The Future of the Professional Services Industry
In his article we paint a picture of the future of the professional services industry based on current market conditions and emerging trends.
The professional services industry will embrace digital-first revenue business models and business practices.
AI and automation will take on a greater role. Data continues its reign as “king.” Remote work is here to stay. We’re watching these predictions take shape in real-time.
At the same time, the future of the professional services industry has never been so uncertain.
On top of the ongoing pandemic, 2022 has introduced several new variables into the mix. This includes ongoing supply chain issues, the war in Ukraine, inflation, and disinformation. These variables create challenging conditions for both firms and their clients.
So, what does all this mean for the future of professional services? No one can say for sure.
In this piece, we’ll try to paint a picture of what’s next for knowledge-based work based on current market conditions and emerging trends – and what that means for firms moving forward.
Professional Services Firms Embrace New Rules of Client Engagement
The professional services industry has always been about human expertise and 1:1 relationships with clients. Firms are investing in new ways to engage clients, share insights, and solve problems beyond the traditional business model.
Now, in-person engagements (and billable hours) aren’t going away, it’s just that it’s no longer the only way – or even the best way to engage with clients. And, ultimately, firms (and their customers) will benefit more from a more diversified set of offerings.
For example, Belgian accounting and financial advisory firm, Van Havermaet modernized an 80-year-old business model by building a cloud-first platform for helping clients navigate accounting, HR, tax, and legal challenges.
According to Van Havermaet CIO, Benny Westaedt, providing the right advice on the right platforms, as well as co-creating with customers is the future of the business. Advisors actively collaborate with clients – which, Westaedt says makes both the firm and its customers stronger – and on top of that, is “really fun.”
The firm is now able to deliver IT solutions to clients and work together in real-time to develop new solutions and strategies. What’s more, the data from these virtual engagements can be used to streamline and refine processes used in future engagements.
Collectius, a debt management company, used Power Apps and D365 Customer Insights to build a CRM solution that would allow them to provide data-driven customer service and better self-serve options. These investments allowed the organization to automate simple communications, deliver personalized insights, and offer a personal conversation with a dedicated mediator.
Many professional services firms are also investing in their own SaaS-like platforms. Meaning, clients can subscribe to a self-service platform that allows them to access and leverage data to drive business outcomes.
For example, PwC’s Risk Command Suite is an advanced analytics platform that accurately helps clients detect risks faster. The platform uses AI to make recommendations to reduce risk, comply with regulatory requirements, and automate workflows.
New Revenue & Service Delivery Models Demand New Infrastructure Investments
New technologies have forced professional services firms to rethink the way they package and deliver services.
Firms need to ensure that they have the infrastructure in place to modernize their service offerings and continue to evolve tech-based offerings. McKinsey Solutions Leader, Francisco Caudillo told Protocol that consulting firms aren’t trying to become tech companies. The focus remains on solving problems for clients.
So, firms might instead look for solutions that can shoulder the burden of managing critical infrastructure, data, and cloud security.
Benny Westaedt, the Van Havermaet CIO, says that investing in solutions like Azure Stack HCI and Azure Arc meant that they no longer needed to worry about fixing today’s problems with old technologies – instead, the firm could focus on developing innovative solutions for its customers.
For example, they’re currently considering how they might leverage AI and simulation capabilities in future offerings. Westaedt also noted that Azure enabled the firm to do things they couldn’t do just six months ago.
Additionally, firms are also looking toward solutions that streamline and democratize the development process.
According to a recent report from HFS Research, low-code/no-code solutions are accelerating digital transformation. Tools like Microsoft Power Apps and Power Automate are helping organizations meet changing needs, tackle new challenges, and deliver solutions to market faster – which, done right, can unlock a huge competitive advantage.
Firms tend to see the best results when non-technical experts team up with IT to form “fusion teams.” Fusion development, by the way, is an agile-like development approach that draws on individual strengths and effective communication to develop and deploy technology at a rapid pace.
Professional Services Firms Can Stand Out by Reducing Risk
Facing the possibility of a recession, clients may be more hesitant to sign on for a long-term engagement. Firms will need to get creative to convince customers that the investment is worthwhile.
A recent Salesforce report stated that 88% of customers believe trust becomes more important during times of change. For professional services firms, trust has always been critically important. But firms need to provide more assurance or data-driven proof that their solutions can deliver the outcomes clients are looking for.
Some firms are responding by teaming up with clients on projects – which allows them to share the risk. For example, Booz Allen uses a transaction-based fee model that allows the firm and its government clients to make money from joint products that generate revenue.
This type of arrangement is becoming more common. It benefits the client and the firm in multiple ways. Booz Allen can also use data/lessons learned in future projects, create reusable components, and streamline delivery.
AI and automation might also help firms instill more confidence among clients – in terms of quality control, compliance, data accuracy. For example, consulting firm EY has invested $1.5B in digital transformation projects including strategic acquisitions, new technology solutions, and an automation framework for improving audit quality – which helps clients keep up with pressures to respond to complex legislative changes ASAP – such as fluctuating VAT rates.
EY saves money and clients receive audits faster – knowing they’ve met all compliance/reporting requirements.
TIBCO used Azure’s cloud-native technologies to build a connected intelligence solution that uses AI to detect fraud. Azure Event and IoT Hubs support real time data streaming to surface anomalies and patterns that indicate potential data breaches, insider threats, money laundering, insurance fraud, and more.
Strategic Planning with Speed and Uncertainty in Mind
Look, the emphasis on becoming a data-driven organization hasn’t been “futuristic” in almost a decade. The reason we bring it up (again) is that firms are under pressure to leverage AI, ML, and automation to deliver outcomes at speed, scale — and with precision.
According to Gartner, there’s been this shift away from tools and technologies — and toward this idea of using data and analytics to drive decision-making as a basic business competency for modern leaders.
Analysts say that skills like understanding how humans and machines can work together to achieve a specific goal, operationalizing AI/ML to solve complex problems, and using AI to augment and support decision-making are now essential for survival.
Unfortunately, professional services firms still struggle to effectively use data to meet client demands.
A joint report from Forrester and Salesforce found that 38% of firms struggle to hire the right people and 32% say they can’t keep up with customer needs. Researchers also found that many pro services organizations lack any clear revenue strategy and face significant obstacles when it comes to gaining actionable insights from their data.
Professional Services Firms need end-to-end visibility, reliable insights, and analytics tools. Baked-in intelligence allows you to reliably make decisions to come out of this tumultuous period on top.
In a recent Bain & Co brief, Turning Inflation Disruption into Value, analysts emphasize that as inflation continues to wreak havoc on markets, organizations that use data to improve productivity, prioritize high-ROI decisions, and build a sustainable cost management system will be in the best position to weather the storm.
Firms need to step up their game and start using tools like predictive analytics, real-time data streaming, etc. to provide unique perspectives and solutions to clients.
Final Thoughts
Fingers crossed, we won’t experience any more unprecedented black swan events in our lifetimes. Firms that learn to leverage big data and AI/ML to evolve with their clients, competitors, and the market will be better positioned to win in the future economy—whether we’re really staring down a recession or things end up turning around.
Velosio’s Microsoft experts help professional services firms tear down data silos, optimize portfolios, and future-proof the entire business model.
Book a consultation to learn more about how we help professional services firms prepare for whatever’s next.