Which is better KPMG or Deloitte
How the "Big Four" became the channel's toughest competition
Go through the revolving doors, past the marble reception, and into the elevator. Go upstairs to a waiting area that resembles a hotel suite, where the friendly staff will take your coffee order. Enjoy the panoramic view of the city and don't forget to stand upright and remove any lint from your jacket. You are in a different world now.
Welcome to the "Big Four", in the land of auditing, consulting and insurance, paired with a portion of taxes, law and finance. These may be well-worn stereotypes, but the offices of Deloitte, EY, KPMG and PwC are symbolic of the world of business, a world of consultants and strategists.
But in 2018 the skyscraper offices will cast a very large shadow on the technology industry that will quickly penetrate the channel. This radical change shakes the channel to the core and affects an ecosystem of partners who until a few years ago lived in peaceful coexistence with the consulting companies.
Today, however, a limit has been crossed. At an ARN Exchange event, a PwC partner said: "You can advise a customer on transformation for a million dollars. Or take 50 million dollars and invest in transformation." A penny falls from the top of the food chain into the trenches, and large consulting firms no longer just advise, but implement and integrate technology solutions and services.
"Consulting has a reputation for drawing on a large pool of best practices, initiatives, market trends and skilled professionals to make more informed decisions and achieve better results," said Jens Butler, Head of Services and Sourcing Advisory at Tech Research Asia.
“The focus is on problem solving, solution analysis, design and recommendations, which were then expanded into full service implementation and integration areas.” “Much of this development was based on their experience and ability to leverage knowledge of customer requirements, and creating frameworks, architectures, and offices to deliver these great programs. "
But why have the large consulting firms such as Deloitte, EY, KPMG, PwC, Accenture etc. partially replaced the traditional system integrators? "These consulting firms have grown in importance," added Butler. "Much of this corresponds to the market development and the higher customer expectations. This also means that these companies attract the attention that is being given to the 'digital journey' and, of course, participate in this journey.
“Part of the challenge is figuring out what digital (and all of its sub-components) actually means to the customer, how best to use it, and what are their best and most relevant options. In Australia and New Zealand, Butler said, many searched Company clarity and direction. Less and less interested in choosing the tools you need during a predictable sales pitch. "That's exactly what companies like Accenture and Deloitte take advantage of and have been able to gain market share," said Butler. "This is done by being more independent are perceived, have a broader knowledge of the customer and the markets beyond IT and are close to the company. "
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According to Butler, risk management around technology engagement has come back to the fore. "Value, cost and applicability all play a role in the decision-making process, but risk is becoming more influential," he said. “In view of the most recent violations of cybersecurity, data protection regulations and the general business implications, a simple checklist for the technology capability is insufficient.” And the management consultancies with their audit and consulting experience play a big role on this side - like the introduction of the areas of technology consulting and Enterprise Architecture at PWC shows. "
Gaining the authority to interpret and gain market share is no small feat even for large companies that traditionally operate on the edge of the channel. But such a shift is by no means a surprise in a world of technology. After all, we are living in a time when every company is almost forced to become a technology company.
"Whether it's automakers like Tesla, transportation companies like Uber, hospitality companies like AirBNB - traditional companies are at risk of extinction from technological disruption," added Jay McBain, lead analyst at Forrester. "That means that every service and consulting company that supports these industries is also forced to become a technology company."
McBain predicts that by 2020, more than 80 percent of accounting and marketing firms will be indistinguishable from traditional technology channel partners. The legal sector is not that far at 55 percent, but is moving in the same direction. "Imagine all companies, across all industries, competing for those technology dollars that the divisions are increasingly spending," said McBain. "That will cast a huge shadow and it will be difficult to keep up."
And competition in the local channel is tough. With emerging start-ups applying pressure from below, resellers, integrators and IT service providers now have to deal with consulting firms who are also on the hunt for the technology dollars. Financially strong and with a huge customer base, these companies have become tough competitors.
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"Given the presence they have across the customer and IT environment, they are in an enviable position," admitted Butler. “But the pace of change and evolution is so fast that they cannot rest either.” By acquiring intellectual property, integration skills, technologies and industry solutions not only in the areas of artificial intelligence, machine learning and analytics, but also in the traditional areas of system integration, shows that they always want to be one step ahead of the competition. "
"Are they going to lose their closeness to decision-makers? Only time will tell, but they are a good example of how the service industry is developing, at a rate that is far faster than many in the market would like." "
At the local and global level, new technologies are capturing the imagination of companies, regardless of their size or importance. From artificial intelligence to the Internet of Things (IoT) and everything in between, customers are exploring and experimenting at a record pace, increasing the creative level across the market.
Openness to technological change has always helped the channel's flexible players. These players have a long tradition of customer engagement and the ability to reinvent themselves over and over again. In theory, therefore, an increase in end customer satisfaction should give traditional providers an advantage. "You'd think so," said Butler. "Yes, the current mindset and, increasingly, the budget are heavily focused on AI, robotics, IoT and machine learning - but the gap between wanting and doing is currently between 12 and 18 months in Australia and New Zealand."
But why is it like that?
"The majority of customers understand that they need to move from older to newer platforms," explains Butler. "That's why they want to take advantage of the tremendous opportunities these new technologies offer and use them safely, on a budget and in a business-oriented manner." On the other hand, Butler admitted that they also knew that budgets increasingly depend on bottom line and that this is where the need for acquisitions arises.
"Therefore, every investment requires a clear understanding of how the project will take the company forward. For example, I must understand how a chatbot can help improve my customer interaction metrics or increase the share of wallet," said Butler. "And here, too, the corporate and IT consultancies can act on several levels and help to realign the business, and not just the fancy technology behind the options."
In assessing changing customer needs, Butler found that technology is no longer a technology talk. "Customers' internal and external business drivers play a far greater role in the choice, use and implementation of technology," he said. "It is becoming more and more important that almost every corporate function develops into a core and differentiating function within a company." "And the consulting firms have many years of experience and excellent skills when it comes to such discussions."
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In addition, most technologies no longer focus on end-user computing, mobile or SAP solutions. All of this contributes to the fact that serious changes are currently underway. "A big question will be how all of these different pieces of technology fit together," added Butler. "For example, how the data collected from the IoT device and the associated analysis help drive an improved traffic management system or proactive vehicle maintenance." It is an integrated exchange that requires the ability to move from top to bottom as well as from connect bottom to top. "
Do traditional system houses have a chance in this battle?
For the brave of the channel as they grapple with this new breed of competition, comfort seems to be in short supply given the vast opportunities that arise along the corridors of consulting firm power. Relationships with many of the technology providers also need to be considered, explains Butler. "The ever evolving and growing ecosystem of partnerships - largely due to growing customer demand and the growing volume of technology - creates tension," Butler admitted.
"Many traditional integrators struggle to find their role in the increasingly dense web of technology and relationships. They have to remain loyal to certain partners, partly because of the past and also through the way they have structured their organizations to operate these technologies, but sometimes they clash with their own offerings. ”“ The consultancies have usually been able to work with most technology vendors because they do not manufacture themselves and are seen as less of a threat ”.
Alluding to the adage - the bigger they are, the harder they fall - integrators and IT service providers still have an advantage through competitive prices and medium-sized know-how, areas of the channel that are normally not associated with the large consulting firms . However, those with a more open mindset can avoid a crash by forging effective partnerships, mostly by providing integration skills and technical skills that complement counseling strategies.
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Another way to move forward, given recent market dynamics, could be to simply put up a "For Sale" sign and wait to be bought out. Regardless of the approach, the channel has to move quickly in order to get out of the shadows and return to its real strengths: customer service. (mz)
This text is a translation of the article Why the Big Four represent the most formidable competition for the channel from our sister publication New Zealand Reseller News.
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