Is AI > Traditional MGMT Consulting?

In 2011, the blockbuster movie Moneyball—based off of Michael Lewis’ book, Moneyball: The Art of Winning an Unfair Game—helped the mainstream understand the importance, and ever-increasing use, of analytics for making decisions. While many industries and professions are being disrupted with increased availability and use of advanced analytics and artificial intelligence (AI), Management Consulting is squarely in the crosshairs of this disruption. Consulting is an industry built primarily on experts guiding others with their superior judgment and intuition. As AI technology advances and becomes more widely available, this $60bn dollar industry may be ripe for disruption [1]. Describing this potential disruption, Barry Libert and Megan Beck wrote that “’Quant Consultants’ and ‘Robo Advisers’ will offer faster, better, and more profound insights at a fraction of the cost and time of today’s consulting firms and other specialized workers. [2]”

So how quickly will this technology and these AI advisors be available? As highlighted by Montse Medina, cloud computing and SaaS vendors are key ingredients needed for AI to become a reality. To estimate the timing and availability of AI in corporations, I searched out two things: 1) what is the current adoption of cloud computing in corporations and 2) how many SaaS vendors and offerings are currently available. According to RightScale, 95% of corporations are using the cloud for business services [3]. This number has continually increased both in total percentage of companies using cloud computing and also in the volume of each company’s work that is done on the cloud. Regarding SaaS availability, a search on Crunchbase for ‘SaaS’—which yielded 19,217 results [4]—provided the best insight into the number of companies providing SaaS offering. This is an incredibly high number which continues to rise rapidly. The high cloud adoption within businesses combined with an array of SaaS vendors has set the stage for organizations to utilize AI for their business operations. In addition to these adoption figures, a recent Economist article further highlighted the increasing usage of AI in corporations and estimated that the “corporate market for AI software, hardware and services: [will be] around $58bn by 2021, compared with $12bn last year. [5]”

So as we move into a world where organizations are using the cloud, SaaS vendors, and AI services to support their businesses, how will this impact the consulting industry? First, I believe that disruption in the consulting industry will—as with most disruption—initially impact their lowest profit offerings. Consulting firms will likely spend more time with bigger and more profitable businesses. They will spend less time with both smaller businesses and low-level tasks such as data gathering and manual analysis [6]. Second, premier consultants will do as they have in the past, and become experts in tools and technologies that their clients’ value but don’t have the capacity to understand or manage. Just as Deloitte has built an entire business on WorkDay implementation and consulting [7], consulting firms will increasingly become technology experts and utilize new and existing technology services to grow their offerings. They will invest in, partner with, and buy technologies that will complement and support their business model. Finally, I believe large corporations will continue to need the support of outside experts consulting and advising them. They will need help understanding and using technology to guide them in a world with increased volatility, uncertainty, complexity, and ambiguity.

In conclusion, while I do believe that the many of the current consulting offerings that make up the $60bn consulting industry will be disrupted, I do not think the $60bn industry will disappear. I believe corporate business leaders will continue seeking advice and support in running their businesses. It will just be the how, what, and who of consulting that will change.