In comparison to other sectors, professional services firms have incorporated digital transformation at a much fast rate, most likely due to their predominantly client-focused nature. However, this is not universal across the sector with many sub-verticals being behind the curve and still following more traditional and dated processes.
Incremental has identified four trends which are disrupting the professional services sector. Many of these trends have already been taken on board by industry leaders, however they continue to be of the upmost importance to sector with many firms still to respond and adapt.
Traditionally, professional services firms have billed an hourly rate for the completion of a project or piece of work. In line with increasing wages, increased competition and pressure from customers to decrease pricing, we are seeing some firms moving towards value-oriented billing.
Value-oriented billing, at times, is easy to apply in the professional services industry given that the value of some services is easily calculated. For example, consider a legal firm charging a set price for completion of the legal paperwork involved with purchasing a new home. On the other hand, other pieces of legal work are much more complicated and difficult (if not impossible) to put an exact figure on – for example, the cost of advising a company on the tax implications of restructuring that company depends on various factors such as what is being proposed and how large the organisation is. Different rates may also apply throughout the organisation as the cost for a trainee to carry out the work will be less expensive than that of a partner.
It is expected that we will see more professional services firms shift to value-based pricing, at least for some services, as they try to become viewed as “trusted advisors” rather than just being service providers paid by the hour. This shift offers professional services firms the opportunity to increase their revenues, transaction rates, customer numbers and profitability.
Professional services companies of all shapes and sizes are expanding their operations into new regions and neighbouring countries, most often to follow and maintain their presence with key accounts. Consider an Aberdeen based PR agency which predominately works with oil and gas customers, it may consider expansion into Dubai or Houston where many of their customers have a presence.
This trend is fuelling the adoption of platforms which provide a 360-degree view into client portfolios with insights into segmentation, geography and potential (and missed) opportunities.
As well as expansion into other geographical regions, we are also witnessing professional services firms expanding their service remits. It is becoming increasingly common for companies in the sector to expand their service offerings in response to their progressively varied and demanding customers.
To step up to this challenge, firms need to employ an increasingly diverse pool of skilled individuals and potentiality utilise a partner ecosystem. This pool of talent and partners needs to be spread across multiple jurisdictions. It is also key that they are used in a targeted manner across different customer engagements across multiple markets. No easy task, especially if it is attempted manually!
This operational complexity means firms require systems, processes and the in-house skills to respond in a fluid manner to changing business and client needs.
Related to agility, a trend we are seeing at a project level is collaborative working enabled by technology. The modern workplace is made up of people who work remotely, in various office locations and/or on the move. Technology driven improvements are enabling project teams, made up of various stakeholders across different locations, to communicate better.
Many professional services firms need to deliver services using a combination of their own resources as well as externally from their clients. This is driving the adoption of systems that support virtual teams to offer service and advice wherever or whenever it is required.
To effectively face the above challenges head-on, professional services organisations need to embrace and respond to these trends. This requires adopting increasingly integrated technology solutions to bring together, optimise and enable skilled talent. Without adopting such practices, many firms risk being left behind.
To find out more about digital transformation and the processional services, download Optimising Business Outcomes – a guide for the professional services sector.
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