Do most of your projects miss deadlines or go over budget? Do your project managers have a hard time managing …
A lot has changed for businesses in the last year. The same is true of professional services organizations that were already reeling in the tech and market developments before COVID-19 and are now bearing the brunt of the pandemic and the concomitant changes accompanying it. It is a perfect storm of changes and challenges that are bound to cause major, long-lasting disruption affecting the way the IT services, engineering services, consulting, and media/marketing firms need to approach services delivery and client relationships.
Immediate effects of the pandemic were seen in forced remote work that affected project delivery and resource management, and reduced client demand that has a long-term effect on the overall financials of the business. This has led to calls for cost-cutting through reduced spending, hiring freeze, furloughs, and layoffs. While this approach may be useful in the near-term, the real opportunity lies in making the professional services business truly operationally efficient and uncovering hidden revenue and profit opportunities.
Best-in-Class Professional Services Firms Are Capitalizing on These Trends
To combat these short-term and long-term challenges, forward-looking professional services firms, particularly in the industries mentioned above, are thinking outside the box to make their operating model sustainable and profitable through:
Targeted Digital Transformation
Digital transformation has been a buzzword that has been around for a few years now. Professional services firms provide high-end services to their customers, including helping them with digitalization, but have often themselves fallen behind on the technology adoption curve. A case in point is many of these businesses still rely on legacy, on-premise solutions from the past era to support their business processes. Most businesses continue using these because of the customizations they have done, long implementation cycles associated with any replacement solutions, and a steep adoption curve.
But, the sudden forced remote work has shown these businesses that their current ecosystem is just not capable of meeting any changing needs and is a relic of the past. In a CFO survey conducted by PwC to understand how businesses are reacting to the new normal, nearly 50 percent responded that they plan to accelerate digitalization, automation, and other new ways of working, among other remote initiatives.
The main aim of digital transformation for professional services firms is to get a single source of truth across their operations so that they can uncover hidden efficiencies and opportunities. And, adoption of these digital technologies will not only future-proof their business operations but also give a significant competitive advantage.
Brack Nelson, marketing manager at Incrementors Services, a digital marketing firm, perfectly sums up the need of the hour, which is modernization and leveraging automation:
“With technology developing at such a fast pace, professional assistance firms are expanding their offerings with the use of automation. Using self-regulation allows firms to analyze complex and challenging processes saving a lot of time while giving quality services. Automation also makes it more comfortable to find the source of difficulties and provides the capability to change them quickly. Additionally, self-regulation can help reduce errors and reduce repetitive tasks.”
Leveraging AI-based Resource Optimization
There are no prizes for guessing what the most important asset for a professional services firm is. These firms deliver services to clients with the help of their skilled resources. Traditionally, services firms have suffered because of manual or siloed processes around managing their resource pool, streamlining resource requests and project allocations, tracking skills and certifications, capacity planning, and more. Add to that the sudden shift to work remotely because of the pandemic and the task of managing resources and utilization has become a completely unmanageable necessity.
With the availability of smart technologies enabled by artificial intelligence and machine learning, the whole process of managing talent can be tightly integrated with sourcing and services delivery to truly improve resource acquisition time with intelligent recommendations and enhanced ability to manage resource utilization, thereby greatly increasing profits.
Cody Warren from marketing firm Hook Agency find that videos at each step of the process helps with managing resources: “We work with construction companies — and were first doing videos for their marketing, but have been pulled into the project management side of things to help them create better expectations and create clarity at each step of the project. Videos sent via email on a drip or as part of pre-templated phases during service implementation can be part of decreasing customer satisfaction and shedding light on the whole process.”
Smart Pricing and Bids
Competitive bids are how professional services firms get all their projects. How the bids perform determines revenues, profits, and much more. In fact, 80 percent of the project profitability is determined at the bid stage, and more than half of all projects do not deliver to plan. Bid teams within professional service firms end up with a lot of back and forth performing costs analysis, project estimations, and resource planning on spreadsheets, which travel from inbox to inbox for days. Most times delivery and resourcing teams are not fully aware of what is getting lined up, causing a breakdown during the execution and billing processes.
Top professional firms are moving away from such disparate processes to leveraging a solution that helps them get complete visibility into resource costs, including direct, indirect, administrative costs, utilization, margins, and more, to develop accurate revenue plans and resource prices that can be used to develop fast and accurate bids. The current need is to have everyone on the same page so that the decisions are made keeping the bigger picture in mind.
Next-generation Client Management
The professional services industry was always competitive and the current pandemic has only made things worse. Clients have been looking for ways to cut down spending, which is directly affecting the professional services firms that depend on their clients’ spending on services. The traditional way of managing clients and service delivery will not make the cut. And there is a need to rethink the services provided and how they are delivered.
The super-competitive nature needs more open and transparent communication with clients and going beyond the traditional time and material or fixed-bid kind of engagements to deliver more value. This also means professional services firms need to improve their service delivery to manage expectations and their profitability. They need to manage projects as profit centers as well as look at the entire portfolio/practices for opportunities to uncover efficiencies and profit opportunities.
Innovative Approaches Are Needed to Successfully Face Disruption
Desperate times call for innovative measures. Professional services firms that often share expert advice about technology and process transformation need to rethink how they can apply these approaches to their business models. They need to leverage these market dynamics to execute on strategic initiatives that bring more predictability to their cash flows and break away from the traditional linear curve that limits their growth.