The Impact of Technology on the Professional Services Industry
Discover the impact technology has on the professional services industry and helps firms maximize profits, solve problems, and serve clients.
Technology continues to shape the professional services industry in profound ways.
For starters, cloud-based productivity apps and communication tools have given firms the ability to work remotely and engage clients in new ways.
Advances in AI and machine learning can automate back-end processes that keep employees from performing valuable work — and as a result, reduce operating costs and maximize profits. They also streamline digital delivery of services and allow firms to shift to outcome-based business models.
AI-powered analytics help firms make profitable decisions. They play a critical role in driving improvements across the entire portfolio. For example, business leaders can improve resource utilization and scheduling, identify and fill skills gaps, and push deals through the sales pipeline.
Technology has also changed the dynamic between professional services firms and their clients. The rise of big data, along with greater access to AI-driven insights has given customers a deeper understanding of their market. In turn, clients expect more from experts — faster turnarounds, lower price points, and insights that go beyond
Here, we’ll dig into the pro services tech stack to find out how technology is changing the way firms maximize profits, solve problems, and serve clients.
AI, BI, & an Explosion of Big Data are Redefining Strategies
Rather than relying on gut feeling or known best practices, AI-driven analytics and business intelligence (BI) platforms are changing the way service-based orgs interpret insights, make decisions, and prepare for the future.
Demand for real-time insights, deeper integration, and end-to-end visibility has companies consolidating disparate apps and systems into all-in-one solutions like Dynamics 365.
Users can improve forecasting accuracy, track performance metrics in real-time, and maintain regulatory compliance and security protections across the entire organization. They also help leaders understand the probability of different outcomes, and organize their resources and finances accordingly.
For example, HB Concepts, a distribution company that delivers inventory and equipment to spas, hotels, hospitals, and wellness centers, implemented D365 BC to improve customer service and operations. The platform’s end-to-end visibility and integrated dashboards helped the team manage complex financial data – exchange rates, pricing models, markups, inventory counts, etc., while built-in sensors helped staff shift from a reactive approach to a proactive maintenance strategy.
Embracing IoT enabled HB to reduce overhead costs, deliver services 3-4x faster and improve relationships with customers and suppliers. Essentially, they were able to transform service operations from a cost center and into a source of value generation.
Another important shift is the understanding that different teams use data in different ways. We helped one of our clients, Brotherhood Mutual, a company that specializes in insuring churches, replace their legacy CRM with the cloud-based D365 Sales — plus integration with the Power Platform. Today, Brotherhood has 11 business units using Power BI to analyze CRM data — in context with their role. Sales, marketing, ministry, etc. can all pull custom reports and view valuable information in a way that’s tailored just for them.
Professional services firms are also using AI, BI, and predictive analytics platforms to to analyze potential outcomes, point decision-makers toward the right choices.
Per Bain & Company data, private equity firms are increasingly leveraging data to level up their sector strategies. Deeper insights enable teams to determine whether they’re focusing on the right sectors, how much investment they’ll need to put up to break into new markets, measure coverage, and figure out which investments stand to have the greatest impact.
Historically, these decisions were largely based on gut feelings and past experiences. However, advances in this space have made it possible to pinpoint individual variables that trigger specific outcomes — making it possible for data-savvy firms to generate returns across a diverse portfolio.
Hyper-Automation is an Urgent Priority
Firms need to maximize productivity, minimize expenses, and increase efficiencies to compete in today’s fast-moving market.
These demands aren’t unique to this space — however, professional services firms are learning that AI plays a crucial role in driving improvements across the entire enterprise. In fact, Gartner predicts that, by 2030, 80% of project management tasks will be outsourced AI.
As mentioned in a previous post, eliminating manual tasks and streamlining processes not only gives project-based firms a productivity boost, it also has a positive impact on employee satisfaction. And — by extension, improves the quality of service they deliver to clients. While this seems a no-brainer, this connection between employee satisfaction and client outcomes is especially critical when you consider the nature of this work — employee insights — and how they deliver them — they don’t just support the product, they are the product.
McKinsey’s 2021 State of AI says organizations are getting better at using AI to reduce costs, and that they’re increasingly using it to mitigate risk (fraud, cyber threats), model scenarios, and enhance their menu of service offerings. But — also notes that the bar for AI and automation keeps rising.
Deloitte’s Tech Trends 2022 report finds that “future-forward” organizations are focused on modernizing the back office and moving toward a proactive self-service model and automating at scale.
The Deloitte report features a case study from Capital One, which in 2015, had the foresight to redesign how they managed and moved data and monitored their digital ecosystem before migrating operations to the cloud.
Capital One’s decision to automate their digital infrastructure enabled them to use machine-learning and cloud-based monitoring tools to detect anomalies — a decision that dramatically reduced the number of security incidents and helped them attract and retain computer engineering talent — who now spend their time solving high-impact problems.
It’s not enough to automate manual tasks like data-entry or email sequences. Firms need to consider how to use AI/ML in new ways to proactively carve out a competitive advantage.
Robotic process automation (RPA), for example, allows employees to do more in less time by assigning tasks to a bot. That way, humans spend less time answering basic questions or filling out reports and more time on tasks that demand creative problem-solving, ethical judgments, or complex analysis.
This graphic comes from a Gartner report for finance pros, but it does a nice job breaking down the many tech investments any firm might make to improve processes – particularly how RPA, machine learning, and chatbots actively support their human counterparts.
Firms Push for Greater Agility
Initially, enterprise ERP systems were these massive, monolithic platforms that were complex, expensive to maintain, and offered little in the way of flexibility.
Over time, cloud-based solutions became available as individual modular components — think one system for project management, one for supply chain, another for sales, and so on. And while that approach offered more flexibility than the legacy monolith, it led to fragmentation, latency, and data unification issues. And — over the years, as firms generated more and more data and added new solutions one function at a time, that lack of cohesion created more problems.
These days, firms are responding to changing conditions by upgrading existing cloud solutions and moving toward a more modular, composable infrastructure — aka all-in-one platforms that offer the best of both worlds: balancing flexibility with a cohesive experience for employees and clients alike.
Gartner predicts that, by next year, organizations that have adopted a composable architecture will outperform their competitors, on average, by 80%. And it makes sense. Composable architecture offers tighter integration, more visibility, and streamlined processes that enable improved resource utilization, forecasting, and prescriptive/predictive intelligence. All of which are critical factors when it comes to winning in the professional services space.
Digitalization Provides a Shortcut to Expertise (well, sort of)
As digitalization increases rapidly, so too does pressure on firms to keep up — and develop solutions that allow them to respond to change – as it’s happening.
We’re seeing this with the rise of low-code/no-code solutions. Mulesoft’s 2022 Trends report predicts that 80% of tech products and services will be designed and built by people who aren’t technology professionals. The benefit is, these solutions accelerate production and empower non-technical users to build and launch apps without first learning how to code and refining those skills.
But — this shift is happening across the board, often in more subtle ways.
Take for example, the widespread availability of affordable, AI-driven SaaS platforms that allow users to manage market research and competitive intelligence themselves, rather than having to hire a consulting firm to manually perform that work. When customers can simply subscribe to some tool at a reasonable monthly rate — and reap the same rewards faster — it doesn’t make sense to stick with the old approach.
That increased accessibility also opens the door to new, digitally-native competitors poised to capture market share from incumbent firms with new perspectives and business models.
Inside the firm, access to new tools can unlock new revenue streams — if they’re able to offer something that clients can’t easily find on their own.
Already, business technologists are moving into a central role, empowering users with training and access to self-service capabilities, relevant data, and the right set of tools for on-the-job problem-solving. IDC’s 2022 FutureScape report forecasts that by 2025, 60% of companies will use some type of expert to support staff with AI and knowledge management.
That said, it’s important to understand that democratizing access to expert insights doesn’t mean anyone can succeed in this space. Yes, digitalization is lowering the barriers to entry and creating an opening for new players to enter the space. But they still have to prove their worth to prospective clients – and it’s not easy.
Ultimately, which skills are in demand will change dramatically. It’ll be more about understanding how to leverage the right mix of talent and tech to drive client outcomes than investing in specialized expertise alone.
Final Thoughts
Embracing the latest tech without first identifying a specific need won’t get you very far.
Firms need to fully understand the impact of tech investments before committing to the next big thing. Otherwise, you’re wasting money AND falling farther behind competitors.
The reason that things like AI-enabled insights, predictive modeling, or low-code development tools are redefining the professional services space is because they solve a problem or unlock an opportunity.
Velosio experts can help you figure out how to best navigate today’s complex professional services space — and what tools and tactics will set the stage for future wins and sustained, long-term growth. Get in touch to learn more about how we can help.
