Five Big Professional Services Trends That You Should Know
A lot has changed for businesses in the last year. The same is true for professional services organizations, which were already reeling before COVID-19 due to tech and market developments, and are now suffering through the consequences of the pandemic. This all amounts to a perfect storm of challenges affecting the way IT, engineering, consulting, and media/marketing firms approach service delivery and client relationships.
The immediate effect of the pandemic is remote work that affected project delivery and resource management along with reducing client demand. This has had a long-term effect on the overall financials of many businesses, leading to calls for cost-cutting measures, like spending reduction, hiring freezes, furloughs, and layoffs. While this approach may help professional services businesses survive in the short term, their long-term success depends on becoming truly operationally efficient and uncovering hidden revenue and profit opportunities.
Best-in-class Professional Services Firms Are Capitalizing on Opportunities
To combat short- and long-term challenges, forward-looking professional services firms are using innovative strategies, like the ones described below, to make their operating model profitable and sustainable.:
1. Targeted Digital Transformation
Digital transformation is 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 that many of these businesses still rely on legacy, on-premise solutions from the past to support their business processes. Businesses continue using these systems because of their reliance on difficult-to-migrate customizations, long implementation cycles associated with replacement solutions, and steep adoption curves.
But, being forced to quickly pivot to remote work has shown businesses that their current solution ecosystem cannot meet changing needs and is a relic of the past. In a CFO survey conducted by PwC to shed light on how businesses are reacting to the new normal, nearly 48% 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. The adoption of digital technologies will not only future-proof their business operations but will also give them 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.”
2. AI-based Resource Optimization
There are no prizes for guessing what the most important asset for a professional services firm is. These firms couldn’t deliver services to clients without the help of their skilled resources.
Traditionally, services firms have suffered due to manual or siloed processes for 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, and the task of managing resources and utilization has become practically unmanageable. Moreover, the PwC survey indicates that going forward, most companies plan to encourage a hybrid work model, which is a mix of office and remote work.
Smart technologies, enabled by artificial intelligence and machine learning, will elevate talent management processes in companies that choose to adopt them. These tools will offer intelligent recommendations and enhanced resource utilization, allowing talent management to become tightly integrated with service delivery, greatly improving efficiency and profits.
Cody Warren from the marketing firm Hook Agency finds that videos at each step of the process help 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 increasing customer satisfaction and shedding light on the whole process.”
3. Smart Pricing and Bids
Competitive bids are how professional services firms get their projects. How bids perform determines revenue, profit, and much more. In fact, 80 percent of project profitability is determined at the bid stage, and more than half of all projects do not deliver to plan. Bid teams within professional services firms end up doing a lot of back and forth using spreadsheets, performing costs analysis, project estimations, and resource planning, which can waste days traveling from inbox to inbox. Often, delivery and resourcing teams are not fully aware of what work is being lined up, which can cause breakdowns during the execution and billing processes.
Top professional firms are moving away from such siloed processes and are instead leveraging solutions that help them gain complete visibility into resource costs, including direct, indirect, administrative costs, utilization, margins, and more. This helps them develop accurate revenue plans and resource prices that can be used to quickly generate accurate bids. Today, companies are recognizing the need to have everyone on the same page, so managers are aware of the big picture when they make decisions.
4. Next-generation Client Management
The professional services industry was always competitive, and the current pandemic has only made things worse. In fact, only 34% of professional services firms are able to meet the expectations of their customers. Clients have been looking for ways to cut down on spending, which directly impacts the bottom line of firms that depend on client spending. Thanks to the technological revolution, increased competition and the pandemic crisis, clients are now looking for more value in quality and turnaround speed for their investments. Therefore, the traditional way of managing clients and delivering services will no longer make the cut. Professional services companies need to rethink the services they provide and how they are delivered.
The super-competitive state of the industry necessitates more open and transparent communication with clients and willingness to go beyond the traditional time and material or fixed-bid types of engagements to deliver more value. It also means professional services firms need to improve their service delivery to meet client expectations while protecting their own profitability. Firms need to manage projects as profit centers while analyzing their entire portfolio to find efficiencies and new profit opportunities.
5. 24*7 Customer Service
In today’s era, customers need to be able to reach out to you at any time, from anywhere, and via any platform. Therefore, professional services are moving toward providing services round the clock, be it via live chat, phone support, or social media. Today, advanced web-based support, like chatbots, live chat, and FAQs, are gaining popularity as they provide an accessible and seamless customer support experience.
Innovative Approaches Are Needed to Successfully Face Disruption
Desperate times call for innovative measures. Professional services firms, who trade on their expert advice about technology and process transformation, need to figure out how they can apply these approaches to their own business models. They also need to execute strategic initiatives that bring more predictability to their cash flows, so they can break away from the traditional linear curve that limits their growth. Moreover, as professional services turn towards technologies to accelerate digitalization, they need to be warier of cybercrime and compliance issues. In the past, small and mid-size businesses could often get away with ignoring such risks; but today, every business needs to be protected, and all firms must regularly check for cybersecurity gaps.
Takeaways: This year, digitalization and the embedding of new technological solutions will remain the major focus of professional services organizations.