Digital disruptors take on Brussels consultants

Europe is ‘low-hanging fruit’ for tech firms keen to eat into the consultancy business.

Digital disruptors have got the consultancy business in their sights.

Several American startups are coming to Brussels, including FiscalNote, RAP Index and Quorum, aiming to break into the consultancy market of Europe’s regulatory capital.

While the digital revolution has already forced many of Brussels’ biggest consultancies to rethink the sort of services they offer their clients, the startups’ arrival is set to hasten the demise of information-gathering — described as “commodity-type work” by one consultant — as a significant source of income.

FiscalNote, for example, uses algorithms to trawl the internet for the information about draft laws and regulations churned out by the EU institutions each week, making what it finds available on a smartphone app. The company also uses data analytics to allow clients to map who the key policymakers are on a given issue and the most effective way to lobby them.

“We built this engine that crunches vast amounts of government data,” said Tim Hwang, CEO of FiscalNote, adding that Brussels was the obvious place to launch due to it being home to the EU’s lawmaking institutions. “Europe is the lowest hanging fruit.”

Tracking the legislative beast

Since the early 1990s when the single market was first codified in hundreds of technical regulations, consultants moved into Brussels to help the world’s biggest companies navigate the EU’s maze-like lawmaking institutions.

When Caroline Wunnerlich joined Government Policy Consultants in 1992, a company that was eventually bought out by global comms giant Omnicom, it was the norm for lobbyists to sip sherry with Commission officials after the weekly press briefing and good lobbyists knew how to dig out information.

“You had to literally physically find out things by going to places to get hold of the pieces of paper,” said Wunnerlich, now the managing director of FleishmanHillard’s Brussels office. “If you knew what a [parliamentary] committee was, you were an expert.”

While being a consultant in Brussels for decades meant explaining the goings-on in the European institutions to companies that tended to have little or no knowledge of the workings of the EU, the digitization of information has changed that, as once hard-to-access information is coming online.

“In the early 1990s, you were talking to the institutions, talking and meeting with MEPs on a daily basis,” said APCO Worldwide’s Europe director, Claire Boussagol, who described the changing demands of her clients, many of whom now have their own offices in Brussels. “Now everything is online, so a lot of my younger colleagues are in front of screens rather in the Parliament.”

The startups are taking the technological development a step further by using computers to scrape information about draft laws and regulations published on the internet, re-packaging it for their clients and making it available via a smartphone app.

FiscalNote also allows clients to coordinate their lobbying activity through a specially designed online platform across jurisdictions to ensure a company’s advocacy strategies do not run at cross purposes — the sort of bread-and-butter work done by consultancies for decades.

“You have a pretty good sense of what’s going on,” Hwang said, describing the challenges faced by multinational companies operating in hundreds of countries, each with different regulatory requirements.

Robots don’t do insight

Not everyone is convinced that algorithms will upend the consultancy world.

Some agencies, like FTI Consulting and Cambre Associates, have already started offering services to clients that involve data crunching, while others have simply phased out monitoring as a core part of their business.

And tracking a draft law as it wends its way through the EU’s lawmaking institutions still requires the human touch, as it’s a process that remains dense, opaque and poorly understood — and offline.

This is why APCO’s Boussagol still feels the need to send some of her staff down to Strasbourg each month for the Parliament’s plenary session. “It’s even worse as a bubble [than Brussels] because people are stuck in Strasbourg,” she said. “It’s a wonderful opportunity to meet with people … to have informal meetings.”

This sort of personal relationship is set to be enhanced further by another company arriving from the U.S., RAP Index, which gathers and then crunches data obtained through internal company surveys about which individual in a company is best placed to lobby a specific politician on a given issue.

Its founder Chip Felkel said his business shouldn’t be seen as a threat to Brussels consultants but rather as “a way to sidestep the clutter.”

The startups are also likely to run up against the notoriously secretive and complex comitology system, whereby anonymous national experts make far-reaching decisions about the nuts and bolts of EU legislation behind closed doors.

And the place where most of the sensitive negotiations take place, in so-called trilogues, is almost completely in the dark, with even seemingly cosmetic reforms that would see attendance lists and agendas published rejected by the EU institutions.

“The most difficult nut to crack in terms of finding out what’s going on, who’s taking the decisions, who’s driving those decisions is the Council,” said Acumen’s Elaine Cruikshanks, describing the body representing EU governments. “It’s always going to be behind a veil. The real decisions are behind closed doors.”

The number of players in the EU institutions, the 23 different languages, coupled with a re-nationalization of political power in the wake of the 2008 financial crisis, also add to the complexity.

“The more people there are around the Council table, the more views you have, the more different agendas there are and the harder it is to find a compromise,” said Wunnerlich. “We’re almost getting to the point where we’re not sure what the game we’re playing is anymore.”

This sort of expertise comes at a premium since knowing how the system works can’t easily be gleaned from browsing the internet.

“Consultancies focusing on higher value strategic work are continuing to grow in this crowded market,” said Ruud Wassen, director of Teneo Strategy’s Brussels office. “The rest is commodity-type work which will remain tough in terms of retaining the best and brightest with ever lower profit margins.”

Internet echo chamber

It’s not only the number of voices in the room that’s forcing consultancies to work harder to keep clients happy.

The rise of digital communication and social media has blown open the arena in which interested groups and individuals can influence lawmakers and regulators, something many Brussels consultancies started responding to only a few years ago.

The driver for this change has been the resource-poor but passion-heavy NGO community, which wised up to the power of the internet long before the consultancies.

They’ve made the influence game a harder one to play and “more emotional compared to 25 years ago,” said Boussagol. “The role of NGOs and how they use social media, all of this makes our work different.”

Their strength lies in their ability to translate dense jargon-heavy discussions into easy-to-digest messages that then ricochet across social media, faster than most corporate behemoths can handle.

“A lot of very passionate campaigners… managed to really politicize [discussions on the general data protection regulation in 2013] and moved them out of the technical sphere,” said Corporate Europe Observatory’s Oliver Hoedeman, describing how broad networks of NGOs use the internet to get the masses involved.

One consultancy that has prioritized digital comms is Weber Shandwick, whose purchase of the Scandinavian firm Prime in 2014 and digital startup Flipside last year confirmed the shift away from traditional public affairs lobbying.

Even so, Washington-based Beekeper Group, which develops digital campaigns for its clients that mimic those adopted by successful NGO campaigners, sees a gap in the market.

“Typically Brussels has been very white paper heavy, very legislative heavy, and that hasn’t really translated into how this affects the average person in day-to-day life,” said Beekeeper’s Henri Makembe. His colleague Mike Panetta agreed, saying there’s a need for “a much more creative approach” to how issues “are promoted beyond the Brussels bubble.”