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Physician heal thyself! Certinia study suggests many IT professional service organizations are unready for AI deployment

Katy Ring Profile picture for user Katy Ring May 9, 2024
Summary:
Time for professional services organizations to up their game to take advantage of AI?

AI ethics or AI Law concept. Developing AI codes of ethics. Compliance, regulation, standard , business policy and responsibility for guarding against unintended bias in machine learning algorithms © Parradee Kietsirikul - Canva.com
(© Parradee Kietsirikul - Canva.com)

Certinia (formerly FinancialForce) has just released its inaugural Global Services Dynamics Report, which draws some interesting conclusions from a survey of over a thousand professionals in the US, UK, Australia, New Zealand, Singapore and Canada.

The research reveals that many professional service organizations are bullish about growth because of economic uncertainty and rapid technology change. This is elevating the role of services in implementing innovative technology and transforming operations at speed. One of the reasons organizations are planning for services growth is because of AI as a market driver. The irony is that many IT service organizations are not in a good position to adopt AI themselves.

Cobblers' children have no shoes

Professional service organizations offer made-to-order services to their clients and have a core value proposition around cultivating strong, ongoing client relationships. Technology itself is redefining professional services, not least with the introduction of AI tooling. However, somewhat predictably, IT service organizations urgently need to improve their own data collection and the tools they use internally.

Most professional services operations need to provide extensive data analysis in order to best support their clients. In recent articles on TCS and IBM, diginomica has reported on how these consultancies are deploying AI to gather and interpret publicly available data to give clients a jumpstart to projects. Generative AI can interpret real-time data and organize it into usable information, helping to make sense of complex, unfolding events.

However, professional services have always suffered from the occupational hazard that the value of an individual professional lies with the experience and knowledge that individual has accumulated. Consequently, the sharing of that individual’s expertise is in some senses seen as scoring an own goal against that individual’s own future billability. Add to this, the challenges of working remotely (which service professionals have always done because of the requirement for working on client sites) and the seeds are sown for an incredibly siloed operation. Individuals know what they know and the professional service organization is never much more than the sum of its parts.

Can AI come to the rescue for PS technology laggards?

In Certinia’s Global Services Dynamics Report, research firm Dimensional Research surveyed participants across IT Services, services embedded within software and independent professional service firms and found that in 2024, just under two-thirds of organizations see their professional service organizations as a profit center, with 85% planning to grow their professional service teams in 2024. When asked the type of resource professional service organizations were expecting to hire, just over half plan to hire a mix of full-time employees (FTEs) and contract staff. However, a third plan to add only FTE headcount, suggesting a bullish outlook regarding business growth in 2024.

A key concern amongst professional service organizations remains efficiency, with the main tools still relied upon by these organisations being trusty old Excel, shared documents and collaboration tools. As the report states: 

Spreadsheets prevail, leading to low technical maturity among professional services teams.

Within the professional services profession itself, the majority do not expect AI to reduce headcount; rather professional service teams believe that AI will help to improve efficiency, service quality and profit growth. As many of these professionals, no doubt, tell their clients, disconnected spreadsheets, siloed information systems and unstructured data are all impediments to deploying AI across information that it can learn from to provide meaningful insight. The report points out: 

If AI is the answer to the efficiency concerns of professional services teams, the question will be who has the technical maturity to adopt.

How can professional service organizations raise their game to enable their own adoption of AI? According to the survey, less than half of services organizations leverage a commercial Professional Services Automation (PSA) product, designed to provide project management and documentation, time recording, billing, reporting and resource utilization. This low adoption is, the report says: 

...despite the well documented impacts that PSA applications have on efficiency, profitability, workload balancing and employee and customer satisfaction.

My take

Clearly Certinia’s interest in its Global Services Dynamics Report is to illustrate that professional service organizations will be in a much better position to grow and reap the benefits of AI, if they use a PSA tool. The good news in the report for PSA vendors is that the survey participants are self-aware enough to indicate that: 

They need to move away from an ad hoc tool approach and implement a dedicated professional services solution, and one that is powered by AI.

The one caveat to these findings is that while a PSA tool makes perfect sense for many professional service organizations, including familiar names in the IT services sector where services offered tend to either be highly repeatable and economical, or rely on a systematic procedural approach, they do not necessarily benefit highly innovative, cutting-edge teams where the culture will likely derail their usefulness.

A final thought - as professional service organizations strive to move away from time and materials billing, to value-based pricing (which is a logical consequence of the application of AI as it radically reduces the time taken to fulfil many service tasks), will organizational, rather than individual, knowledge become a stronger or weaker part of the value proposition?

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