Your guide to digital transformation in professional services
Also known as the post-sale service industry, the professional services sector is large, encompassing many companies. Professional services firms include different types of businesses with various digital transformation needs. Examples are consulting firms, software publishers, IT service providers, manufacturers, and distributors. Each category presents multiple challenges and opportunities as they begin their digital transformation.
Despite these differences, digital transformation in professional services is essential. Statista predicts that global spending on digital transformation will reach $3.4 trillion by 2026, cementing its significance as a business investment for the future of companies of any size.
But what is digital transformation? Which businesses are in the professional services firms? And what technologies does the professional services sector use? Discover the answers to all these questions, beginning with a definition.
What is digital transformation?
Digital transformation is integrating digital technology into business processes as part of an organization’s new approach to change through digital innovation. Businesses adopt new technology to improve efficiency, maximize employee productivity and offer more value to customers and shareholders.
So what do we mean by the professional services sector?
Which businesses are in the ‘Professional Services Firms’?
The Big Four manage most professional services firms: Deloitte, EY, KPMG, and PwC. These companies support nearly all FTSE 100 and FTSE 250, helping them to operate, develop, and grow their organizations using the following methods:
- Consultation – Helping businesses to become more efficient through organizational change and minimizing costs.
- Financial advice – Guiding business strategy with financial decisions.
- Taxes – Advising companies on how to complete tax returns and the best ways to be tax-efficient.
- Auditing – Ensuring the accounts of a business are legal and valid through review.
- Actuarial – Financial risk assessment based on predictions.
These are the ways the professional services Big Four support companies. But how does a transformation fit into a professional services company’s approach to change and efficiency?
How does digital transformation apply to the professional services industry?
Digital transformation applies to the professional services industry in many ways, the first being a solution for the drop in service demand.
A drop-in demand for your services
If your competition can deliver better results more efficiently because they can take on multiple projects at a time, then even your most steadfast customers might explore other options if you don’t manage to keep up.
Increased demands on your project management team to achieve better results
When vital business data is centralized in a fully integrated system, it allows a competitor’s team to quickly track and analyze the information. Streamlined data management makes it easier for them to view accurate and current information, leading to better-informed business decisions.
Outdated systems often result in a loss of productivity as you struggle to compile data. The data is likely obsolete or inaccurate, even if you successfully make sense of it. This point makes it essential to consider within a transformation.
Talent losses or significant pay rises to retain your existing employees
By staying up-to-date with technology, you can keep the most talented employees in your company while also showing them a path of how they can improve their skills for future advancement.
The companies that focused on obtaining new talent and bettering their technology last year have become a more powerful force in the market, which will continue into 2023. On the other hand, those firms who failed to innovate their current talent retention strategies experienced labor shortages as a direct consequence.
Digital transformation creates value
While value can be interpreted in different ways, delivering quality value is a way of strengthening your bond with key groups, like customers and employees. With digital transformation, you can improve your value proposition even more by:
- Enhanced user experience
- Greater process efficiency
- Streamlined workflows to improve staff productivity and well-being
To create the most value, you need to identify where your opportunities are. Additionally, you must consider any challenges you might encounter; for example, digital transformation often means lessening employees’ workloads. You must think about how they will react internally to changes made within the company, as this could result in problems with change management processes down the line.
So here we see how technology can support the digital transformation process in professional services, but what technologies do professional services companies use?
Which technologies are used in the professional services sector?
Technology is at the heart of digital transformation in professional services. It is helpful to split the technologies into each industry, beginning with accounting.
Accounting
There are many technologies used in accounting services. The first of these is blockchain.
Blockchain
Blockchain, also referred to as distributed ledger technology (DLT), is a secure database that can record data for accounting and finance professionals. With blockchain, we can create smart contracts, verify people’s identities and credentials, transfer assets, and perform other functions. This action helps to improve visibility, transparency, and trust within the financial sector.
AI-powered productivity
Accountants and finance professionals can be much more productive with the help of AI algorithms that can complete time-consuming, repetitive tasks quickly and accurately. Doing so saves time and reduces mistakes caused by human error, leading to lower costs and happier customers and staff.
Augmented computing
In today’s world, accounting and financial professionals have access to more data than ever before. However, this data would be limited in its usefulness if we didn’t have the computing power to process it and make sense of it. The emergence of edge computing and quantum computing will allow us to glean insights from data that would otherwise be impossible to understand.
Legal services
Legal services can sometimes overlook technology as an essential tool, but you must incorporate it into business models as part of every transformation. The first of these technologies is analytics.
Legal Analytics
Legal firms must consider evolving client demands and changing market conditions to support the restructuring of processes by analyzing big data.
This is beneficial in the following ways:
- Firms possessing potential clients can identify them and demonstrate expertise for a case almost immediately.
- Likewise, legal professionals can assess and approach cases using a strategy preferred by the client to improve customer experience and boost satisfaction rates.
- Claims made by lawyers often go unsupported due either to a lack of evidence or weak reasoning. Analytics reduces the instances of this happening.
Smart contracts
Smart contracts are digital agreements that complete transactions automatically once both parties meet the specific conditions. They don’t need anybody to check or review them, but they require total trust between both parties involved.
Virtual law
With an increase in working remotely, we anticipate that virtual law will become an even more popular technology trend.
A virtual law firm operates online and typically has no physical location for clients to visit. Instead, they host meetings through digital platforms such as Zoom or Google Meet.
The primary distinction between virtual law firms and more traditional ones is their physical set-up – they are still subject to the same standards and regulations. Virtual firms are often led by independent consultants instead of employees or partners, as is typical with more traditional businesses.
In many cases, clients of virtual law firms benefit from reduced fees since overheads tend to be lower for practitioners. Consequently, legal firms can reduce rates, improving client satisfaction.
Business
The primary trend for transformation in the business sector is cybersecurity.
Cybersecurity technology
Security has become a significant concern in the past decade, with all sensitive customer, staff, and business data stored online, often in the cloud, increasing vulnerability to theft.
Financial firm Hiscox reports that in the United Kingdom, a small business falls victim to a successful hacking attempt every 19 seconds, on average costing £25,700 annually in damages.
Shocking statistics like this are causing a greater focus on improving cybersecurity measures to prevent malicious hacking, data breaches, ransomware, and other cybersecurity threats that aim to steal personal data.
Insurance
The insurance field uses many technologies, the first being predictive analytics.
Predictive Analytics
Predictive analytics help you understand customer behavior and anticipate their future needs and behaviors.
In 2023, insurance companies will use predictive analysis for these main reasons:
- Anticipate future trends
- Assess fraud risk
- To set pricing structures
- Identify customers at risk of policy cancellation
Robotic process automation (RPA)
RPA targets automating tedious tasks like completing transactions, claims processing, and document verification. Some believe this is negative because they assume automation always means firing employees and eliminating human jobs. However, this is not accurate.
If anything, current staff can focus on more complicated processes that are not automated. At the same time, new positions will open up for IT professionals familiar with data analytics and machine learning.
According to experts, by implementing robotics and cognitive automation technologies, businesses will provide employees with more meaningful work while also automating specific tasks, thereby increasing satisfaction.
Telematics Devices
Telematics is the use of telecommunications to gather data remotely. Recently, it has become a popular addition to vehicle insurance digital transformation technologies. Companies install a device in a car’s onboard diagnostics port and measure various metrics such as speed, location, and journey lengths.
Car manufacturers and insurers give this data to customers with suggestions on how they could drive more efficiently and safely – thus qualifying for savings on their policy renewal. Not only does this improve customer service offerings, it also provides insurers with valuable insights into driving habits.
These are the technologies currently used in professional services. But what part do current and new technologies play in the transformation process?
What is the transformation process in professional services firms?
The transformation process professional services firms use to transform their company splits into three sections. The first is transformation.
Transformation
Many companies find it challenging to adjust their business model amidst industry upheaval. The present day is experiencing unprecedented change, and a history of success does not ensure future success in today’s digital world. Many companies find it challenging to adjust their business model amidst industry upheaval.
How can enterprises ensure their strategic business model works with their operating model? This question is what transformation seeks to answer.
Optimization
Businesses often fail to drive efficiencies in processes because they do not factor in the human element. Companies underestimate the human elements that form the most significant challenges in change management and digital adoption. This lack of understanding from employees leads to confusion about role-specific enablement instruments such as work instructions, guidelines, and policies.
Control
Many businesses find it challenging to track how well their processes are running, if they’re meeting requirements, and what compliance and risk mitigation measures need improvement. Without this information, decision-makers can’t take quick or effective action to improve operations.
These three stages describe the transformation process. But what will the future hold for transformation in professional services?
What does the future hold for professional services in 2023 and beyond?
As advanced technology is at the forefront of every digital transformation in all digital business models in professional services, it is essential to future-proof your organization with the newest emerging technology.
Transformation in professional services enables firms to rise to the top of their field as they gain a competitive advantage and increase revenue. No-code AI is the first technology to consider to achieve this goal.
No-code AI
No-code AI allows anyone to build AI solutions without writing code. It is an efficient way to test ideas, create new projects, start businesses and get products to market faster. Because scientific research allows us to understand the advantages of no-code AI better, we anticipate that more companies will use this innovative technology in 2024 and beyond.
AI on the cloud
AI Clouds provide technology for every stage of the AI process, from creating features and models to monitoring and operating apps. Once a business has developed, the company can share these technologies across an organization. Technologies that support the end-to-end AI lifecycle are called AI platforms.
Conversational AI
Conversational AI is the term used to describe machines capable of understanding, processing, and responding to human language. You can think of it as the ‘brain’ that powers a virtual agent or chatbot.
You’re missing out if you’re not using conversational AI in your business. This technology can automate customer service tasks, improve marketing efforts, and boost sales. In other words, it’s the key to successful digital transformation in 2024.
The artificial intelligence of things (AIoT)
AIoT uses AI technologies with IoT (Internet Of Things) infrastructure to make more efficient IoT operations, improve human-machine interactions, and enhance data management and analytics.
AIoT will pave the way for new business models that center around selling data and insights instead of products. Consequently, AIoT will likely significantly impact the business economy and society in 2024 and the following years.
Machine learning and hyper-automation
Hyperautomation involves increasing the automation of business processes by utilizing Artificial Intelligence (AI), Machine Learning (ML), and Robotic Process Automation (RPA). Machine learning and hyper-automation will play a significant role in digital transformation moving forward. As these technologies improve, they will become essential for companies seeking to stay ahead of the competition.
Invest in digital transformation today
Make sure your professional services business stays ahead of the curve by investing in digital transformation. Ensure your professional services business stays ahead of the curve by investing in digital transformation. Utilize the latest digital technologies and tools to work more efficiently and effectively than ever.
Digital transformation will allow you to meet clients’ needs better and keep up with the ever-changing professional services landscape. If you are ready to take your business to the next level, now is the time to invest in digital transformation within your professional services company.
