannot help but embrace 2021 as the saving grace worldwide.

Looking back, we see the global pandemic has had a significant impact on the Consulting and Business Intelligence Services Market. Herein, I would like to share my thoughts on this matter and forecast for 2021. In doing so, I will share views from two unique perspectives:

1)     The view of the Corporate Client

2)     The view of a BI Consulting Company

1)     Enterprise users and clients focus on Data Collaboration

Our HICO Group of companies works directly and indirectly with a broad set of corporate clients across industries – varying in size and corporate functions. The COVID-19 pandemic affected every one of them – in one way or the other – bringing about a noticeable shift in client demand and an internal work environment that has not seen a greater or faster change since World War II. Various lockdown scenarios, offices being closed, and social distancing have created a new reality of how we work and collaborate with each other. The so called ‘Modern Workspace’ has become a reality for most of us.

In the early days of the pandemic, the challenge for many of our clients was to maintain their operability in a remote setting. Setting up a mobile workplace with laptops, mobile phones, file sharing, and a video-calling/chatting infrastructure was a challenge for many companies. Some meaningful changes and infrastructure-related decisions were involved.

Barrons headline November 24, 2020: 'HP and Dell Both Crushed Earnings Estimates as Covid Continues to Drive PC Sales'

Here is an example that might better illustrate the situation. One of my MBA alums who works for a large multinational company shared that at the start of 2020, their company planned an annual travel and entertainment budget of CHF 8’000’000 for one of their sub-units. In November, this unit’s spending forecast was only CHF 1’800’000 for the entire year. Now the clue – for 2021, they are planning only CHF 1’500’000 for the same unit.

Assuming other businesses might face the same budget cuts, this momentous change is expected to have a significant impact on the travel services, hotel, and transportation industry. Furthermore, it is a clear indication of how we work together has changed, forming a ‘new normal’ that blends home, mobile, and classic office environments. This new reality is here to stay and is certainly going to introduce additional operational and strategic business challenges, independent from novelty medications and vaccinations on the horizon.

Our clients are getting prepared for this future and are re-shaping their views toward the collaboration challenges ahead. They have realized that they need new processes and tools for different company functions as well as for the variety of use cases and data complexity their teams are confronted with. This is especially noticeable in areas of finance, sales, and business intelligence where teams have formulated a strong need for data-point-specific collaboration. To keep track of any business-related conversation, it is necessary for team members to know the right context. This context is usually given by data and related KPIs. Questions like ‘why COGS for X product category, Y region, and Z month are up/down’ are important and can easily get lost in translation without context.

Current tools are not supporting a data-driven dialogue and data-driven collaboration. It is important to engage the right group of people in these discussions, as well as to decide who is part of the discussion, who has access to the data, and who is restricted from select sets of data. Our clients have also formulated a strong need to save such conversations in a secure place where data and decisions are traceable. This supports compliance and audit demands. I am convinced that Collaboration Strategies will further evolve and that the tools available today will not be the tools of the future. Our solution KPI-Chat in combination with TRUECHART tackles these challenges and we will develop further to stay ahead of the current Business Intelligence collaboration wave.

2)     The Business Intelligence services market will consolidate

Due to the COVID-19 pandemic, 2020 produced the greatest global economic downturn since The Great Recession. This obviously also impacted the demand for Business Intelligence services, especially in heavily data-regulated sectors such as air transportation, entertainment, or travel. Over a short period of time, the demand for BI-related services in these industries has come to a halt; other sectors followed suit by decreasing their BI services and consulting budgets accordingly. At the same time, enterprise clients have upped their game by recruiting and training their own internal resources. As a result, projects where clients are willing to pay EUR 1800/day to build a simple dashboard are exceedingly rare.

As demand has dropped in the short term, smaller consulting companies are impacted the most. If one big client stops or reduces their demand, the impact on a 3-10-person team can be dramatic and lead to liquidity issues or even the death of the company. At the same time, the demand for data-led companies is becoming broader and more complex. ‘Great that you can implement a Qlik project for us, but can you also deal with Tableau, SAP or Power BI? Do you have Cloud knowledge? What about data infrastructure and data warehousing? We want to bring our BI team to the next level – what about Data Planning?’

Client demands and needs are becoming increasingly complex and it is important to broaden their capabilities, but at the same time, to clearly position them as relevant in the market. The brand of a service company combined with its marketing and sales efforts is key to driving business success. Content marketing, client lead acquisition, growth marketing, and marketing automatization integrating on- and offline-channels are not just buzzwords but a reality for any successful consulting services provider.

With this being said, today is not only about client demand and a smart marketing strategy, programs, and infrastructure. There is an additional battle that continues – the war for talent. Data and Business Intelligence consulting firms sell knowledge and only if you have exceptionally talented and smart people on board can you deliver a valuable service. Smart people are demanding. They want to develop their skills. They like to be challenged and expect structured feedback on their potential and performance. They will stay if there is a personal and professional development perspective for them. Within HICO-Group, we put a lot of effort focusing on the Human Capital as a differentiation factor.

People join a firm but leave their line-managers. When we hire line-managers, we put even more effort into bringing leadership talent on board. When we develop people internally and move talents from a specialist track to a leadership track, we do this consciously and know how important and difficult this change can be. We support our leaders with stringent Human Capital processes where clear goals are set and measured, potential is accessed and communicated, and people have the possibility to have structured discussions about their own personal and professional development. Our key goal is to develop talent within the firm and retain the smartest, most talented people for the long run.

Finally, Service companies need a smart data infrastructure to steer their business success through challenging times. The advice we give to our clients about KPI-driven digital strategies is as relevant for them as it is for us as players in a data-heavy industry. Data on the utilization of our consultants, average day rates, travel time, cash flow, liquidity, forecasting of our business, managing the sales pipeline, list of 10 clients (by days, revenue, profitability), and many more KPIs are all important data points which are planned, measured, and evaluated over time.

We at HICO decided to build our own ‘KPI Hero’ with a Data Warehouse as the basis which consolidates all the data from various input systems (e.g. ERP, accounting, HR, marketing, CRM, car fleet, project management, etc.). This system was derived from our business strategy and the KPIs which drive this strategy. In the beginning, we struggled (as our clients do) to collect and maintain all the relevant data points, but in the end, it was worth the effort.

Today, our different Qlik apps give us a comprehensive view of our own corporate performance and forecasts. As a team, we are able to follow a common set of goals, our current performance, and joint business forecasts. We have implemented individual views for our consultants, our software development and leadership teams, as well as for Marketing, Sales, Finance, and HR. All functions collaborate around and master one common pool of data and KPIs.

To summarize, all these differentiating factors:

the offering,

marketing,

sales,

talent management, and

smart data infrastructure

have become necessary factors of a successful path to the business growth of any services company.

Unfortunately, all of them require capital and, ultimately, size. In my view, this has already led and will further lead to a new wave of consolidation. What we can already see is increasingly more smaller teams struggle to survive as they are not able to develop a differentiated offering. They must either develop a niche set of competencies and capabilities in high demand or join forces with a larger player.

HICO-Group has decided to play an active role in this consolidation process. During 2020, we already started engaging with incredibly talented teams and integrating them into our group. Our offering now differentiates us in the market. Mid-size to large enterprises view HICO-Group as a one-stop shop for their data-led business challenges. Our clients leverage us to develop KPI-focused strategies and implement them in areas of data estate, planning, and data analytics. Consequently, we have developed and built upon our existing marketing/sales function and a data-led corporate performance measurement system. Additionally, we have invested significantly in our talent platform to acquire and develop the best consultants in the industry ranging from analyst to principal/lead level.

I look forward to 2021 as corporate digitalization continues to be one of the key challenges our clients are confronted with. We as HICO-Group recommend a KPI based digital strategy; and with a growing team and group of companies, 2021 will be another year of fun challenges ahead.