Innovative Use of Data through Technology will Transform Professional Services Firms
Professional services firms are on the cusp of a fundamental transformation driven by data, enabled by technology.
For years it has been accepted that these are knowledge-based businesses and that their lifeblood is the information that flows through them. This led to the emergence of the importance of areas such as knowledge management. Today, technology has caught up with theory and firms are exploring ways in which they can use their key asset to simultaneously improve the running of their organisations and to transform their client offerings. Between them, professional services firms hold vast amounts of data which, if applied more effectively, will help their clients:
- make better decisions
- reduce costs
- grow revenues; and
- and reduce risks, all of this in a timelier manner.
Most clients of services firms are focused on their businesses and solving problems, not always separating whether something is a question for an accountant, tax adviser, lawyer, consultant or property specialist. It is for this key reason that professional services firms need to adopt a broader view when considering how they innovate through technology. There is already much written with a view to specific industries, for example around law and the rise of LegalTech. There are currently not enough people taking the wider view of industry trends across professional services so that those innovating can learn more effectively from each other around common trends.
Driving innovation that matters.
I have written previously about how people need to adopt a greater understanding of the customer to drive innovation that really matters. For coverage of the in-house legal perspectives on how consumption is changing read my previous article here. Neither data nor technology is really specific to one industry. A large FTSE 100 business that engages right across professional services thinks of their business as an entity, and they are accountable to their shareholders. Yes, they have internal functions such as strategy, legal, finance and operations, who will each engage with different professional services firms, but for them that is just a way of separating the running of the business and the respective skill sets needed to achieve this. The data that runs through their business is all related to their central purpose, whatever that might be. The financial data, legal data, strategy data, property data, are just differing dimensions on this central purpose. It sounds obvious, but it’s perhaps easy for professional services firms who specialise in one aspect to miss that bigger client perspective. The client’s goal is to use the data they hold to achieve better outcomes. Professional services firms that help them achieve this will build more strategic, broader and longer-lasting relationships.
The same generic perspective should be applied to the technology that is starting to unlock the data and its potential. Areas such as Artificial Intelligence, data analytics, process automation or blockchain are not specific to any one professional services area, they are generic technologies. While there will absolutely be areas of specific application to resolve specific industry challenges, firms need to start taking a wider view on how these technologies are driving transformation elsewhere. These technologies, along with how they use client data sets, will lead to an even greater blurring across the professions. For some insights related to the areas above and how I believe the Big Four will impact on legal services, click here.
So, what does this look like?
To try and bring this to life for the client let’s take a simple example of something that most businesses still need – property to house staff in and to meet clients. Think of the data related to this – the operational data around space utilisation and industry comparators, the financial data around costs and capital allowances, the legal data around lease clauses and trigger points, and the strategic data around the assessment of alternatives including technology-based solutions to drive remote working etc. The data related to property is in disparate forms, with different internal teams and with multiple external services organisations having relationships to support elements. There is a whole set of data which if it could be accessed better could be put to work to make better decisions, compared to the current position where each service provider often only sees their part of the client’s problem. It may not be the best example and perhaps is not a daily challenge for a business, but it is one everyone can relate to. The constant is the data, sitting in many different forms in different places.
Now imagine a world with IoT sensors and Smart Contracts, with cloud-based data analytics, automated accounting and RPA dealing with administration, that all worked together; a world of real-time analysis of utilisation metrics, of industry benchmarking, of contract analysis and automatic lease contractual clause execution, of automated capital allowances claims, and automatic presentation of strategic options based on comparable data sets – perhaps a way off but by how far? Data and how it is used and how it flows across services firms will be central, as will essential areas like data standards. I’m not suggesting this will necessarily happen for property, but rather that the perspective needs to shift to being about the client and their business challenges, together with the data and how it relates to the data others hold. Firms need to assess that data against other wider pools of client data to identify patterns, then come back to the services they provide and ask how the data could be better integrated and leveraged through technology. They should also question whether it even needs to be a service or if it could be productised and what it would mean to their business if it wasn’t productised by their organisation.
However, stepping back to the present, currently, many firms are too focused on their internal use of technology and how they use it to innovate. While this is a logical and essential first step to drive efficiency, it will lead to a relatively slow evolution rather than the revolution that some clients may be looking for. Those that are successful are rapidly assessing how to transform client outcomes by more effective use of data and through using technologies such as those mentioned to achieve this. Those that are pioneering are doing this in a collaborative way with their clients, again something that can often be uncomfortable for services firms with long-established hierarchically-driven client relationships. Firms need to not just consider how they will offer transformative outcomes but also how they will deliver these in a more accessible or “productised” form. Attitudes to consumption are changing based on consumer technology and workplace generational demographics, and many firms have yet to recognise what this will mean. This is not to say that services businesses should become product businesses, but rather that they need to productise elements and do so in such a way as to unlock higher value services-based offerings. I have written more about this shift towards productisation previously here.
To make this opportunity around data real, you will find an interesting article from Reuben Barry of Ecovis around their work on data analytics here. Reuben talks about data, insights and action and says, “Ultimately our purpose is to transform data into insights that can support, prompt and drive actions, leading to better decision-making in the businesses that we are supporting”. The article also talks about the different skills that are needed to achieve this such as data science. For some further reading around some of the trends in the accountancy space and why they will likely transform into technology businesses I have written a recent article on this topic, which has some interesting perspectives from Microsoft and how they see the space, see here.
These leader articles aim to stimulate some thought and to suggest some further reading related to the themes covered. In addition to the above references some interesting recent items to consider are as follows;
- Law firms developing tech to improve service to clients
“Law firms that want to get into the business of building and selling technology products need to get out of the old business model and become more nimble.”
- PropTech now “revolutionising” real estate
“The sheer amount of data that is now available to property managers is a potential game-changer, especially in the age of AI.”
- Blockchain a potential ‘game-changer’ for accountancy
“It is still in its early stages, but it does have the potential to change the shape of the accounting and auditing world, and as a consequence, the role of the accountant in the future.”
Finally, to leave you with some thoughts around this topic you might want to consider the following:
1 – Ensure that you really understand the wider client perspectives around the problems they are working with, who the other advisers are, their internal challenges from the business and their plans around data. Many are undergoing their own technology-driven changes within their markets, such as banking, for example, and will have advanced views on their data strategy and their plans around how they will use various technologies to help their competitive positions. You won’t find many large banks not understanding the potential disruption and opportunity around something like blockchain, but how consistently can we say this of all services firms?
2 – When you are looking at the client’s problems ensure you are then considering your place in solving aspects and how this could be disrupted by someone offering a broader offering, or perhaps productising aspects of service-based offerings and in so doing “commoditising” whole service-based areas. Would anyone really now pay for a Will from a lawyer since Wills have been so comprehensively productised, first in paper form in Will packs available from WH Smiths and now from numerous free document automation-powered services? It’s worth remembering that this used to form a core part of what many lawyers in the B2C space used to do (and some are still trying). As I have said before, if something can follow a logical process to produce an outcome then technology will play a role in taking it from a bespoke “service” to commoditised “product”. How would you disrupt yourself in your area of focus? If you can think it, then chances are someone is already working on it.
3 – Finally, think about the data that is needed to solve the challenges you have thought through. How much of the data do you hold, who holds related data and what are they planning to do with it through technology, and what are your agreements on how the data can be used? What is your plan for how you will use this data to provide more analytics-based services to help clients get better outcomes, what roles will technology play and how are related services businesses planning to use the same technology? Is there a threat, an opportunity or both? Fundamentally, what is your data strategy and how does that empower your firm strategy, noting that an IT strategy is not the same thing as a data strategy, and in turn, this is not the same as a product strategy?
True innovation starts with understanding. Understanding the client’s problem, understanding who else is trying to solve related aspects, understanding how related technology is being used elsewhere, and understanding your position along with the threat or opportunity. Taking a broader view across professional services, Alternative Views will deliver understanding to fuel your innovation journey.