27 de dezembro de 2021

Inside the rise and rise of advisory

Fonte: Baker Tilly Internacional 

As the world becomes more complex, so too do the questions that businesses need to answer — and for many, those complex questions mean they can no longer go it alone.

The demand for outside and expert perspectives is a key driver behind the rise and rise of advisory and consultancy services within professional service firms, now tipped to be worth up to $300 billion.

And while fears of disruption persist in some parts of the professional services landscape, the ability of accounting and advisory firms to help others deal with disruption may actually prove to be a source of resilience.

The pattern of advisory growth can be seen in the latest statistics from the International Accounting Bulletin.

Across the globe, advisory services are tipped to represent up to 40 per cent of the core revenue of major accounting, audit, advisory and assurance firms, up from just a quarter of fees a decade ago.

At Baker Tilly, which had record revenues in 2018-2019 of US $3.9Bn, advisory for the first time overtook traditional accountancy as a source of income, representing the shift to high value consultancy and engagement with clients.

Baker Tilly network CEO Ted Verkade says the professional services sector has had to adapt to meet the growing client need for additional expertise.

“We know that there are big waves on the horizon for professional services, many of which will directly impact our clients’ businesses and bring new responsibilities for business leaders,” he says.

“These are changes that will impact the communities in which we work. Managing and preparing for those changes has been part of our planning for several years and the growth of our advisory services is critical to this plan.

“Our strategy is designed to position us, and our clients, so we can embrace the opportunities that changes bring, whether that is technology disruption or sweeping legislation or a change in the way people connect.

“Our clients need someone who knows their challenges and who can help them navigate the path forward.”

Baker Tilly Germany created its advisory team when the company was established over 40 years ago, consulting to sectors including real estate, financial services and shipping.

Nearly 30 per cent of its revenue now comes through the advisory stream, mainly driven by IT advisory combined with the optimisation of business processes. A further 20 per cent is derived from its growing legal services offering.

“The enlargement of our international approach, with a key focus on specialised sector knowledge, is key to meeting the demands of our clients”, says Ralf Groening, partner and spokesman for the Baker Tilly Germany board.

“We are targeting numerous mid-size export champions in the German market and thus it is crucial for us to be perceived as large global organisation, acting and serving on a worldwide level.”

In the United States, where advisory services represent about 36 per cent of revenue for Baker Tilly US, the area of digital consultancy is particularly strong. Overall, revenue from advisory is now worth nearly 3.5 times that from traditional accounting among Baker Tilly’s North American firms.

Accessing the right skill sets

The big drivers stem from a lack of internal business capacity, says Baker Tilly US Director John Runte.

“Companies don’t always have the right skill sets in house to do what is needed,” he says.

“They need to run the business at the same time as they need to grow the business, and that’s not easy.”

He says many clients lack what he calls the privilege of focus — being able to concentrate on one issue, in detail, for a period of time.

Since future opportunities depend on successful execution of the business plan or investment strategy, there is a clear business case for investing in the right help when it is needed.

“We see clients who find it increasingly difficult to get something done right and on time given the demands being placed on their workforce,” he says.

“It is one of the biggest drivers behind the demand we see for advisory and consulting in the US.”

It is not just big markets that are seeing a change, however.

Baker Tilly South East Europe, an area that covers Cyprus, Greece, Romania, Bulgaria and Moldova, has seen a sharp increase in the demand for advisory skills.

“Our strategy set back in 2016 was to move away from being a traditional accounting practice and become a regional consulting firm,” says Marios Klitou, chief executive of Baker Tilly SE Europe.

“In 2019 over half of our total revenue emanates from consulting services, whereas group revenue has increased by over 45 per cent over the past three years.”

Baker Tilly Head of Strategy Ryan Piper says client demand for advice and on-call expertise is likely to grow, citing a lack of clarity about how to manage disruption, shorter time frames for strategic objectives and even the increased regulation being experienced in most markets.

“This presents advisory opportunities, as clients have questions around the impact of more regulation or legislation,” he says.

“If businesses are looking at cross-border work, they need to know ‘can I sell this product here or deliver that service there’.

“If they are looking at their competitors, the questions might be driven by the software they need to invest in or the M&A opportunities that could help them secure market growth.

“Those are advisory-style questions that go beyond a traditional accounting offering.”

Mr Piper says building advisory capacity within firms had allowed Baker Tilly to provide a deeper set of options for clients in particular sectors, including emerging business lines.

 

The UK Baker Tilly firm MHA has developed a specialist electric vehicle practice, for example, providing advisory services to car manufacturers, dealers and the supply chain as well as more traditional services such as tax advice.

In Israel, Baker Tilly’s consulting and advisory arm consults on the market for drones and unmanned aerial vehicles, while in the US, teams work to help small to medium manufacturers take advantage of the connectivity and data innovations known as Industry 4.0.

“We can see some sophisticated offerings now where firms have started to offer services down industry lines or even sub-sector verticals, and that is really paying off given the depth of the advisory services we can offer,” Mr Piper says.

“We are now reconsidering our advisory products across our network and how we can bring these to the kinds of challenges our clients face every day.”

A good example of the areas where client needs are accelerating is in the digital space.

Baker Tilly US last year launched the Baker Tilly Digital sub-brand, recognising client demand for the service and concentrating skills and expertise within a specialist digital team.

John Runte, principal and leader of Baker Tilly Digital for Baker Tilly US, says digitalisation of business is changing the way mid-tier clients do business, from operations to marketing to customer engagement, but many struggle to identify the right approach for digital transformation.

“Emerging digital trends will be as significant for business as PCs, web and mobile already are, and businesses have seen how important it is to get ahead of the change wave,” Mr Runte says.

“Our clients feel that urgency. They understand digital practice is both a way of life and a business imperative.”

The digital team is now able to draw on experience from across the global network and help give business options that can make their operations more robust.

“As a result of our experience, in a very pointed and public way, we are now showcasing our digital technology capabilities to make us stand out from our competitors,” Mr Runte says.

“We are blending our expertise with our core transformational capabilities, industry strengths and providing leadership across sectors.”

Mr Verkade says the Baker Tilly network is focusing on several strategic fronts in 2020, with building the opportunity for complementary and allied services — including in advisory, legal and similar areas — one of the key opportunities for growth.

The goal sits alongside raising Baker Tilly’s brand profile to grow the network and attract talent, as well as continuing the investment in client-focused technology and solutions, and better use of data and analytics.

All initiatives would continue to be undertaken against the backdrop of continuous improvement in service delivery, including raising the profile of Baker Tilly’s extensive coverage in newer markets.

He believes the strength of Baker Tilly’s advisory services is only going to increase as client demand for additional expertise builds, and the breadth of the network coverage in remote and emerging areas offers plenty of scope for growth.

 “We think this is an area where we have a competitive advantage because as we have grown as a network, we have never lost sight of our clients and the great relationships that we believe are a key pillar of our business,” he says.

“They know that whatever the challenge they are facing — whether it is digital, strategic, in human capital or operational — and really, wherever they are in the world, they don’t have to face that future alone.”

 

From the outside in – the advisory process at work

When an established business is faced with rapidly-changing environment, the scenario is brutally simple – re-evaluate or lose market share.

Executives at a Global Top 100 aerospace and defence contractor could see the landscape shifting and growth slowing, leading to the conclusion that an outside perspective was necessary.

Yaki Baranes, Head of Strategy and Management Consulting Division at Baker Tilly Israel, and chairman of the Strategy & Management Consulting services global committee at Baker Tilly International, says the client needed to re-evaluate their position — and get advice on what was coming over the horizon.

“They needed to explore potential areas of growth and identify key markets to invest in to ensure they remained competitive and continued to deliver industry leading services and products to aerospace and defence clients,” he says.

Mr Baranes says one of the main issues facing the contractor was that it didn’t have the right platforms or technologies in its portfolio to prepare for emerging global security challenges, a new and promising segment at that time of the project.

The company was also missing opportunities in cyber security, small unmanned aerial vehicles, otherwise known as drones, and technologies including naval systems and platforms.

“We saw that many companies were seeing naval as something that they need to strengthen,” Mr Baranes says. “And what was surprising was that the company didn’t have any naval portfolio. Nothing, zero.”

The first step at of the strategic consulting phase for Baker Tilly Israel was to conduct a full market analysis and develop an analysis of the global aerospace and defence market, including emerging threats, trends and market demands.

“We presented our analysis but also gave them insights on what they should consider as threats, and what they should consider as opportunities,” he says.

Once the market picture was clearer, it was time to go inside the company.

“We did a lot of interviews with marketing people, engineering, VPs and the CEO to understand how they saw the company growing, what made the company successful in recent years and what made it slow down,” Mr Baranes says.

With the broader picture in hand, the contractor then set strategic goals for the next five to 10 years, and Baker Tilly Israel helped the management team work on the ‘scoreboard’ – measuring milestones and putting the plan into action.

“For example, to get into the cyber world was one of the key strategic goals,” Mr Baranes says.

“To get in, the plan was to acquire a cyber company because we concluded that it would take years for the company to develop cyber capabilities on itself.

“We saw the only way to get into this market is by acquiring a company. Eventually the company bought about five or six of them because the market was just changing all the time.”

Mr Baranes says trust between the client and advisor was crucial in the successful development and implementation of the strategy.

“I always prefer to start every process with a phase one, which is analysing the market and not the company,” he says.

“Usually when you analyse a company you tell them things that they know. But when you start with the market, you start in a position where you start the consulting projects with new insights and data — which offers real value to the decision makers.

“I think that’s where you gain a lot of trust with them because they see that you know things that they don’t.”

At a time when an accountant might have slimmed the company down, Baker Tilly’s consultants took a different tack – and the rewards came as the contractor won major contracts in several countries.

“While accounting deals with analysing the past and company’s results, our job as consultant is to look at the future and what the client should do today to continue its growth,” Mr Baranes says of the difference between accounting and advisory.

“We’re looking at what will make the company grow and then we try to push the company to these directions.”

 

 

 

 

 

A Baker Tilly pode ajudar a sua empresa!

Entre em contato connosco para saber mais!

 

Marketing & Communication

marketing@bakertilly.pt

 

 

 

 

 

Utilizamos cookies próprios e de terceiros para melhorar os nossos serviços através da análise dos seus hábitos de navegação. Se continuar a navegar, consideramos que aceita a sua utilização. Pode obter mais informações ou saber como alterar a configuração, na nossa Política de utilização de cookies.