Professional Services Organisations (PSOs) are under pressure from all possible directions. PSOs have to work with increasingly technology-savvy clients. They need to navigate around the digital shortage that plagues particular technical expertise and continue to come to grips with automation. They have to understand the repercussions of digital technology on their competitiveness and ability to grow. Furthermore, they must explore how emerging technology can give them a competitive edge, maintain existing client relationships, win new clients, or create new services and revenue streams.
Now, this may be similar to many other sectors and industries across the globe, but unlike manufacturing, retail, or logistics, professional services share some fairly unique traits, which effectively binds them together as a sector. It also differentiates them from other sectors by:
- The importance of the expertise and knowledge of employees to business success.
- Organisationally, this is reflected in the separation of the front office “creatives” – the billable resources who get things done. Supported by the back-office resources and systems designed to support the frontline teams.
- Intangible qualities such as trust and reputation are vital to professional services. However, they are more difficult to assess compared to other sectors.
This blog highlights five key challenges that decision-makers need to consider when selecting professional service technology for their organization. They also need to ensure their technology is serving their current and future business needs.
Client trust factor
As previously mentioned, the key ingredient between a PSO and their client is trust. Clients go to firms because of the quality and reputation of the company. In particular, the expertise of its people. When you’re managing a technology project, you’re responsible for your client’s business, too. If a project is late or over budget, an SEO campaign fails to launch on time or third-party costs rise. This has an immediate impact on your client’s business. This directly affects the way your client feels about your business. It impacts your reputation and ability to win future business.
According to a 2020 report from the Project Management Institute (PMI), 13% of IT projects fail. However, that number only represents the total failures. Of the projects that didn’t fail outright, 31% didn’t meet their goals, 41% exceeded their initial budgets, and 47% were late.
For most businesses, that would be a serious source of concern. For PSOs — marketing agencies, IT consultancies, managed services — there’s a fundamental bigger problem. It can have an immediate impact on their clients and therefore damage the PSO’s reputation and client’s trust.
There are multiple reasons why technology projects fall behind schedule, run over budget, or simply fail to meet expectations. The common denominator is that all of these reasons cause problems for your client, and this will hurt your relationship with them.
The worst-case scenario would be the predicament that Accenture found itself in back in 2019. Its client, Hertz, filed a lawsuit for a failed $32 million website redesign project. Clearly, there was a breakdown in Accenture’s internal development process, which led to the Hertz project failure. Identifying the reason why a technology is not working effectively is the first step to solving the predicament.
Poorly specified requirements
Many organizations have adopted agile processes for their projects because they allow for more flexibility and rapid deployments than traditional approaches. Waterfall processes encourage the creation of documents detailing every technical aspect of the project prior to any work starting. In contrast, Agile encourages a more “on the fly” approach. However, both approaches still require the gathering of useful and effective requirements.
Projects are in trouble when user, technical, business, or legal requirements are not comprehensively documented and communicated to the IT or development teams. The prospect of failure is further heightened when the success criteria for the project is not clearly articulated. When technical teams don’t know the overall project objectives, it’s easier for them to miss the target. Furthermore, initial requirements may change, and those changes are often not properly impact assessed. At the project level, development teams don’t know where to direct their questions, turning communication into a more difficult task. Communications break down and this leads to delays and additional unexpected costs. Applications are built that don’t fully meet the needs of the business owners.
Lack of visibility
Creative, technical, development, QA, deployment teams, as well as suppliers often work across multiple tools. A spreadsheet here, a project management software there. Sharing stored data in different applications makes managing a project’s status difficult and time-consuming. Effort is spent updating spreadsheets and circulating information rather than solving project issues. Without an accurate, timely view of the team’s performance on specific activities, it’s difficult to manage deadlines and allocate resources across projects.
Modern PSOs are increasingly complex matrix organizations with data held in disparate departments throughout the company. According to a recent McKinsey report, businesses must now develop digital initiatives in days or weeks. Previously, they had one- to three-year timing plans. The report highlighted data silos: 33% of business leaders revealed a lack of connectivity between existing IT systems, applications, and data as an inefficiency when it comes to digital delivery. Many PSOs have legacy infrastructure that does not allow interoperability and integration with new tools and enterprise systems. This is particularly challenging for those responsible for developing customer-centric technology projects. They need access to data to create cohesive experiences for client users across an increasing range of touchpoints.
COVID-19 has accelerated the dependency for an on-demand workforce as organizations have shed millions of full-time roles during the pandemic. As a result, many unemployed skilled professionals have turned to contract work. A recent report by Upwork revealed that 36% of professionals are now full-time contractors — an 8-point increase from 2019. As a result, professional services firms have to provide their freelancers with collaboration technologies, cloud solutions, and video conferencing platforms like Zoom and Teams to enable them to work more efficiently and collaboratively.
A recently published report by Mavenlink suggests, “Professional services organizations — uniquely people-dependent and often facing challenges in scaling — have remained underserved by technology, with little innovation to support a modern, on-demand workforce.”
What needs to change?
While the sector remains highly skilled, some back-office processes carried out by firms are repetitive and resource-intensive. Estimates suggest that 37% of the time in the professional services industry is spent on mundane activities. This includes collecting and synthesizing information. Additionally, the large amount of manual work required to compile data between systems was identified as a top challenge by executives from service-centric industries.
Artificial Intelligence (AI)-led technologies and machine learning (ML) can create efficiencies and expand the services offered to clients. Spending several days reviewing documents or contracts is a thing of the past; AI-based tools can carry out routine but complex tasks in a matter of minutes.
The industry is already investing in cognitive technologies. A Deloitte study revealed that AI investment delivered slightly higher returns for professional companies than the median ROI of 17% across all industries. Along with tech, media and telecom companies, professional services firms have made the highest investments and realized the highest returns.
Connecting resource planning and project management
One of the key reasons professional services projects are delayed is resource management. One example of this is when key people are not available at the time they are needed. As a result, managers are forced to check schedules and ask numerous individuals about their workload instead of completing the tasks at hand.
The impact? Projects go red on the risk register because of a lack of visibility and communication that may go back to the initial planning stage. Managers need the flexibility and ability to move resources to resolve project issues proactively instead of waiting for the project to go red or over budget.
A more sensible approach would take account of existing and scheduled workload when planning projects by utilizing a centralized system uniting project management and resource planning. It requires a platform that shares project status, documentation, and skills matrices to all team members. Furthermore, it should support change management, updating project documentation when a change takes place. As a result, project teams would have more confidence when planning and managing a project. Decisions can be evaluated within the context of the entire project portfolio and the business can make more intelligent decisions.
Realizing the full value of technology
The question is how can PSOs realize the full value of “enabling technology.” PSOs need a platform that supports resource management at every stage of the professional services engagement life cycle. Firms need visibility across the entire resource value chain to make more effective project decisions on behalf of their clients.
They need applications available to the entire distributed workforce that share data from existing legacy professional automation systems, CRM, finance, productivity tools, and human capital management. This software will provide real-time progress against timeline and budget using a unified data model so projects run smoothly, predictably, and profitably. These tools connect the tech stack so businesses can execute with precision and extend with ease. PSOs will then have access to coherent business intelligence, insights, and dissemination. The real opportunity to break down those silos to enable your employees to work more effectively. Ultimately, this will drive scale, profits, and competitive advantage.
To find out more about the importance of a unified data model in resource management read this white paper commissioned by Mavenlink. (registration required)
The Mavenlink Industry Cloud for Professional Services™ delivers transformative value by putting resource optimization at the core. It provides integrated project management, collaboration and accounting, enables complete visibility, and scales across hundreds of teams and thousands of projects enabling professional services organizations to operate with unlimited scale, drive predictable outcomes, and realize full margins.