Digital Transformation in the Professional Services Industry
Digital transformation is changing the professional services industry. Learn how to leverage data, AI, and automation to grow in a rapidly changing market.
The professional services industry is changing rapidly, with current economic and market conditions accelerating those changes.
Firms must embrace new technologies and rethink everything – from business processes and service offerings to how they engage clients – if they want to survive in today’s competitive environment – let alone thrive in the years to come.
In this article, we’ll examine the current state of digital transformation within the professional services sector.
From Here On Out, Data is the Strategic Advantage
The most effective way to set the stage for future success is to develop a data-driven mindset and really sophisticated analytical capabilities.
As such, the first critical digital transformation goal professional services firms should focus on is establishing a single source of truth for all operations and business units.
This ensures total visibility into the entire business, links project activities to financial records, enables firms to gain control over resource utilization, revenue, etc.) allowing them to better respond to changing demands, market forces, and the inherent uncertainty that defines this space.
But — unifying your data isn’t transformative anymore. It’s the bare minimum. Today’s data strategy is about using data to create value and separate your firm from the competition. See, widespread access to insights and AI analytics means we’re kind of all working with the same information.
Firms need to get used to treating insights as a strategic asset. The change in language is subtle, but instead of looking at deep expertise as the core value prop, the value now comes from providing context and interpreting insights in new ways.
Gartner recommends that finance teams focus on a few key goals: using data to create dynamic narratives, leveraging the cloud to achieve enterprise agility, augmenting data management, and consolidating their data and analytics platforms into one, unified platform. But – it’s worth noting that this advice is just as valuable for the C-suite, project teams, and the employees working the front lines.
Firms Must Redefine Centuries-Old Business Models
Take away the tech stack and you’ll find that many Proserv orgs still use the same approach firms have used for centuries. You know, something like this: expert insights at premium prices, a strong focus on personal relationships, and the driving philosophy that maximizing billable hours is the only path to profit.
Now, there’s nothing wrong with doing things the “old” way— assuming “the old way” gets the right results. The problem is, it doesn’t.
Customers are changing. They expect new digital products and services, seamless transactions, and flexible productivity tools and communication channels that support new ways of working. They also have new needs, different priorities, and fluctuating budgets.
These changes in consumer behaviors and expectations have led to the increased commoditization of professional services. Think — insights delivered through a SaaS-like web app, subscription-based billing, and on-demand access.
As it stands, many firms are rethinking how they package, deliver, and bill their services so they’re more in line with clients’ current expectations.
They also need to embrace digital business models and manage projects as profit centers to ensure they’re bringing in predictable revenue. For example, we’re seeing a lot of service-based organizations replace time-and-materials billing with outcome-driven structures and subscription-based revenue models.
As an example, PwC developed ProEdge, a digital upskilling platform that helps its clients identify and close skills gaps, automate repetitive tasks, and engage employees with personalized learning experiences. So here, you have a consulting firm addressing this well-known need – a global skills shortage as well as this long-term need to ensure that employees continue to develop their skills.
Another example comes from Mercer MacKay Digital Storytelling (MMS, a firm that provides marketing services to tech companies. Initially, the firm provided one-on-one service to clients.
In an effort to future-proof and scale its business, MMS built a specialized marketing platform to help its clients tell their own stories.
But, according to President and Chief Storyteller, Gail Mercer-MacKay, the real value comes from combining analog skills like empathy, collaboration, and marketing savvy with technology. In other words, the new platform extends the value MMS already brought to the table – making them more agile and resilient.
AI & Automation
According to Gartner’s Top Priorities for Finance Leaders 2022 report, we’ve entered an era where AI, hyperautomation, continuous processes, and other algorithm-centric innovations hold the key to unlocking serious financial benefits.
We’re talking: cost-savings, governance controls, security protections, automatic calculations, predictive modeling capabilities, scheduling & resource optimization, the list goes on.
Firms need AI-driven capabilities to maximize billable time, understand resource availability, optimize portfolios, and drive consistent experiences in spite of all the variables working against them. You know, all of the materials, milestones, stakeholders, etc. that must come together to deliver a successful project – on time and on budget.
For example, professional services automation tools help project-based teams assign projects to the right people, improve project tracking, maximize utilization rates, and improve overall profitability. Other ways AI improves project-based work: AI-enabled resource optimization, flexible budgeting and forecasting, smart pricing and bids, streamlined business operations, etc.
Of course, with all that promise comes a lot of hard work. Firms will need to invest in developing the digital skills that allow them to take advantage of cutting edge technologies – and continue to provide training and upskilling opportunities to prepare their workforce for future success.
Optimizing Your Workforce is Essential
The shortage of skilled labor, coupled with the rapid pace of change is forcing proserv firms to rethink how they support their workforce long-term.
The most successful organizations are taking advantage of new tools and really thinking about how they might use them to create digital experiences customers are excited about.
For example, employees can use augmented analytics platforms to deliver critical insights to clients, helping them connect the dots between data points and understand those connections in context. Or, they might use journey orchestration capabilities to deliver rich, personalized experiences at every touchpoint that deepen existing client relationships.
Business leaders need to find ways to increase revenue, drive efficiencies, and scale capacity up or down in response to fluctuating demand. Which means they’ll need to get used to digging into the data to optimize portfolio performance – otherwise, they’ll lose ground to data-savvy competitors.
And—project managers will need to learn how to use AI-driven capabilities to maximize utilization rates, match the right people to the right projects, and maximize profits.
All of this means that firms need to get serious about hiring people with the right skills (most of which center around working with data) and continuing to develop their workforce.
Another critical transformation area is investing in new solutions for sharing information and accessing critical insights – both internally and with clients. For example, advanced content management systems help teams access and share content and insights with clients. Many come with an advanced search function that makes it easier to find the right information faster – and without switching between apps.
So, it’s not just about training, it’s also about providing the tools that enable employees to deliver the best possible service to clients.
Final Thoughts
Taking in all of these big changes can seem overwhelming. Between rising customer expectation, the pressure to embrace new business models, and an increased reliance on AI-driven insights and automations, firms are staring down a long list of challenges.
Ultimately, though, it doesn’t matter how much the forces of digital transformation are redefining the industry, people will always be at the heart of any professional services firm. As you start your transformation journey, it’s important to keep that in mind. Consider how technology allows you to provide more value to your clients, deepen existing relationships, and get more from the resources you already have.
Velosio’s solutions and services for professional services firms help clients leverage the benefits of Dynamics 365 to drive transformation and long-term growth. Contact us today to learn more.