30 Apr The Rapidly Changing World of Professional Services
Disruptions and major transformation are on the agenda
Anyone in the professional services industry already knows that businesses are facing a host of new challenges each year with 2020 being far from an exception. In ten years’ time, this industry will look significantly different than it does today even in spite of COVID-19.
The day-to-day world of professional services will continue to shift as client and employee expectations adapt to the onset of new technology accelerating to compensate for present-day hurdles.
Let’s take a closer look at the key issues and challenges faced by industry leaders in the global economy:
Clients are more demanding and better educated
It should come as no surprise that a majority of service providers say that customers today have come to expect far more than ever before. Clients demand greater value, better quality and faster delivery of their solutions and services. Transparency and empowerment also place high on the list of must-haves.
These increasing customer expectations are driving the growth of a range of services available as many executives have widened the scope of their service offerings in recent years.
The competition is heating up
Studies have brought forth agile concepts and innovative business models as key success factors to surpass the competition. This sector had been undergoing a considerable degree of consolidation in 2019 and that has only sped up in 2020. Companies are being acquired and merged in record numbers as new companies backed by solid financing and offering a different business model are being launched at a rapid pace. At the same time, new technologies are threatening to commoditize the high-ticket services which are the bread and butter of many stakeholders.
The growing trend towards deregulation is also playing a ongoing role in some sectors by freeing up restrictions on almost all aspects of service provider property. This opens up the market for innovative business models that were not possible in the past due to regulatory constraints.
It is worth noting that many companies still rely on their expertise as a key differentiation strategy. Based on the current speed of technology innovation, which is not about to slow down, combined with the fact that specialists will most likely be working somewhere else within a few years, this strategy is suffering from a lack of long-term vision.
To counter this issue, it seems obvious that having a focus on customer and employee loyalty is becoming a priority in order to stand apart from the competition.
The war for resources
One of the points raised by a majority of the companies surveyed was the constant need to find new skilled employees. As new technology and techniques are taking over the market, these businesses are constantly under pressure to keep up with the changes.
Both to resolve this issue and address the obstacles involved in operating a business during a global health pandemic, many companies are now offering flexible working conditions and remote opportunities to attract new employees or retain current staff, as well as leveraging the self-employed market and outsourcing to contractors. This approach allows them to secure the right skill sets at the right time, while avoiding investing large amounts of time and money to recruit, train and manage resources.
Organisations that will be able to build on and make good use of various talent networks while offering staff flexible or remote work opportunities will stand out from the rest.
People buy differently
The evolution of the buyers’ journey was already a growing phenomenon and it has been further accelerated by COVID-19 as an increasing number of consumers and clients pursue non-traditional channels (digital, contact-free) to find the services that meet their needs.
Even the way people are getting recommendations is changing. Organizations have been forced to build and protect their online reputation for example, with sophisticated content marketing and “organized and structured” engagement programs on social media.
Services purchased through “à la carte” models are attracting a growing number of supporters. It is quite compelling to be able to choose different providers for different tasks to then combine their unique expertise. In this context, online marketplaces, as an example, are providing customers with an easier way to find alternatives.
There is no doubt that many companies felt ill-equipped to adapt to these changes in the early months of 2020.
Technology as a disruption of daily life
Everything points to the fact that technology is in the process of significantly altering the way we use professional services. As technology gives way to new methods of organizing and providing professional services, it is altering the very nature of the expertise delivered by professionals to their customers.
We are already witnessing the rapid pace of automation as machine technology moves to entirely replace low-end services that can be optimized by self-service platforms. Look no further than your local grocery store’s self-checkout counter and how the number of stations has only increased in large chains with the resources to adapt quickly.
Digital technology is and has been the biggest disruptor. It is primarily powered by social media, mobile devices, cloud services, Big Data and AI. However, new technologies cannot solely be viewed as a potential threat to the professional services industry, as it can also become an opportunity to redesign the way these companies are conducting business.
Here are a few examples:
Companies that are integrating artificial intelligence, Big Data and hands-on learning to manage their tasks, processes and highly complex decision making will be able to enhance the speed, precision and, ultimately, the quality of services they offer.
From problem resolution to prevention, real-time data access will shift the consulting approach from one of problem resolution to one of prevention, as potential issues will be identified earlier in the various work processes.
The increasing use of new communication technologies will extend the footprint of the business and offer the ability to connect with clients all over the world.
Clients of the future
Customer needs are already changing and will continue to evolve as the current technology revolution unfolds. We can expect the following:
- Customers will turn more and more to technology and automation as a means of securing services and knowledge. They will be able to do this via a services marketplace, knowledge sharing or through online consultants whose services are powered by technology and artificial intelligence.
- Customers will be demanding immediate results and actively seek out price competitive providers. They will require the pricing to be in-line with the results and value, rather than expressed as an hourly rate.
- There will be a higher value placed on the business relationship as clients and provider will work in closer collaboration when possible; on the flip side, it will also be quite common for clients and consultants to be located on different continents.
- Multidisciplinary teams will be gathered which will include several service providers in order to meet client needs.
Digital transformation in no longer optional
The scenery is changing all around your organisation. If you have yet to notice, take a closer look and start your digital shift as quickly as possible, if you have not already done so.
If you delay making the changes that will be required to adapt to the new way of doing business, you are at risk of having to undergo a radical transformation of your company in the not-too-distant future. It goes without saying that the transformation of your business model will always be easier if you proceed incrementally and/or by sector. Take advantage of that time to explore new market opportunities and/or develop new service offerings.
You can find inspiration in the principles of continuous improvement management to ensure your change process will not weaken your company culture. Adopt a flexible organisational structure to facilitate the implementation of new digital technologies. And never forget to stay focused on the core competencies that continue to add real value for your customers, today and in the future!