Intelligent technologies are here. And few people question whether machine learning, natural language processing, and blockchain will make a tremendous impact. Yet, many leaders don’t know how to get started – and those from small and midsize professional services firms are no exception.
Because these technologies are so new, the full range of opportunities and risks are not well understood. But, according to IDC, if firms don’t digitize their products, services, and operations over the next three years, those organizations will find themselves competing for a progressively shrinking minority of their market segments’ opportunities.
Business leaders know action is needed, and the risk of doing nothing is incredibly high. Why? Because the market will judge professional services firms on their capacity and commitment to apply intelligence both in automating internal operations and in delivering services digitally.
Where do firms begin when time, people, and cash are limited?
Most small and midsize professional services firms are laser-focused on delivering client needs, so they often consider internal processes and strategy only in their spare time. Given the predicted impact of intelligent technology, firms must start now to define and execute a digital strategy. The keys to success are to get started and learn along the way. No one has digital figured out completely, and the early movers will have the advantage.
Intelligent technologies in the professional services industry can give small and midsize professional services an advantage and be realized through multiple innovative approaches:
1. Intelligent process automation and guidance
One of the easiest ways to start is by applying machine learning to the intelligent automation of internal processes. This means going beyond bot automation to achieve truly intelligent automation and guided interaction.
Automation of even complex tasks is expected to happen within the next decade. A study conducted by Oxford University’s Martin School predicted that 94% of auditing processes will be automated by 2025. Deloitte, for example, uses machine learning to reduce time spent reviewing accounting documents by 50% or more which allows staff to focus on value-added analysis and interpretation activities. Other firms are also evaluating machine learning to automatically staff simpler project requests, which will make more time available to resource managers for higher- value activities.
Unlike bots, machine learning can also identify trends, uncover insights, and trigger alerts when unusual patterns emerge. This provides staff and management with the right guidance at the right time. For example, the system can learn when high-risk staffing conflicts might cause a project to go off track and alert the project manager, or even to identify high-risk situations when talent may consider looking for another job.
2. Intelligent client service delivery
Digital technologies can also be used to capture knowledge and deliver it to clients digitally. IDC predicts that by 2020, 90% of large enterprises will generate revenue from data as a service – an increase from just under 50% in 2017. These services would be delivered through client-facing digital services and complimented by high value-added professional services when needed.
One example of such a digital service that is already in the market is digital Sarbanes-Oxley compliance audits. Clients can upload extracts of their ERP and HR systems and be guided by the system to pinpoint possible compliance issues. If issues are found, the client can then engage professionals at the firm to provide detailed analysis and client-specific recommendations.
Upfront investment in digital product development is required to deliver highly scalable and profitable revenue downstream. This also means that professional services firms would run more like a product company, requiring significant organizational change and investment and resulting in software-like margins and market valuations.
3. Service delivery platforms
Industry lines are blurring as firms bring data, technology, and people-based services together on digital platforms that provide differentiated, industry-specific solutions to clients. For example, technology firms are complementing their existing cloud-based software with new data and high-value professional services. Meanwhile, some professional services firms are developing new digital delivery models that complement their existing people-based services.
According to IDC, “the rising digital economy means that all enterprises must operate like digital-native enterprises — that is, rearchitecting their operations around large-scale digital innovation networks, becoming, in effect, a new corporate species.”
Already there are life science technology platforms that combine data, cloud software, and experts to provide unprecedented value to pharmaceutical and medical device companies. In retail, we see digital platforms that track and sell point-of-sale and digital-coupon data and offer expertise to help clients interpret and execute on their strategies.
A digital platform provides a massive return on scale. As its services attract new customers, new data is generated which increases the value of the platform further. Professional services can then be leveraged to tailor the platform to customer needs or to extract additional insights and recommendations. Meanwhile, new business models continue to emerge as the market figures out how to combine and scale data and services – creating competitive opportunities for professional services firms to explore.
Combining technology and people-based services
Intelligent technologies present considerable growth opportunities for professional services businesses. When immediate steps are taken, small and midsize firms can be in a prime position to grow profitably and respond to competitors and new disruptive rivals.
At the same time, we must not forget that adopting digital technologies is a process – one that requires discipline and the willingness to change the operating model. At a minimum, small and midsize professional services firms must be open to more disciplined investment in internal processes and, most likely down the road, shift to making focused R&D investments and organizational changes that help them operate more like a technology company.
The key is to start now. Build experience applying digital technologies to your own operations and quickly define a strategy to become a fully digitized professional services organization.
Understand how small and midsize professional services companies are going about digital transformation, what challenges they face, and how their efforts will pay off. Download these white papers to get insights into how you can transform your business:
- The Digital Professional Services Firm Unlocking New Business Value with Digital Technologies
- The Transformation Imperative for Small and Midsize Professional Services Firms