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By Catherine Lynch, Industry Marketing Director, Professional Services
The saying, “time is money” has historically defined the professional services industry. Most professional services firms have traditionally billed for engagements based on time and materials.
The professional services sector is a highly segmented industry with unique challenges. Professional services range from technology services to business consulting services, managed services, legal and recruitment services and everything else in between.
The global pandemic presented new obstacles for many professional services firms, but three major trends were already affecting the industry.
Three Overarching Trends Affecting the Professional Services Industry
1. The increasing speed of business
2. Digital delivery of services
3. The shift to an outcome-based business model
An outcome-based business model works differently to the traditional rate-based business model. Rather than being based on the time it takes to achieve a certain outcome, it is based on the outcome itself, and the effort it takes to reach it.
In this model, the risk is shared between the service vendor and the customer. The above industry trends were discussed further during a recent webinaron the professional services industry.
Drivers of Change in the Professional Services Industry
The three main trends of accelerating speed of business, outcome-based business models and digital service delivery are being driven by a number of factors.
- Shifting customer demands and expectations are putting pressure on firms to be faster and more agile.
- Lower barriers to entry enabled by digitalization are creating a prime environment for new entrants offering services that can be performed more efficiently, digitally, virtually and which can be automated at a significantly lower cost.
- Workforce management is becoming more digitalized, providing increased transparency, more accurate proposals, faster estimates, more exact billing, and better cost-efficiency. Having a flexible network of internal and external global talent can provide the right resources for diverse projects at the right time and the right price.
- Emerging technology is helping professional service firms improve their employee experiences, transform their business processes, and change their service delivery methods. Virtual work and digital delivery methods have become the norm, while artificial intelligence (AI), machine learning (ML), and robotic process automation are driving productivity up and the cost of delivery down.
- Cloud-based technology is making advanced solutions more accessible to companies of all sizes. Cloud technology also gives firms the ability and the agility to scale up or down depending on workloads.
Innovation: The Key to Success
During the webinar it was interesting to hear from a mid-sized German systems integrator, Navarro ES, which moved all of its business processes to the cloud. As a result, the company, benefited from standardized best practices and was able to deploy within a matter of weeks with just a small in-house team.
We also heard further examples of cloud based innovation, including:
- A zero-touch time tracking solution that captures project time data using AI and highly automated processes, enabling firms to protect and optimize their revenue
- A sophisticated project pricing and estimating solution with embedded industry best practices to reduce the risk of losing a project bid.
- An industry cloud solution that enables firms to achieve higher margins and improve project delivery by gaining key insights into sales pipelines, in-flight projects, and delivery resources
Strategic Priorities for Professional Services Firms
Cloud-based technology can provide the capability and versatility to transform business processes but to foster innovation and efficiency, professional services firms should also consider the following strategic priorities:
- Transform to an outcome-based business model. Establish and follow best practices to streamline your operations, to improve delivery models, and to make proposal creation and billing faster and more accurate with outcome-based estimates.
- Provide knowledge as a service using subscription-based delivery models for service and expertise.
- Digitalize your workforce to efficiently manage and quickly scale your workforce up or down based on project needs and specific skills requirements.
Watch the webinar on demand here.