With businesses around the world grappling with the challenges posed by the COVID-19 pandemic to cut costs and extract the greatest possible value from their suppliers, professional services firms are in the firing line.
As digital technologies disrupt and transform services and service delivery, particularly those provided by law firms, accountancy practices, management consultants, marketing agencies and the like, they are having to deal with a marketplace in which there are deep-seated changes to their basic rules of competitiveness.
A pre-COVID survey by The Economist Intelligence Unit reported that professional services firms were already being significantly affected by new technologies and service delivery models – as well as by new, smaller, more specialised and niche challengers. Over 80% of respondents indicated that specialised providers with high-level skills were more likely to offer greater value to their organisations than large, broad-based offerings.
The pandemic has merely served to accelerate this trend.
As a result, professional services firms are themselves having to embrace digital transformation – and the CFO is well-placed to drive this.
According to Sage’s CFO 3.0 research, which was based on a survey of more than 300 South African financial decision-makers and CFOs, the role of CFOs has changed considerably in recent years. Almost all the respondents (90%) said their role involved far more than the “number crunching” and compliance issues of the past.
This change had been facilitated by their adoption of emerging technologies such as artificial intelligence (AI), big data and cloud technology, all of which have empowered them to play a far greater role in developing and driving company strategy.
There are many ways in which CFOs at stressed professional services firms can help drive the digital transformation necessary not only for their survival in today’s rapidly changing business environment, but also their growth.
Embracing digitisation will also empower CFOs to help their firms to meet the growing market demand for specialisation and niche services within their own operations.
CFOs can, for example, eliminate manual processes for tasks like invoicing, time-and-expense management and creditors, and using real-time data to improve reporting. This will leave more time to focus on the things that technology can’t handle, like where and how to drive growth and improvement.
Adopting new technologies like cloud computing and AI would also help to ensure that in addition to automating as many routine processes as possible, there could be enhanced integration of data and processes across their organisation.
Gerhard Hartman, VP, Medium Business, Africa & Middle East at Sage, says: “Cloud computing has many other advantages as well, including greater agility. It can, for example, enable a budget-strapped professional services firm to tap into on-demand support. It would also enable the adoption of a hybrid staffing model that allows for staffing numbers to be quickly scaled up and down depending on client demand and business needs.”
Hartman adds: “A major benefit of cloud-native applications is that they allow for the sharing of information with clients – and, since the Coronavirus lockdown, with employees, too – regardless of their location. Also, online forms and chatbots can provide clients with support and information, as well as enabling the completion of simple tasks that could otherwise tie up a highly paid resource for an unnecessarily long time.”
Embracing AI and possibly other advanced technologies like big data would also give professional services companies greater insights into their customers and the industries in which they operate, thus enabling them to take on more of a consulting role and deliver greater value – thus enhancing their competitive edge.
In addition, the insights gained would enable the financial leader to provide greater strategic direction to their firm by, for example, determining the returns and margins on individual projects, which clients are more or less profitable, and which employees are most productive.
However, digital transformation in any organisation can create resistance and negativity if it is not handled with sensitivity. While the CFO 3.0 research shows that most financial leaders are comfortable with digital transformation changes, team members, particularly those with jobs involving tasks that might become redundant as the pace of digital transformation accelerates, might feel particularly threatened.
“Many people might resist improvements because it means adapting to change. It’s incredible how easily we can conflate something comfortable as necessary. Employee buy-in is essential if the rest of the company is to follow,” Hartman says.
“Many organisations either ignore the threat this could pose to the business, or delegate it to a change management individual or team in HR. However, as a digital transformation champion, the financial leader also has an important role to play in helping to manage the change within their own teams as well as across the organisation,” Hartman concludes.
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