… but many professional service firms are not prepared for it.
An article by Sebastian Hartmann, June 2019
As professional service firms respond to clients demanding more tangible solutions, consultants, tax advisors, auditors, lawyers and marketing agencies are experimenting with the next generation of business models. We see professional services clearly pushing into „everything-as-a-service“ and generally much more „digital“ approaches to delivering their expertise and value. This has created a renewed and even greater appetite for data than ever before – and not just their clients‘ data, but their very own data: A discipline which has often been neglected and is mastered only by few players. I believe that next generation success models in professional services will be determined by a firm‘s ability to generate and leverage data in order to use analytics and artificial intelligence to drive insights, actions and value for clients, as Megan Beck and Barry Libert explain.
The problem: Many professional service firms are only used to working on and with their clients‘ data – to some extent. There is even regulation in place in many countries and an increasing awareness of these traditional data needs within the firms. Nonetheless, there is still an almost universal lack of robust data architecture and management around most client data processes, sources and pools. Even more dramatic and frequent is the wide neglect of the core and alternative data sources of professional service firms themselves. Here are just some key examples of questions, for which most firms would severely struggle to find the answer – let alone the data:
- Data on services, products, solutions: What is the firm actually selling to clients? How well are their solutions doing across clients? Which versions and variations are being delivered? So basically all descriptions, definitions, master data etc. that paint a meaningful picture of their business down to client-relevant deliverable levels.
- Data on value chains, delivery processes and resources: How are services, products and solutions being delivered? What do the processes per item look like and how are they performing? Which deliverables are created at how much costs? What is the actual price per deliverable and the entire solution? Which elements are standardized, repeatable across clients and where does customization set in? Which methods, insights and tools are being used? All these data points are often not collected in a systematic approach across all client engagements, but will become crucial as the next generation of business models becomes mainstream and more complex value chains cry for management.
- Data on client journeys and sales channels: How and through which channels are clients interacting with the firm? What does the customer journey for certain clients or typical issues look like? How well do services, products and solutions sell in which channels? How to best optimize channel usage and orchestration?
These questions may be asked on occasion, but cannot be answered repeatedly or systematically for most professional service firms – still, one might say. Finding answers has been left to the domains of knowledge management approaches or CRM efforts, which mostly share one trait: They fall short of their expectations and represent administrative hurdles instead of value generators for the business.
Only about 20% of professional and B2B service firms feel to have a very effective enterprise-side data management in place, according to KPMG‘s CIO survey for 2019. The traditionally fuzzy nature and artisan guild thinking of professional services is probably a particular driver of these challenges. Moving away from „keeping people utilized“ towards „delivering clearly defined solutions in a reliable way“ requires a major shift in strategic thinking on the management levels. And, we can now witness this paradigm shift for professional services taking shape: Technology spend is increasing dramatically and is strongly driven by the search for technology-driven and innovative growth, including new business models. Again, our recent survey underpins these developments, which in turn drive exactly the above mentioned questions (see also „Strategy For an With AI“ by David Kiron and Michael Schrage). In order to find answers, data is becoming the key ingredient for the next generation management playbook.
The „race for data“ in order to deliver on the promises of Big Data, Machine Learning, Artifical Intelligence and especially new and digital business models, is clearly on. It will drive more rigorous business architecture, data models and, actually, more holistic management efforts in general to professional services. Something, that may be long overdue for a number of reasons.
So, I advise professional service firms to do at least four things to shape up their data game right now and brace for the impact from new competitors:
- Envision and define data driven client solutions and/or delivery improvements. Infuse your thinking with client and other external input. Look for similar patterns in other industries. Once you have identified interesting use cases, work back towards the right data sources and supply chains for each case. Do not treat this as a one time exercise: Make it part of your strategy discussions, leadership and management meetings across the firm. Over and over again. Identify the right visionaries and evangelists within different areas of your firm in order to inspire action and keep momentum.
- Create overarching data management responsibility, but also awareness and a sense of purpose and ownership across the firm. Take your key players on the data journey and create measures of success for „their“ data elements to the big picture. Work actively with the different groups of data creators, processing units and beneficiaries across the firm to realize specific and tangible use cases and thus success stories. Do not forget to celebrate success with everyone involved.
- Pool your data & analytics competencies in one place or a virtual organization. The right talent, like data scientists, business and information architects etc., are still scarce in many firms. Putting them within each business unit or assigning them to just single services or use cases is like „butter on too much bread“. Pool your talent and work across all business units, services, products and solutions with a strategically prioritized view on potential for success and your firm‘s learning curve.
- Identify the right partners to shape and execute your data strategy. This requires an honest assessment of your own capabilities – something that may be hard to swallow for larger professional service firms, who claim „to have all capabilities for their clients‘ digital transformation“. But this game is not about advising yourself, but relentless execution and mastering digital business operations. Find the right technology partners and talents, who have played this game before.
Systematically designing and shaping your digital business architecture for data sources, collection and usage across the firm is becoming a key capability in professional services – and necessary in order to unlock the promises of artificial intelligence.
This capability may determine success or failure for the next generation of business models. Especially in a professional services context, this thinking and capability must power strategic analyses and decisions, drive internal optimization and at the same time focus on the essence of delivering value the right way, at the right place and time for clients.
Take your organization on this journey towards a new world of technology-enabled, data-driven and AI-powered solutions for your clients. And start this journey now – it will take some time.
… but many professional service firms are not prepared for it.
Looking forward to hear your thoughts!