Certinia has published a report that looks at the opportunities and challenges facing professional services organisations (PSOs) in 2024. The Global Service Dynamics 2024 Report (registration required) is based on a survey. This was conducted by Dimensional Research of over 1,000 professional services organization (PSO) leaders. In a supporting blog, Greg Smith, Head of Global Product and Solution Marketing for Certinia, highlights that 54% of respondents see adapting to AI as the biggest challenge over the next year.
However, AI is truly a double-edged sword. With AI offering the promise of increased efficiency (87%), service quality (69%) and profitability (66%). Smith notes, “PSOs can (and should!) be a profit center for businesses when managed efficiently. One avenue to drive that efficiency is the strategic deployment of AI to boost the capacity of teams — not replace them.”
The report is 18 pages long and is a well balanced mix of commentary, data visualisations and analysis. There are also a few comments within the paper from customers and analyst firm TSIA. Oddly, there is no supporting comment from Certinia within the report, which starts with the methodology and an executive summary.
The report is divided into three main sections: Top Challenges, Objectives and Strategy and Technology matters. It concludes with the key takeaways. The focus draws towards the need for PSOs to move away from spreadsheets and disconnected tools and adopt a solution like Certinia, which can provide a complete opportunity to cash solution for PSOs.
The final quote from a Certinia user, Mark Conklin, Senior Director of Operations, Salesforce, is compelling. He said, “The numbers are mind-blowing. In the last three years alone, we’ve integrated 10 companies, added 7,000 users, managed revenue forecasts to 1% variance +/-, increased our billable hours by $14M and are pushing $2.5B through the professional services automation app from Certinia.”
What is in the report
The top three challenges facing PSOs over the next 12 months are significant economic change (54%), adapting to AI (54%) and the rising cost of labour (49%). There are, however, some concerns about the lower demand for professional services (22%) and the difficulty in hiring talent (40%). These seem contradictory, but finding talent is a challenge seen in other surveys.
Of greater concern is the lowering demand without a qualitative element. Though the answer to why this is the case is not available. Also, with no trend analysis from a previous study, it is difficult to know what lies behind this decrease. Is AI having a bigger impact on the industry, with talent harder to find and replacing what PSOs do?
The report looks at IT Tech and traditional PSOs and it highlights some of the differences between them. Internal challenges such as increasing productivity (52%) and profitability (48%), according to all respondents. Within PSOs, specifically, balancing workloads (48%) is also seen as a challenge. Is this because there is still a reliance on spreadsheets rather than modern integrated resource management solutions?
Can growth continue?
Despite the economic turmoil of recent months, 82% of organisations have grown teams in the last 12 months. However, with job losses highlighted across the industry, the report does not indicate whether this growth is organic or achieved through M&A activity. It may not mean that the industry has grown over the period, as the survey cannot identify that.
The future looks positive though, with 85% of professional services teams looking to grow in 2024. The report looks at the hiring strategy, with 53% looking to hire both FTEs and contract staff. However, again, whether there is a balance between M&A and organic growth is unclear.
Technology Matters
On technology, firms are still using tried and tested and ancient technology across people, finance and projects. With spreadsheets being used by more than half in all cases.
John Ragsdale, Distinguished Researcher, Vice President of the Technology Ecosystems Technology Services Industry Association (TSIA), makes a salient point in the report. He says, “The pervasiveness of spreadsheets, disparate collaboration tools, and homegrown solutions to manage professional services delivery work in a disconnected manner is at the root of many of the challenges professional services teams face.”
The introduction of AI may be about to change things as it is seen by 81% as a way to increase efficiency. While 61% plan to use AI to address external challenges. To do that, organisations must consider their whole tech stack. AI should not work in isolation. Certinia offers solutions with embedded AI that enables PSOs to automate and improve operations.
Enterprise Times: What does this mean
The report is well put together without some of the direct marketing pitches that many other industry reports have. It gives an insight into how other business leaders are thinking about the challenges and opportunities for the industry. The report is a quick read, but does not dive into some of the more interesting and searching questions about why people answered what they did.
It does, however, show what the typical utilisation rate for professional services teams is, with two-thirds achieving over 70%. However, with many reliant on spreadsheets to measure this KPI, how accurate these figures are is open to question.
For a quick read, the executive summary provides most of the insights available in this report. However, it could have been further improved by the authors posing some questions to the reader that would make them consider their answers more deeply within their organisation.
