Why Professional Services Firms Must Digitize These 5 Areas

Professional services firms can make considerable revenue by helping their clients digitally transform, but sometimes they don’t spend enough time thinking about how they canbetter leverage technologyto improve their own business.

According to our global research study at Workday,only 29% of professional services leaders say they’re confidentin their organization’s current financial and business plans or their future digital transformation plans. This compares to 45% of all leaders across industries.

If you’re in the industry, consider these five key business areas that, when not digitized, can be disconnected, time-consuming, and rigid.

1. Planning and Forecasting

The challenge.在许多组织中,计划每年发生一次and in silos; at other firms, it happens only when executives request it. A big problem with this approach is that in reality, assumptions should change as the business changes.

And as disruption reshapes the business landscape, firms will need to learn to pivot and adapt faster. This will be crucial in the future, as technology continues to evolve customer expectations and demands.

As an example, headcount planning is typically separated from other financial data, such as revenue opportunity, costs, and profit margin, and many firms lack the ability to understand the specific skills they’ll need in each service area. Traditional bottom-up planning is a disconnected process with limited data and dimensionality; with this method, most firms focus only on high-level planning, making big assumptions for full-time equivalent (FTE) and worker-type levels.

The solution.Link planning processes into end-to-end operational processes. For example, source headcount planning from actual job roles, talent profiles, worker skills, and recruiting requisitions, and incorporate financial impact assessments—also sourced from project and financial systems—directly into this analysis.

With digital planning processes, you can focus on active planning, which pulls from more live data sources, reflects the operational cadence of the business, and connects more participants into the process. Taking the headcount planning process further, this would enable you to bring in service lines, recruiting, and human capital.

“These are disruptive times,” writesDoug Henschen, vice president and principal analyst at Constellation Research, in “Why the Digital Era Demands Agile Planning.”

“When companies are trying to innovate or respond to change, they need visibility into business conditions and solid planning and forecasting,” says Henschen. “They need what-if analysis to test new business models and gauge the impact of new products and services.”

Organizations of all shapes and sizes canadapt the way他们创建,在响应计划和执行策略nse to a rapidly changing world.

2. Talent Management and Development

The challenge.According toLinkedIn data, the professional services industry has the highest turnover rate of all industries. In addition to compensation, workers have often cited burnout, flexible work, and career growth as key factors in staying with a firm. In Workday’s“Employee Expectations Report 2022,”growth-related terms were commonly used in comments left by 1.8 million employees across more than 1,000 companies.

Firms also struggle to identify and utilize the existing skills in their workforce. You may very well have the expertise you need, yet are unable to surface those skills and match them with relevant opportunities. And with attrition rates in professional services around 13.4%, it’s important to engage the talent you have.

The solution.To develop and nurture talent, firms need a digital employee engagement strategy backed by continuous learning, guided career journeys, and a skills-based approach as the foundation for effective workforce planning, recruiting, and internal mobility.

To help guide employees in their careers, firms can provide a digital foundation that arms them with information about career paths, mentoring opportunities, and mobility across different service lines and even geographies. That includes establishingtalent marketplacesthat allow employees to access new opportunities.

With the rapid pace of change and ongoing labor shortages in many industries, companies are increasingly adopting askills-based approachthat widens the talent pool and finds workers with skills that can move the business forward in dynamic environments.

Simply put, professional services leaders can now leverage an open andconnected skills ecosystemto deliver business value and enhance employee experiences through machine learning in both Workday and other applications.

“Fundamental to delivering on this shift to a skills-based approach are technologies, such as AI and ML [artificial intelligence and machine learning], which can understand key attributes to help drive automation and provide insights and predictions that help to identify and align skills with jobs, quickly turning employee data into a strategic advantage, while helping businesses adapt to change,”saysWorkday Co-Founder, Co-CEO, and Chair Aneel Bhusri.

By bringing skills data together, services firms can have a holistic view of workforce skills and tailor career experiences that help drive employee success and satisfaction.

“Organizations, including our own, are increasingly shifting to skills-based talent strategies to help improve engagement and provide career growth opportunities for their employees,” says Amy Richmond, managing director at PwC, in arecent Workday article.

3. Global Resource Management and Staffing

The challenge.如果你持有一个行业的领导地位l services firm, you’ve probably put names on a whiteboard, or in a spreadsheet, to assign workers to projects. You may have found you don’t have complete insight into the right people for some jobs and their skills, availability, or even what projects should have priority.

The solution.Get your resourcing process online and integrated into your human resources, financial, professional services automation (PSA), and planning systems. This gives you a holistic view of talent beyond your local office or past projects and availability (including project assignments, paid time off, leave, and global holidays), project requirements, and the specific skills of your workers. This will create tremendous potential for resource forecasting, digital matching solutions, and talent optimization.

Leveraging AI technologies such asmachine learningcan also help.Intelligent resource managementunlocks real-time visibility into your workforce and makes project resourcing dramatically more efficient, more effective, and more intelligent.

“You’ll never take out the human element entirely,” says Patrice Cappello, global head of professional services industry strategy at Workday. “But machine learning can work through so many more dimensions around who would make an ideal team for a particular project—helping the person tasked with resourcing make data-driven decisions faster, and with greater accuracy and confidence.”

4. Client and Project Profitability Tracking

The challenge.Business success depends on having a clear understanding of profitability across service lines, customers, and regions. A key missing component of profitability analysis for professional services businesses is project-level profitability.

Historically, project profitability has been disconnected from financial planning and reporting processes. When project managers use spreadsheets or local project execution solutions for project financial tracking, others lack the operational insights they need to understand the drivers of business performance. This hinders assessment of profitable engagements and customers.

The solution.Make tracking project profitability standard practice, and an important key performance indicator (KPI). Incorporate it as a key component of yourPSAprocess. Once established in a connected PSA system, you can track costs and revenue in real time, as transactions happen (think time, expenses, payroll, and contractor invoices that drive both revenue and cost calculations). Such a system allows you to bubble up project-level financial data into planning and increase real-time metrics visibility for each service line.

5. Billing and Revenue Management

The challenge.Many firms lack visibility into their end-to-end, opportunity-to-cash processes. Symptoms of manual and disconnected monetization processes include one-off contracts, spreadsheet-based pricing, invoice confusion, revenue leakage, and lengthy close processes. Firms may also lack the agility required to develop innovative new service offerings.

Services industries, which are talent-driven, have been challenged to provide timely and accurate quotes as most firms don’t use configure, price, quote (CPQ) solutions. There is no cross-company visibility into opportunities, scopes of work (SOWs), or resource requirements.

Many services quotes today are generated manually in disparate and disconnected spreadsheets and documents, causing delays and errors that can impact the customer experience and prove costly for the business.

Managing services quotes outside of the core system also means that most organizations start a project with an internal proposal/outcome that’s never going to be up to date. As the project starts, changes occur: resources, weekly task work, project forecasts. All of these updates impact billing, revenue (revenue leakage), and cash flow.

The solution.Digital monetization offers immense opportunity, but it needs to be holistic and agile, which are fundamental attributes of cloud-based solutions. A single platform that integrates customer-facing (customer relationship management or CPQ solutions),operational (PSA), and financial processes will minimize the number of touchpoints and process owners.

Leveraging a services CPQ solution builds accurate quotes that lead to accurate project staffing. The data from projects can then feed the quoting engine for future engagements, growing firm profitability.

Once you have a streamlined opportunity-to-cash process, the ability to focus on profitable projects, forecast, innovate, andsupport new revenue streamsbecomes easier. This also represents a significant opportunity to drive new business models.

Moving Forward

Successful professional services firms can do many things right, from delivering projects on time to maintaining high client-satisfaction rates. One reason firms get high marks on such KPIs is that they have the technology in place to support automation, data-driven insights, and better decision-making.

Digitizing key processes across an organization makes it more agile and streamlined, freeing up your talent to focus less on manual tasks and more on meaningful work that propels the business forward.

To learn more about how Workday helps professional services firms drive digital transformation,visit our website.

This updated article was first published in January 2020.