A recent study by international consulting firm Advanced Human Technologies, has identified seven so-called mega-trends that are shaping the future of professional services. Here’s what they are – and what you as a consultant or contractor should do about them.
The environment in which professional service providers ply their trade is a dynamic one. The Advanced Human Technologies study gives valuable pointers on how to navigate the opportunities and challenges of the future.
1. Client sophistication
Driven by the need to cut supplier costs, companies want to understand what they are buying. In many instances, companies are hiring the best professionals from their suppliers to strengthen their own teams, while at the same time acquiring the knowledge of how consultants conduct their business.
Companies also enlist specialist assistance to help them get the best from their professionals. Large corporates, for instance, contract specialist consulting firms to manage the process of appointing PR and advertising agencies. These consulting firms assist clients with drawing up selection criteria, evaluating the candidate agencies and ensuring a transparent, even-handed process. They are also often involved in conducting annual agency performance reviews on behalf of the corporate client.
The advantage of working with more sophisticated clients is that they help you to develop your own capabilities. They understand that top notch professionals don’t come cheap and they know how to work with you so you can do your best.
The disadvantage is that you have to keep up with their expectations. You can’t pull the wool over their eyes and you certainly can’t survive your whole career on what you learned at university.
How should you respond?
2. Governance
As a result of a number of high profile business debacles in the past few years (remember Arthur Andersen? Fidentia?) the business world has become a less trusting place than before. Conflict of interest is at the heart of the matter and it does not only apply to auditors.
To prevent suspect business practices, some governments have introduced legislation, such as the Sarbanes-Oxley bill in the USA, which regulates how audit firms can and cannot work with their clients. In South Africa, the King I (1994) and King II (2002) reports on corporate governance deal comprehensively with risk identification and management in businesses.
Professional services firms have also become careful to stick to their knitting. Multidisciplinary practices, eg, audit firms with legal services divisions, have lost their allure as companies recognise the governance pitfalls they present.
How should you respond?
3. Connectivity
Mobile phones, Blackberries and WiFi laptops (to name but a few) ensure that we are contactable just about 24/7. Apart from clients expecting faster responses from their consultants, the use of informal, highly interactive communication, such as instant messaging, results in clients feeling part of the process and therefore expecting to participate.
Another implication is that clients increasingly expect professional firms to be great at connecting their professionals to each other in order to provide a seamless service. If, for instance, your engineering company is known to have an engineer with specialist drainage design knowledge, your clients will expect to benefit from his expertise without having to ask for it.
How should you respond?
4. Transparency
This is one of the most powerful trends across all of business and society. The most important implication of transparency for professional services firms is that clients increasingly want to see what is happening while their consultants are at work. A London law firm, Kemp Little, has set up an extranet so that clients can see at any time what the progress on their matters is and what fees have been incurred. In the same way, Ketchum PR has an online facility where its major clients can see (and provide input into) the work involved in developing media campaigns.
There is massive value in getting clients involved along the way. They gain comfort from being able to see what is going on and they understand and appreciate the value being created. As the consultant, you gather in-depth knowledge of the client and what they want, build stronger relationships and have the opportunity to demonstrate what sets you apart from the competition. The intention is not to be absolutely open about everything, and certainly not with each and every client. It is rather to use transparency to build deeper client relationships.
How should you respond?
5. Modularisation
One of the most important implications of today’s information technology is the ability to break down business processes and activities into their components. Services can now easily be unbundled, allowing clients to pick and choose which of these elements they prefer to do themselves and which will be allocated to service providers. Thanks to technology it is also straightforward to re-integrate the different elements into a single business process that delivers the desired results.
Professional services firms increasingly apply the same principle, for example, by outsourcing either routine or highly specialised tasks to other professionals. They maintain responsibility, however, for the overall quality and integration of the final product.
In this way, the client still receives a one-stop service while benefiting from more efficient and cost-effective service providers behind the scenes.
How should you respond?
6. Globalisation
Business opportunities and competition have gone global in a big way. Email and the Internet make it possible for professionals in different parts of the world to collaborate and service clients in countries other than their own.
Certain parts of the developing world, such as India and Eastern Europe, are becoming professional services growth nodes due to labour costs that are significantly lower than in the USA and Western Europe. A growing number of US tax returns, for example, are being completed by tax experts in India, simply because they can do the job cheaper, but to the same quality standards, than their American counterparts.
Clients increasingly expect services to be delivered globally. However, you don’t have to be a global company to get business from them. In advertising and public relations, major clients often appoint different agencies in different countries or regions, with one lead agency to coordinate global campaigns. A local example is Baird’s Renaissance, which is the African partner of Edelman PR Worldwide, the world’s largest independent public relations agency.
How should you respond?
7. Commoditisation
A commodity is a product or service for which the customer sees only one significant difference between the alternatives on offer: the price. Professional services used to feel immune to commoditisation, but this is rapidly changing, with the market being swamped by “me-too” companies. Client companies are increasingly likely to shop around, exchanging loyalty for lowest cost.
Commoditisation is further encouraged by the fact that the bar on minimum standards set by clients is being raised. A degree, MBA, professional registration and some blue chip clients on your resumé are no longer all you need to clinch a management consulting assignment. These days, you need this just to get in the door and onto the long waiting list.
To stand out from the crowd, and to avoid the race for lowest cost, you have to be able to demonstrate the unique value you can add.
How should you respond?
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