Navigating Change: The Evolution of Business Models in Professional Services

Rapid technological advancement, shifting client expectations and environmental and socioeconomic uncertainty are upending the professional services industry.

In response, architecture, engineering and consultancy firms must become more agile, resilient and adaptive to emerging challenges and opportunities. For many firms, this means shifting business models to intensify their focus on digital technologies and, crucially, data-driven decision-making. This approach is the first step towards fully capitalizing on opportunities and navigating the complexities of the current landscape.

In our 5^th Annual Deltek Clarity UK and ANZ Industry Study, we learned that 67% of professional services firms expect to lose market share within two years if they fail to make significant progress in digital transformation.

So, what are the few getting right that eludes the many to secure a competitive advantage in this bold, data-driven future? Neil Davidson, group vice president at Deltek, responds to four major disruptive themes and discusses how firms can manage change and embrace disruption as an opportunity to emerge stronger with a business model that is relevant to the new climate.

1. Socioeconomic Uncertainty Demands Agility

The socioeconomic landscape continues to impact the professional services industry. For example, we've seen a short-term rise in the cost of building materials due to geopolitical tensions. And over the long term, 74% of firms are concerned about local and global recessions. Despite this, 84% of the firms we surveyed expected to increase profits in 2024.

But it's not just firms feeling the squeeze; clients are increasingly scrutinizing fees while demanding more value for money. In response, firms must innovate their business models to deliver competitive services and drive growth through market expansion and diversification.

To get the insights they need and find new growth opportunities, many firms are embracing modern, cloud-based business solutions to unlock a complete view of the business. These integrated solutions provide the end-to-end insight needed to:

• Monitor and analyze business performance to mitigate risk and inform strategic decision-making. Putting value on data maturity gives the organization the opportunity to use data as a guiding force. However, firms must ensure that there are clear goals and a vision for where they want the data to take them.
• Identify emerging business opportunities by market, client, project type and other metrics underpinned by historical and predictive performance data. This approach allows organizations to pinpoint opportunities effectively.
• Proactively evaluate project teams, resources, budgets and scope changes to optimize client outcomes. This intensified focus on data enables organizations to concentrate their efforts on projects and clients where they can make the biggest difference and constrain growth where profits and margins are consistently low.

By empowering everyone with a shared operational view, firms can nurture a more agile and collaborative culture that focuses on resilience and tech-led growth.

Digitalization is Now a Competitive Necessity

While many professional services firms recognize its competitive benefits, 75% of firms have yet to reach a mature stage in their digital transformation journey. It's time to change that, and such transformations needn't take long and can create tremendous value.

Personalize Services to Nurture Client Loyalty

Firms are shifting away from traditional service delivery models and improving satisfaction levels by creating more personalized, long-term client experiences. The key to getting this right is providing client managers with on-demand access to client information.

Ideally, managers and client advocates should be able to access data remotely using their preferred digital devices to instantly locate and reference client projects, contracts, goals, challenges and pipelines.

This makes it significantly easier to provide timely client recommendations, such as when working on-site, and proactively tailor project outcomes and solutions to the client's needs.

Create New Efficiencies with AI-Powered Automation

AI-powered automation is becoming a mainstream tool and revolutionizing how architecture, engineering and consulting firms operate by streamlining processes and enhancing efficiency. By encouraging thoughtful innovation and employing AI, firms can automate an array of routine tasks that traditionally consume significant time and resources.

As the technology continues to develop, firms are increasingly using AI assistants that integrate seamlessly with their business solutions to:

• Generate and automate smart content, such as project summaries and graphs
• Predict project and organizational success based on historical trends and data
• Locate, explore and query project information rapidly using natural language.

In practice, users may ask their AI assistant to locate and summarize all contractual information related to a client's building project. They can even ask the AI to draft an email to a client, such as to remind them of any unpaid invoices alongside a concise summary of the outstanding accounts receivable.

3. Business Models Should Support New Ways of Working

Our research found that 46% of firms believe that difficulty attracting and retaining talent detrimentally affects their organization, and 40% felt the same about their firm's lack of investment in staff training and upskilling.

Firms need to adopt new practices in digital and talent management. As hybrid and remote working become standard, attracting and retaining best-in-class talent will depend on how well you can accommodate their productivity needs.

Business models and systems that don't support new ways of working can often cause unnecessary challenges and prevent people from working independently. Outcomes often become dependent on the availability of other team members—such as finance leaders for one-off reports—and slow, manual access to information.

Integrated systems remove these barriers, democratizing access to the data everyone needs to manage their clients and projects effectively. Driving efficiency throughout the organization frees employees from mundane workloads, allowing them to concentrate on more creative tasks and customer interactions.

Additionally, this can help HR leaders reveal previously obscured opportunities for upskilling and reskilling, enabling them to better utilize existing resources. By focusing technological investments on the outcomes that matter most, firms can strengthen their overall performance.

4. Turn Sustainability into a Business Opportunity

The increasing emphasis on environmental, social and governance (ESG) criteria is opening up a wealth of business opportunities for architecture, engineering and consulting firms. While progress will vary across countries, clients and stakeholders will likely become more interested in sustainability as it grows in inclusivity and affordability, and firms can position themselves as leaders in this transformative space giving clients more reasons to innovate.

One significant opportunity for architecture and engineering firms lies in offering design and project delivery services. By incorporating green building practices and materials, firms can meet client demands and differentiate themselves in a competitive market. The ability to provide clients with innovative, eco-friendly solutions enhances brand reputation and can lead to increased client loyalty.

Consulting firms can leverage their expertise to help clients navigate the complex landscape of ESG regulations. By providing strategic consulting services on compliance and sustainable practices, firms will be able to enhance their value proposition, ultimately leading to long-term client relationships. This advisory role can be furthered by developing training programs for clients, helping them to understand the importance of sustainability in their own operations.

Lead the Change with Deltek ERP

In today's rapidly evolving landscape, urgent developments whether economic, political or environmental are compelling businesses to become more efficient, sustainable and above all, digital. The evolution of business models in professional services will demand new approaches, innovative technologies and fresh perspectives. It is the successful organizations who will absorb this continuous change and make technology a source of competitive advantage.

Deltek’s cloud-based ERP solutions are purpose-built to meet the evolving needs of architecture, engineering and consulting firms. Deltek ERP lets you manage the end-to-end project lifecycle in a single location, providing flexible access to intelligent automation and smart resource management tools.

Together, we can help you accelerate digital transformation and create a more agile and data-driven culture, underpinned by real-time access to the latest business insights. We work closely with your teams to assess their challenges and empower them to build on the strongest parts of your business, ensuring your firm is well-equipped to navigate change with confidence.