Digital Transformation And Professional Services Firms: Effects, Shifts, And Key Strategic Recommendations

Eric van Rossum

Digital disruptions have transformed how companies and their customers interact. This is especially true in the professional services industry. Channels, business models, and revenue streams are being transformed by apps, cloud computing, machine learning, and on-demand digital services. Executives are being forced to turn to digital transformation to stay competitive. But is the professional services industry on the right track?

Two areas affected by digital transformation within the professional services industry include:

  1. Linear talent acquisition: Talent today has evolved substantially over the last 10 years. Collaboration apps, mobility, the globalization of talent, and the resourcefulness of digitally savvy professionals has produced a new class of workers. This has contributed to the fact that 38% of the workforce is now considered “non-employees.”
  1. The growth of services automation: The rise of new technologies, including cloud computing, Big Data, machine learning, and artificial intelligence, has enabled automation of repetitive and predictable tasks. Some of this automation can now be managed by bots. Bots are taking the place of admins, customer service representatives, data researchers, and executive assistants. At the same time, cognitive technology solutions can learn to analyze data, build models, test strategies, and make recommendations to decision-makers.

What these changes mean

First, expertise is being digitized. A combination of advanced smart automation and on-demand talent sourcing is allowing professional services firms to address changing capacity issues with minimal investment (risk). It is unclear how much of the deep analysis and insights workload will shift from human workers to sophisticated machine learning and cognitive solutions, but the shift is underway. Firms that take advantage of these technologies are likely to enjoy a significant competitive advantage in the coming years.

Second, on-demand talent acquisition is mirroring the shift to on-demand IT. Just as on-premises IT investments have been shifting to a hybrid model of on-premises and cloud-based solutions, talent investments are shifting towards a hybrid model of employees and contingent workers. Through this digitally enabled model, firms are not as limited by their budgets as they once were and can now staff up or down as needed and generate non-linear growth.

Increasing the ratio of remote and contingent workers presents new challenges for business leaders, HR professionals, recruiters, and project managers. There are cost efficiencies of being able to hire and access expertise on demand.

Access to online skills development and training for employees adds a new dimension of agility and value creation for firms looking to develop their employees and help them upgrade their skills. The same access to training and professional development can be leveraged to fill knowledge and skills gaps for contingent workers before assigning them critical tasks. This ability to skill-up on demand is an integral element of this new digitally enabled hybrid model of talent management.

Third, execution is being digitized. Technology helps firms automate and scale service delivery. They can expect lower costs, higher revenues, and improved outcomes. For smaller firms, this lowers barriers of entry. These firms can now address the challenges that kept them from competing. As capacity scales, firms will find themselves in a position to leverage talent and technology. They will be able to develop new types of services or find ways of delivering services in new formats.

As collaboration tools become more intuitive, teams will learn to work better together. This access to specialized solutions allows professional services firms to run processes and provide a consumer-grade experience for users.

Data analytics and automation solutions allow firms to identify problem areas and opportunities. This will generate deeper insights in real time. It will also inject more precision into predictive models.

Last, the next digitization frontier focuses on customer engagement. One aspect of the digitization of business that we shouldn’t overlook is the increasing consumerization of customer acquisition, development, and retention. A combination of technologies enables firms to anticipate customer needs and improve operations. The same solutions allow for a faster response across all channels.

Key questions to consider

The purpose of digital transformation as it pertains to professional services firms is to adapt to the new reality. New technologies are assets to use for growth. How can digital tools help large firms protect their dominant position? How can they help small or young firms compete against large or established firms? How can they eliminate pain points, reduce friction, and accelerate success? These are the questions that every digital transformation initiative should strive to answer.

For more insight on digital leaders, check out the SAP Center for Business Insight report, conducted in collaboration with Oxford Economics, “SAP Digital Transformation Executive Study: 4 Ways Leaders Set Themselves Apart.”

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.