Successful Disruption: Breaking Through The Brink

Eric van Rossum

The professional services industry is on the brink of disruption. The digital revolution is here, and it is impacting the business. The key areas affected are the digitization of expertise, talent, service delivery and customer engagement.

Digitized expertise

People now expect to find instant information. Where industries could once hide knowledge, transparency is the new norm. Clients are looking for simple ways to find and use service expertise. They expect to find proof of knowledge before hiring. Customers also want to pay for services based on outcomes. Usage-based billing processes are no longer desirable. These digital processes will help businesses stay competitive. They also give clients the edge when making decisions.

Digitized talent

Clients want to know who will perform the skilled services they need. This is more important to clients than the type of expertise offered. At its core, the service industry is a people industry. Advertising employee skills show clients their knowledge and value. By updating this information in real time, clients have more control. Firms will gain an edge on the competition by highlighting talent skills. This also allows firms to source the right skills needed through a contingent workforce.

Digitized service delivery

The method of delivery is a key part of the new business models. More customers expect automated services, from ordering to billing. Services that were once people-driven, such as customer service calls, are now digitized or replaced by self-service models. Self-service methods help clients connect with experts faster. Selling digital knowledge-as-a-service processes, such as lifecycle services, can improve the customer experience. Digitizing service delivery methods adds value to your business.

Digitized engagement

Customer engagement starts from the moment clients learn about your firm. They do a lot of research before contacting you for your services. They make buying decisions based on the digital information you provide. Businesses can learn from this by gathering search information and studying reading times. Tracking how customers get your information can help you to understand the buyer journey. Digitizing client records will also improve customer engagement. Driving self-service processes on the front end is key.

It is not just about automating processes and giving data to customers. It is also about adding knowledge to these automated processes. Professional services can no longer avoid digital practices. Customers want service firms that are open with their information and ideas. Even traditional talent-based services must adapt to new digital business models.

By ignoring digitization, you are ignoring customer needs.

New business models for new thinking

Digitization trends are having a profound impact on business models, which are being reimagined to align with the new dynamics.

Digitization is shattering the linear growth model. Revenues matching employee growth is the old way of thinking. It may seem hard to imagine service-based businesses raising revenues without a rise in talent numbers. Digitization is changing this model, and new players are driving non-linear growth.

Embracing disruption

Professional service firms must embrace digitization in these four areas to remain competitive. Adopting new business models gives service firms the opportunity to grow. Firms can achieve nonlinear growth by remodeling customer interactions and scaling their businesses. To embrace the new digital reality is to become part of the disruption, rather than a victim of it.

New thinking for the digital age

Hiring professionals to do tasks, then billing for time and materials is old thinking. These traditional business practices do not support nonlinear growth. The digital revolution requires new thinking and ways of doing business to move forward. There are three ways that nonlinear business models are changing professional services. Outcome-based engagements, knowledge-as-a-service, and external talent networks are new models of doing business.

Outcome-based engagements

Simple time and material business practices will no longer be as profitable as they were in the past. Clients now want an outcome-based structure. This model drives customer satisfaction and increases nonlinear revenues. Service firms must focus less on time and more on results. Outcome-based contracts let firms break the bond between fees and headcount. Revenues will now increase based on outcomes, not time spent reaching those outcomes.

Knowledge-as-a-service

Focusing on one project per client is no longer an option for revenue growth. Professional service providers must learn that they have value to customers beyond individual assignments. Most clients will pay for expanded services in new areas if they know the benefits. Digitizing expertise teaches clients the value of lifecycle services beyond single projects. Services such as proprietary analytics and risk management tools are becoming more desirable.

External talent networks

By the end of 2017, almost half of the world’s workforce will use freelance talent. Service industries will begin to rely on subcontractors as their primary talent. Clients want qualified workers at lower costs. Freelancers are flexible, skilled, and can produce quality outcomes. Digital talent networks let firms identify, classify, and attract qualified workers without the overhead of employing them directly. This new model reduces recruitment, training, and overhead costs.

The time for disruption is now

Avoiding digitization is no longer an option for professional services. Future growth depends on adapting to new digital methods and processes. The brink of disruption is now, so it is time to embrace these digital business models. Failure to adapt will cause your clients to look elsewhere. They will go to competitors who focus on customer needs, desires, and outcome-based results.

Professional service companies must remember that digital disruption is not a bad thing. It is an opportunity to provide better services to customers with improved methods. Digitized expertise, talent, service delivery, and engagement allow for nonlinear growth. Adopting new business models will disrupt the professional services industry. You can choose to benefit from these new opportunities or fall behind. By embracing digitization, businesses will lead the way into the new digital age. This new way of thinking can drive your growth potential to new, unimaginable heights.

For more insight on the new digital age, see Digital Is Your Business: The Case For New Business Models.


Eric van Rossum

About Eric van Rossum

Eric van Rossum is global vice president and general manager for Professional Services Industries at SAP. He is responsible for the company’s overall strategy for this industry, oversees the global business in the sector, directs product and solution road maps, and leads go-to-market activities.