Deltek has issued its 4th annual EMEA and APAC Clarity industry study. 74% of firms believe they will lose market share if they do not digitally transform their business — notably, 45% of firms placed investing in technology as the top priority.
The report is based on findings from a survey of 549 respondents from architectural, engineering and consulting professional services firms. 3Gem Research and Insights conducted it. The report includes UK, Germany, Nordics, Benelux, Australian and New Zealand findings.
The report is around 30 pages long, and the executive summary consists of five sections that dive into the survey details. There is very little breakdown by country in the report, though.
Neil Davidson, Group Vice President for the Professional Services Sector at Deltek, summarizes, “This year’s report shows how 2023’s global economic outlook is presenting the architecture, engineering and consulting industries with a variety of challenges. This has created a strong focus on investing in technologies to gain competitive edge.
By tracking trends in KPIs, digital transformation strategies and robust CSR initiatives, firms can be more informed on what is impacting their bottom line, be agile enough to pivot adapt to addressing any potential threats or seize opportunities and have in place the credentials to future-proof their business. The research suggests that in 2023, the most successful businesses will be those that re-evaluate their priorities and direction – particularly in the areas of maximising investment returns, CSR and workforce management.”
What is in the Clarity report
The summary draws out ten key findings from the report. The top priorities are:
- Investing in new technology, expanding into new markets, and attracting more talent
- Cyber security (63%), the risk of recession (62%), and inflation (61%) are the biggest concerns
- Firms plan to invest in technology, but not doing so risks market share
- Digital transformation will likely occur within five years
- Barriers to digital transformation include budgets and talent skills
- Smaller firms are finding it tougher to digitally transform
- There is room for improvement in KPI measurement
- ESG is growing in importance
- While two-thirds of firms plan to increase their workforce, finding and retaining talent is a challenge
- Firms expect profit growth from more engagements from existing or new clients
The rest of the report introduces each section with a summary and key findings. The data from the survey is visually displayed with analysis from the authors and quotes from Deltek customers that add a qualitative element to the survey. While there are comparisons to last year’s results, there is little in the wait of trending information over the last four years of the report. However, with Covid, those trends may have proven unusual.
- Opportunities & Challenges: Lays out the priorities, challenges, and opportunities AEC firms face. It also dives into the top challenges for project management.
- Technology Trends: Looks at investment in technology, the impact of not doing so and how quickly firms intend to transform. The report looks at the importance of emerging technologies noting Data Science as the most important (87%), but many others, at least 77%, are somewhat or very important. It looks at how prepared forms are for digital transformation and the understanding of the latest tech available.
- Tracking Performance Metrics: Confirms which metrics are used within AEC firms but indicates a surprisingly low level of automation, with 86% still manually entering financial data for projects.
- Corporate and Workplace Metrics cover the metrics used for business and project management performance, the top KPIs being margins (74%) and profitability (73%), respectively. Financial KPIs dominate, and although organisations have raised the importance of ESG, 74% report they are now more important to their firm than at the start of 2022. The KPIs used do not reflect this! The survey examines the importance and development of Talent, CSR and ESG strategies.
- Profitability and Growth Potential: 71% of firms expect to grow profit. The survey highlights different ways they intend to achieve that, including reducing expenses (28%), balancing employee cost ratio (27%) and increasing cost control (27%).
Enterprise Times: What does this mean?
Despite its length, this report is easy to read and has several interesting insights. It is also reflective of many other quantitative surveys about similar subjects. Optimism towards growth but concern about finding the right talent is one. The rise in importance of ESG and CSR, but no concrete plan that applies KPIs to the business. That will need to change as legislation emerging over the next few years will especially impact smaller firms around ESG.
What Deltek will find good news, is the urgency that is now being applied to digital transformation. It seems a tipping point has been reached. For Deltek, with its extensive partner ecosystem and global presence, this is good news if it can fully capitalise upon the desire for transformation and investment in technology.
