Enterprise Times asked several vendors two specific questions about trends in 2023. We received responses from Aprika, FinancialForce, Planview, Smartsheet and Unit4.
Business Trends
The first question was, what three business trends will affect the professional services sector during 2023? There was a degree of consensus with all five business leaders indicating a focus on profitability during the economic downturn.
A focus on profitability
Louise K. Allen, Chief Product Officer, Planview, commented. “To support company profitability, PS will need to balance revenue growth, retention, and profits and margins through more strategic planning and execution.”
Andy Campbell, global solution evangelist at FinancialForce, answered: “One key trend will be maintaining profitability against the backdrop of economic strain, achieving business growth without increasing headcount. With tighter control of cash flow and a greater reluctance to spend money, businesses want to make their spending go further. This focus on ROI and rigorous insight into cost vs value, will be a priority.
Colin Johnson, co-founder and CEO of Aprika, expanded the answer slightly, noting, “While Mission Control has bucked the trend, we’ve definitely noticed declining budgets and head counts across the industry and a refocus on profitability and margins over the past few months and expect that to continue into 2023. Dovetailing from that, we’ve also noticed a huge requirement to get more from less, to create efficiencies and use tools that drive productivity without having to rely on increased revenue.”
Talent
The second most common answer was around the retention and acquisition of talent, an ongoing theme from the last two years.
Allen noted, “The labor market remains tight—attracting and retaining talent continues to be challenging. PS can engage and retain employees in a number of ways, including aligning projects and skills with career growth trajectories.
Bryce Wolf, Senior Manager, Industry Solutions, Unit4, commented, “War for talent continues to trend, and succession planning becomes critical. Changing workforce demographics means PSOs must consider how they replace experienced middle and upper management. With so much movement in the market, effective succession planning creates opportunities for candidates with promotions and new challenges.”
Sarfraz Ali, Vice President and Head of EMEA, Smartsheet noted the importance of digitally upskilling existing talent. Johnson, again, had a slightly different slant to the talent issue noting, “Finally, with the expanding gig economy, discussions around 4-day work weeks, the explosion in freelancers, and cultural shift to remote work– we fully expect businesses will need to be more flexible, agile and accountable to how they manage and enable their resources. “
Other trends
Both Allen of Planview and Ali believes that professional services organisation will need to deliver more value with Allen, alongside Johnson and Wolf noting a move towards subscription models. Allen commented, “PS will be relied on to deliver more value for customers and to the business with subscription models for recurring revenue and outcome-based service offers.”
Campbell advocated a trend towards outcomes-based approaches, noting the time to value as being important. He noted, “2023 will see a move to an outcomes-led approach from service providers and customers alike. Businesses will prioritise value and speed to deployment. Crucially, this will require balancing faster deployments with long-term strategies, to avoid falling foul to short-term benefits at the expense of the big picture.”
Campbell also sees a maturing of customer success within professional services. This is not surprising following the launch of the Financial Force Customer Success Cloud solution in 2022. He said, “We’ll also see an increasing professionalisation of the customer success function. Organisations have cited customer success as a focus for years, but it’s still nascent in many businesses. It is more than just providing good support; it’s about proactively engaging with customers, regular communication, and effectively managing that relationship.”
Johnson provided the final insight noting, “As corporations continue to expand and contract, start adapting to a post-COVID world and continue their digital transformations, we’ll also see elevated requirements for change management across organizations to nurture and enable employees through changes in people, processes, technology and culture.”
Technology Trends
The second question asked was what three technology trends will impact the professional services sector most during 2023. It prompted five different answers, each aligned partly to the technology the companies offer as much as the trend within professional services. There were some common themes, notably automation, whether it is through increased efficiency or a no-code/low-code platform.
Planview
Louise K. Allen, Chief Product Officer, Planview, answered, “The three technology trends that will have the most impact on professional services (PS) sector in 2023 are moving beyond manual processes, a focus on connectivity, and adopting integrated work management software.
“Manual processes (i.e. spreadsheets) are inefficient and crippling in terms of visibility that’s needed for service delivery, particularly during market volatility and potential hiring slowdown.
“For example, our customers find value in our PS automation software because we connect the entire service delivery lifecycle to create a single pane of glass to run and control all aspects of their business with enough flexibility to adapt and scale.
“Second, connected services organizations can connect their people with the right technology for client engagement, opportunity planning, flexible delivery, and financial insights to keep customer satisfaction high while driving revenue. Finally, utilizing integrated work management software tuned for client delivery will be critical in the new year.”
FinancialForce
Andy Campbell, global solution evangelist at FinancialForce, said, “Three S’s will dictate 2023’s tech trends: streamlining, simplification and subscriptions.
“Organisations are increasingly aware of the limitations of having complex webs of systems and software. Navigating dozens of spreadsheets is not conducive to quick deployments, and it makes vital processes time-consuming and difficult. Businesses are looking to streamline and automate operational functions, and we’ll see that continue.
“The people dimension of business will inform tech simplification. Making employees happier involves giving them opportunities to develop and succeed and creating an engaging work environment. Simplifying the digital tools they use to do their jobs will go a long way to giving employees more space for collaboration, innovation and development.
“Finally, as SaaS reaches new levels of maturity, especially amid a tougher economic climate, the tech that supports effective management of new revenue streams such as subscriptions – platforms that simplify revenue recognition in line with IFRS15 – will become increasingly important.”
Unit4
Scott McIntyre, Global Head of Product Management Industries, Unit4, said,
“Having a single integrated source of truth on information around people, financials, and projects is critical to Professional Services Organizations (PSOs). In the current economic climate, we see PSA capabilities being integrated or being part of ERP systems and a greater focus on ecosystem integration with other applications, including HR and CRM.
“New subscription models for PSO have created demands on project billing and resource management, which are more complex and therefore require a more sophisticated, integrated real-time understanding of people, finance and projects (PSO triad).
“PSA functionality is moving towards closer integration with the core ERP system. We saw this reflected in the 2022 SPI Benchmark, where PSA adoption was down. We see that PSOs are not just adopting vanilla ERP systems, but ERP tailored for their specific industry (Consulting v IT Services). An industry-tailored model is essential to enable faster adoption at a lower cost of implementation.”
Smartsheet
Ben Canning, Senior Vice President of Product, Smartsheet, said, “In 2023, we are going to continue to see the need for organizations to invest in technology that helps enable their teams to focus on larger and more complicated problems rather than getting bogged down in daily tasks.
“First, organizations have to consider enabling the entire bench, not just their technology teams. This can be done by investing in no-code technology, which allows anyone to build tools and processes that can be implemented without needing to know how to code. Additionally, investing in increased workflow automation will enable teams to schedule repetitive tasks so they can focus on more strategic work.
“Lastly, the world has changed– with global and asynchronous teams more common than ever, it’s now critical to invest in enhanced collaboration tools to bring teams together– regardless of their location.”
Aprika
Colin Johnson, co-founder and CEO of Aprika, noted, “Between the growing demands on data hygiene and platform security, I think we’ll see a move toward platform consolidation. Gone will be the days of a million apps doing a million things and consolidating into overarching projects or business platforms. This single source of truth will allow for greater transparency, reduce security risks and drive down costs.
“Data collection, analysis and accountability will continue to evolve in 2023. How data is gathered, interpreted, securely stored and utilized for growth will be a major focus and the businesses that adequately resource this function will benefit from data-driven decision-making.
“As the consolidation of tech stacks continue, we expect business will reduce their need for separate skill sets. Moving towards a centralised platform removes the need for administrators for separate systems, enabling reductions in operating costs.”
Enterprise Times: What does this mean
2023 is going to be a tough year for professional services organisations. None of the above predictions is outrageous, and all could easily come to fruition. Companies will need to focus on profitability, with rising costs from suppliers and staff likely leading to pressure to increase their prices. What business needs to avoid happening is a vicious circle that leads to further rises in inflation and further price increases.
Outcome-based engagements are an iteration of value-based pricing, and client organisations will want to ensure that organisations can measure and deliver value during the engagement. Open-ended contracts are less likely with SaaS software not offering the can customisation options that companies once required.
This is the first predictions piece around an industry that Enterprise Times has published, and we would like to thank all the contributors and would also like to wish all the PSA vendors we work with a prosperous 2023.
Professional Services tools such as PSA, PPM, and work management solutions will likely see increased adoption in 2023. The three types of solutions are drawing closer together, with functionality increasingly overlapping. However, they are unlikely to merge into a single sector as there are some fundamental differences between the requirements for each.
After some consolidation in 2021/2022, more may come in 2023. However, by the end of 2023, the winners and losers will be clearer.
