Analytics consulting revenues soar to $23 billion in US market

11 June 2018

Clients in North America account for more than half of global spending on analytics consulting services. New research indicates that the global analytics consulting market is worth around $43 billion, including both in-house data analytics teams and external consulting costs.

US-based corporations spent $23 billion on analytics – a multi-dimensional and evolving field that harnesses statistics, AI, and other tools to identify meaningful patterns in large data-sets. The capacity to use analytics can dramatically advance an organization’s understanding of both its own internal systems and broader trends involving its customers, clients, and industry.

A survey from Source Global Research found that 91% of US executives believe their company’s use of analytics had “generated substantial value” for the firm. The $23 billion US companies spent on analytics consulting in 2017 was almost evenly split between developing in-house capabilities ($13 billion) and contracting external consultants ($10 billion).

More than two thirds (67%) of the executives polled said they expect their organization to increase analytics consulting spending in 2018-19. This is significantly higher than the 55% who expect a spending increase across the spectrum of consulting services. In the US, the analytics consulting market enjoyed 11% growth in 2016-17 and accounted for 53% of global revenues.

An important point, however, is that analytics consulting is not generating entirely unique revenue. Instead, with the advance of technology and changes in terminology, consulting projects which may once have been placed in the strategy or supply chain boxes are now part of the analytics puzzle.

For the Director of Source Global Research, Fiona Czerniawska, the advance of analytics consulting both in terms of revenue and annexing other consulting fields, reflects its importance to the industry.

“There can’t be a consulting firm in the US that hasn’t been exposed to clients’ interest and investment in analytics in the last five years,” she said. “Many firms have made a significant investment in this space; some would put it at the heart of virtually everything they do. Nobody—we think it’s safe to say—is complacent about the opportunities, perhaps the threats, that analytics represent in the future.” 

Analytics consulting revenues soar to $23 billion in US market

Executives seem far more excited by the opportunities analytics investment can bring to their organizations, rather than worried by the threats. Nine in ten of those polled are keen to measure the impact on new revenue growth. A similarly large majority expects concrete results in terms of cost savings.

“Clients have been investing in this area for years; building teams of data scientists and running experiments,” said Chris Brahm, Global Practice Leader, Advanced Analytics at Bain & Company. “Now they want to know what the benefit is and establish how they take their investment to the next level.”

“In the last few years, we have seen clients start to innovate with analytics pilots and establish centres of excellence. That’s successful to a degree, but they find it challenging to scale things out to the wider organisation. We’re entering a new phase, and it's one where the scalability of analytical capabilities has become much more important.”

For Czerniawska, opportunities for consulting firms without considerable analytics pedigree to enter this lucrative market are rife. Her firm’s report concluded that, among corporate clients, little distinction is made between technology consulting firms on the strength of their analytics work. Rather they are concerned with how their consultants plan to leverage analytics to help them achieve particular goals.

Czerniawska points to the ecosystem model as the best hope for non-tech consultancies to advance into the analytics space. Consulting firms without the deep expertise and deeper pockets of IBM or Cognizant should “create ecosystems with less obvious US based organizations, allowing them to quickly draw on a toolbox of solutions from multiple suppliers and match them to the needs to the client,” she argues.

“Embracing the partnership model means that firms can avoid having to develop their own technology. It also partly mitigates the problem around competition from non-traditional players— from the likes of Google, Amazon, and LinkedIn.”


AE Industrial Partners unifies defense engineering consultancies Gryphon and Schafer

21 March 2019

Aerospace, defense, power, and industrial-focused private equity firm AE Industrial Partners (AEI) has combined similar portfolio firms Gryphon Technologies and Schafer. The latter firm was acquired in 2017 by engineering, recruiting, and IT consultancy Belcan, a portfolio company of AEI.

Founded in 1972 and headquartered in Arlington, Virginia, Schafer provides advanced engineering and technical advisory services in the areas of aerospace and defense, having designed, maintained, and upgraded leading-edge systems for the military, Department of Defense, intelligence community, and other clients. Among its high-profile work, the company has provided technical and program support for the radar system on the MQ-9 Reaper drone.

Within its technical advisory services unit, Schafer delivers analysis and planning, technology development, IT management, cybersecurity, operations, and communications services. In its advanced engineering unit, the firm provides support in military aerospace, with expertise in laser weapons, missile defense, and space superiority. The engineering unit also provides lab and scientific support to government agency clients, offering advanced facilities and expertise in physics, chemistry, materials science, and other fields.

In 2017, the firm was acquired by Belcan, a provider of engineering, supply chain, technical recruiting, and IT services to clients in aerospace, defense, manufacturing, and the government sector. Headquartered in Cincinnati, the 10,000-person consulting giant is a portfolio company of AE Industrial Partners.AE Industrial Partners unifies defense engineering consultancies Gryphon and SchaferThe private equity parent company has apparently seen a better alignment of synergies and business focus through the merger of Schafer with DC-headquartered Gryphon Technologies. Like Schafer, Gryphon provides defense engineering and technical services in support of national security programs. Founded in 1998, Gryphon specializes in warfare systems and integration, naval architecture and marine engineering, program management, testing, and logistics. The firm was acquired by AEI in September 2018.

As such, Gryphon acquired Schafer on March 15, with Big Four firm PwC serving as financial advisor to Gryphon. The terms of the transaction were not disclosed.

"The acquisition of the Schafer assets fits perfectly within our Gryphon investment thesis of building a diversified, world-class engineering and technical services company that supports our nation's most critical national security challenges and programs," Kirk Konert, principal at AEI, said.

“Gryphon provides Schafer with additional resources and capabilities in conjunction with a culture and focus that centers around Schafer's core markets. In addition, the new Belcan organization reflects the keen focus on our core capabilities and our commitment to the engineering, tech services, and consulting segments," Lance Kwasniewski, Belcan CEO, added. 

Gryphon CEO P.J. Braden expects the combination to strengthen the firm’s capabilities and footprint, while expanding service offerings. "The combination creates exciting opportunities in how we continue to support the missions of our existing and new customers," he said.