How Market Shifts and AI Are Reshaping Consulting

In this episode of The Consultant’s Way Podcast, hosts Dean McMann and Anthony Paluska discuss key current events shaping the consulting and professional services industry. They begin by analyzing the new administration’s efforts to cut government spending, particularly the recent cancellation of 22 consulting contracts totaling $45 million. While these cuts primarily affect firms specializing in government contracts, they signal a broader shift toward increased scrutiny on consulting expenditures.

The hosts debate the long-term impact, acknowledging that while some realignment is necessary, the ripple effects could disrupt the Washington, D.C. economy and lead to potential job losses. They also speculate that some consulting firms may still find opportunities advising on these very cost-cutting initiatives. The conversation then shifts to the growing trend of professional services teams within SaaS and product companies expanding their role beyond implementation. Many organizations are now pushing their PS teams to take on more strategic, consultative responsibilities, increasing their value and making their software offerings “stickier” with clients.

The hosts question whether this is a widespread industry movement or if they are seeing a selective trend among firms that are already inclined toward this shift. They express interest in gathering more data to validate whether this transformation is becoming a corporate mandate across the industry or simply an organic evolution led by ambitious PS leaders. Next, they discuss recent research from Future CIO on the barriers to enterprise software adoption. The findings reveal that a lack of internal consensus on desired outcomes, uncertainty about vendors' ability to deliver results, and disagreement on key product features are major hurdles to purchasing decisions.

The hosts note that these challenges highlight the increasing need for technology providers to go beyond selling software and instead help clients clarify their business objectives and align internally before making a purchase. Finally, they dive into the latest AI developments, specifically the emergence of DeepSeek’s cost-effective AI model. SAP’s CEO recently praised this innovation, suggesting it could democratize AI access for mid-sized tech firms previously unable to compete with deep-pocketed players like Google and Meta.

The hosts agree that this shift could level the playing field and accelerate AI adoption across industries. They conclude by emphasizing the importance of staying ahead of these changes and invite listeners to contribute topics for future discussions.