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The new digital imperative for professional services

A woman is showing something on a tablet screen to her colleagues, while they are sitting at a table.The past two years have been a tipping point for the digital transformation of professional services, testing the industry’s agility and the staying power of its traditional business models. This watershed moment is due to several factors, namely the rapid shift to remote working, which has revealed critical gaps in connectivity and dynamic collaboration. New employee expectations have added another layer of pressure as firms navigate a talent market that has shifted solidly in favor of remote and hybrid work. Finally, the billable hours fee structure is beginning to lose favor as customers increasingly demand an outcome-based billing model.

As a professional services leader, you might wonder if ways of working and even entire operating models will ever be the same. Everything about the way your organization develops, packages, and delivers its services is changing. Where you once relied on billable hours as a primary source of revenue, you may now be exploring how to convert existing services into products as a potential new revenue driver. To do this, your organization needs to become digital factory capable of delivering technology-driven solutions to meet customer needs.

You now face a new imperative: delivering greater value and differentiated service with a newly distributed workforce—and doing it at scale. The answer to that imperative is digital transformation.

A group of people gathered in a room at work with their computers is talking to each other

Technology’s role in the future of professional services

People are the most important resource for any professional services firm, with people-related costs representing 79 percent of professional services revenue1. However, faced with ongoing challenges with retention, upskilling, and hiring, firms are examining their reliance on “people power” to execute internal business functions and deliver on customer commitments. They’re looking to technology to augment their workforce and create new pathways to growth.

The future of professional services relies on remote productivity and collaboration, along with the ability to scale through process efficiency. As the workforce shifts and customers demand more scalable and product/app-focused solutions, you’ll need an agile strategy that flexes with changing demands, as well as the digital infrastructure to deliver operational excellence and create more engaging customer experiences. Moving to the cloud helps you meet these challenges while maximizing your technology investments. With cloud-based tools, your teams can collaborate on a scale not possible with on-premises infrastructure, while creating process efficiencies through intelligent automation.

Of course, people will always be central to professional services operating models. The right digital solutions amplify the impact of your team and let them focus on what matters most: building and maintaining customer relationships. Firms that acknowledge and adapt to the changing nature of work have an opportunity to transform into a truly people-centric organization, where employees remain at the heart of what they do.

Likewise, failing to become digitally savvy can make your organization less attractive to potential new hires, and in cases where you’re seeking to innovate and digitally transform quickly, employee voice and input may be muted, or worse, employees may fear their roles are being displaced rather than elevated.

Benefits of digital transformation

Firms that embrace a “digital first, digital forever” mindset can expect benefits in key areas across the organization. According to the Services Performance Insight 2021 Professional Services Maturity BenchmarkTM report, those benefits include:

  • Higher revenue growth (12 percent).

  • More client references (12 percent).

  • Improved project delivery efficiency (38 percent).

  • Higher (annual) revenue per employee (422 percent).

  • Profit (EBITDA) (416 percent).

The evidence is clear—digital tools play an important role in helping firms shift their operating model from one focused on efficient service delivery to one focused on responsiveness and continuous solution deployment. In other words, digital transformation is key to future-proofing your business.

At Microsoft, we’re committed to helping you use the power of the cloud to increase business and technical agility. When you use Microsoft AzureMicrosoft 365, and Microsoft Dynamics 365 together as a consolidated platform, you can accelerate your digital journey and enjoy the freedom to innovate. Migrate legacy applications to Azure and benefit from reduced IT costs, the ability to scale up or down quickly based on your needs, and a better experience for your employees—wherever they are located. Increase productivity with Microsoft 365, which brings together best-in-class productivity apps with powerful cloud services, device management, and advanced security in one, connected experience. And focus more on your customers with the Dynamics 365 portfolio of intelligent business applications, including customer relationship management (CRM) and enterprise resource planning (ERP) tools.

As the vanguards of global business trends, professional services firms are uniquely positioned to transform business models, including their own. Investing in your organization’s digital transformation today will allow you to advise your customers from a place of practical experience tomorrow, as well as deliver the value and service they’ve come to expect.

Learn how digital transformation transformed the Microsoft employee experience and sign up for an Art of the Possible event to explore new ways of working.

1 IBISWorld INDUSTRY REPORT 54 Professional, Scientific and Technical Services in the US (September 2021)