Best in class in the professional services industry how companies achieve transparency, efficiency, and growth

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1 TREND S TUDY Best in class in the professional services industry how companies achieve transparency, efficiency, and growth Eike Bieb er, P rincip al Consultant Finance I ndustry August 2016 I n par t ne r s hi p w i th

2 TABLE OF CONTENTS Introduction The top priorities and challenges in professional services...4 What are the top business priorities?... 4 What are the top business challenges? Assessing the project value chain...8 Why is an integrated v iew required?... 8 How is the project v alue chain supported in professional serv ices com panies?... 9 Softw are-related aspects of im portance Focus on specific areas of the project and services business Project managem ent: Agility and speed of reaction Profitability: Transparency and granularity Finance & accounting: Usefulness of v arious aspects Analytics: Ability of real -tim e m anagem ent Collaboration: Ability of real -tim e m anagem ent Managem ent: Complexity due to dem anding business conditions Marketing: The path to segm ent of one Conclusion About SAP About PAC Disclaim er, usage rights, independence, and data protection

3 INTRODUCTION I n the light of digitalization a nd cha nging ma rket cond itions, v irtua lly ev ery enterp rise is facing intensifying competition and considerab le business cha nges. P rofessiona l serv ices companies a re pa rt of this d ev elop ment. They see their businesses b eing ma ssiv ely a ffected by changing customer p references and the need to resp ond to these changes rap id ly. In a p eop le-centric a nd rather unstab le business env ironment, a gility ha s b ecome the key to success and further grow th. At the sa me time, serv ices firms a re fa cing p ressure on p rices a s customers hav e become tough negotiators in times of increa sing p ricing transpa rency and globa l serv ice av ailab ility. P rofitab le business ta kes center sta ge, and to a chiev e this, p rofessiona l serv ices compa nies require a robust business mod el that p rov ides the right v alue p rop osition, offering, and capab ilities to the right customer at the right time a nd p lace. In a nswer to these cha llenges, p rofessiona l serv ices companies hav e their eye on technology and how it can supp ort their b usiness. Ma king use of the technologica l possib ilities mea ns seizing the opp ortunity to increa se efficiency, transpa rency, and growth. The trend stud y a t ha nd examines the relation b etween the d ep loyment of app rop riate technology a nd grea ter success in the p rofessiona l serv ices b usiness. To a ssess this top ic, P AC recently cond ucted a surv ey of 300 p rofessiona l serv ices companies. P AC conducted roughly ha lf the interv iews w ith I T ma na gers (45% ), and the other half w ith C-lev el ma na gers a nd d ecision ma kers from other b usiness a reas (55%). 300 people surveyed from around the globe From professional services 100 to 1,000 employees AY JUNE Survey conducted in June 2016 JU Fig. 1: Basic surv ey data The surv ey sought insights from d ifferent sub -industries includ ing mana gement, business, IT and tax consulting, aud iting, account and lega l serv ices, ma rket resea rch, ma rketing and adv ertising, resea rch and d ev elop ment, a rchitecture, engineering, and construction, a s well a s renting, ma intena nce a nd rep air. The companies includ ed in the surv ey w ere recruited a round the glob e a nd b elong to the segment of small a nd mid-sized firms (ea ch w ith a minimum of 100 a nd a ma ximum of 1,000 employees). 3

4 PAC - a CXP Group Company, THE TOP PRIORITIES AND CHALLENGES IN PROFESSIONAL SERVICES WHAT ARE THE TOP BUSINESS PRIORITIES? Surv ey resp ond ents were a sked to ta ke into consideration selected business top ics a nd to ev aluate the p riority that they a tta ch to ea ch of them. The results rev eal that p rofessiona l serv ices companies hav e a v ariety of top ics on top of their a genda, w hile none of the top ics clea rly stood a bove the others. When we only consid er the a sp ects to which compa nies atta ch the highest p riority, the need to grow business with ex isting and new clients stood out (with 66% of respond ents confirming this a s the highest p riority). In the course of this question, it b eca me ev ident that this is, in many ca ses, d riv en b y the a im of exp and ing into new serv ice a rea s a nd further geographies. How ev er, a n equa lly strong focus lies on enha ncing their ex isting work. The clea r ma jority of resp ond ents a re ea ger to imp rov e current serv ice d eliv ery, supp ort, and sa les. Virtua lly ev ery p rofessiona l serv ices company is a iming to imp rov e its a bility to a cquire, retain, a nd d ev elop the right talent. Key business priorities for the years to come Enhance service delivery and support 52% 43% Grow business with existing and new clients 66% 28% Improve the ability to acquire, retain, and develop the right talent 57% 36% Enhance sales 52% 39% Expand business into new service areas 40% 45% Expand business in new geographies 35% 43% high priority some priority Fig. 2: Topics considered a priority by professional serv ices firms 4

5 PAC - a CXP Group Company, 2016 Considering the med ium to high relev ance of these top ics, w e get a first id ea on how imp ortant technology is for p ro fessiona l serv ices compa nies. All of these a sp ects reflect the need for adv ancements in a rea s such a s process automation, CRM, a nalytics, a nd scalability. WHAT ARE THE TOP BUSINESS CHALLENGES? Ch allen ges r elated to bu siness pr ocesses W e first consider requirements related to business p rocesses. I n times of d igitalization and a grow ing need to fulfill v ery ind iv idual customer d emand s, p rofessiona l serv ices comp anies a tta ch high p riority to the enha ncement of p rocesses, a s surv ey resp ond ents confirmed. The ma in focus lies on the enha ncement of p rocess efficiency : More than one third of the companies (38% ) consider this to be a b ig cha llenge, while more tha n ha lf of the resp ond ents say tha t it is a mod era te cha llenge (54% ). How ev er, the need to enhance p rocess qua lity and tra nsp arency is a lmost of eq ual importance. Required enhancements with regard to business processes Enhance efficiency Enhance quality Enhance transparency 9% 38% 11% 29% 20% 23% 54% 60% 56% big challenge moderate challenge no challenge Fig. 3: Process-related challenges of professional serv ices firms Str ategic ch allenges From a strategic p ersp ectiv e, b usiness growth is an imp ortant cha llenge for v irtually ev ery p rofessiona l serv ices firm, a s cited by ov er 90% of respond ents. W ith 40% confirma tion, the reduction of costs is the ov errid ing cha llenge. The messa ge is clea r: Firms a re seeking p rofitab le growth. Customer centricity is ta king center sta ge in p rofessiona l serv ices today and, a ccord ing to the surv ey results, ab out one third of companies a re activ ely p rioritizing the imp rov ement of CRM. 5

6 PAC - a CXP Group Company, 2016 Key challenges strategic aspects Create a stronger backbone for future growth and to control growth 33% 59% Reduce costs 40% 52% Improve customer relationship management and customer retention 34% 55% Better react to ups and downs in business 26% 61% big challenge moderate challenge Fig. 4: Key strategic challenges of professional serv ices firms Tactical ch allenges W ith rega rd to business operation s, the most p ressing cha llenge is related to sta ff p rod uctiv ity and motiv ation and, a lmost eq ua lly imp ortant, the need to rea ct to ev er-changing ma rket conditions and customer requirements in a n app rop riate manner. The latter strongly d ep end s on the emp loyees, of course, so the high p ercenta ge figure is not surp rising. Business d ecision -ma king, collab oration, and mana ging risk, comp lia nce a nd ca sh flow s a re a lso consid ered to b e cha llenging by the clea r ma jority of surv ey resp ond ents, a lthough the percenta ge ind ica ting them as a b ig cha llenge is slightly low er (ea ch less than one third ). 6

7 PAC - a CXP Group Company, 2016 Key challenges tactical aspects Increase employee productivity and motivation 38% 55% Better react to changing market conditions and customer demands 37% 54% Enhance business decision-making 28% 60% Enhance collaboration of employees to manage projects 32% 56% Increase efficiency in managing business risks and compliance 26% 62% Enhance cash flow management 24% 56% big challenge moderate challenge Fig. 5: Key tactical challenges of professional serv ices firms The surv ey results suggest that p rofessional serv ices compa nies a re p lanning to inv est in adv anced ana lytics, collab ora tion technology, and in the automa tion and d igitalization of ba ck-end p rocesses. Technology is a v ita l element that enab les p rofitab le b usiness within p rofessiona l serv ices. The comp rehensiv e set of strategic, tactica l, and op era tiona l cha llenges, as w ell a s their interd ep end encies, testify to the fact tha t business and IT need to work closely together in ord er to succeed. 7

8 3- ASSESSING THE PROJECT VALUE CHAIN WHY IS AN INTEGRATED VIEW REQUIRED? Ba ck in the 1980s, M ichael E. P orter d ev elop ed the concept of the v alue cha in, and sta ted that ev ery activ ity within the v alue cha in can b e a d ifferentia tor and the ultimate rea son why a customer buys a p rod uct or serv ice. The v alue cha in concept can b e app lied to p rojects a nd can b e u sed to rev iew the comp etitiv e adv anta ge that a comp a ny offers w hen d eliv ering projects or serv ices. W e ca n therefore sa y tha t the p roject v alue cha in fra mes the p rofessiona l serv ices business. Each p roject or serv ice enga gement sta rts with the genera tion of a lead a nd the creation of an opp ortunity, and continues by the p repa ra tion of a quote and a p roject p la n. After ord er entry, the p roject or serv ice is executed, ba sed on a more deta iled p roject p lan tha t a llows the company to record efforts and exp enses a s w ell a s d ocument and rep ort milestones, etc. The p roject serv ice v alue cha in end s w ith b illing the p roject or serv ice enga gement, or it re- sta rts by up - selling or crossselling to the client. Lead generation Opportunity Billing Project value chain Project proposal and plan Execution Order Fig. 6: Example of the project v alue chain Accord ing to P orter, ev ery build ing b lock in the p roject (or serv ice) v alue cha in creates v alue and ca n be the d ecisiv e fa ctor b ehind the selection of a serv ice prov ider. 8

9 Now, in the d igita l a ge, th e concept is still v alid but it need s to be expand ed. Apa rt from d ifferentia ting build ing b locks, companies can create a comp etitiv e adv anta ge b y thinking across the build ing b locks of the p roject v alue chain and b y integra ting them. I n times of transpa rency a nd me-too, a more holistic app roa ch can ma ke the d ifference. I n ord er to assess the current state, w e a sked the surv ey pa rticipa nts to estimate the lev el of integra tion of the p roject v alue chain tha t has b een rea ched in their compa ny. 65% of respond ents say that integration is currently low (i.e. a n integra tion lev el below 50%), while 35% consid er it to be high (i.e. a n integra tion lev el higher than 50%). I nterestingly, only one resp ond ent rep lied tha t the p roject v alue cha in wa s 100% integrated, while 10% sa id it was b etw een 0% and 10%, which ind ica tes a very low integra tion lev el. 39% is the av erage integration level as estimated by the respondents W e can therefore conclud e tha t there is room for imp rov ement w ith rega rd to the integra tion of the p roject v alue cha in and that ma ny p rofessiona l serv ices companies a re obv iously still missing out on the comp etitiv e ed ge that a high integration lev el d elivers. I n the follow ing chap ters, w e outline why an integrated v iew is required and how it helps p rofessiona l serv ices comp anies to succeed. M oreov er, w e exp lore selected build ing b locks in the p roject v alue cha in more d eep ly to uncov er the req uirements and p otential a reas of imp rov ement. HOW IS THE PROJECT VALUE CHAIN SUPPORTED IN PROFESSIONAL SERVICES COMPANIES? An integra ted v iew of the p roject v alue cha in help s p rofessiona l serv ices companies to stay competitiv e. Two examples: I ntegration enha nces tr anspar en cy because it, for instance, enab les companies to figure out quickly which p rojects a re running a ccording to p lan. Cou ntermeasures can b e ta ken rap id ly in the ev ent of d ev iations. When ca lculating a quote, an integra ted v iew help s the sa lesperson to figure out whether former p rojects w ith the client were p rofitable or not, a nd why. An integrated v iew of the d ifferent b uild ing b locks a lso fosters efficien cy. Ba sed on a linka ge b etw een the d ifferent p rocess pha ses, it b ecomes ea sier to p red ict the d emand for resources, which help s to av oid b ottlenecks and the need to recruit externa l sta ff for sp ecific p roject tasks. After ga ining cla rity on the estima ted integra tion lev els, w e w ere keen to discov er how the p roject v alue cha in is organized and sup p orted in p rofessional serv ices comp anies. 9

10 Organization of the project value chain The project value chain is covered and supported by... 19% one business application or system 66% various systems that are not integrated 15% various integrated systems PAC - a CXP Group Company, 2016 Fig. 7: Different possibilities for supporting the project value chain There is little surp rise in find ing tha t the ma jority of p rofessiona l serv ices comp anies (66% ) tod ay use v arious non-integrated app lications to support the p roject v alue cha in. O nly 15% hav e their systems integrated and those compa nies stated tha t they hav e rea ched high integration lev els w ith rega rd to their p roject v alue cha in. 19% use one business app lication or system, which can b e an ERP system, b ut could a lso b e Excel. 98% of the survey respondents confirmed that Excel is in use to support at least some part of the project value chain Ex cel is in wid esp read use (i.e. the lev el of Ex cel use is higher than 50% ) in 62% of the p rofessiona l serv ices firms, but only a few d ep end solely on Ex cel (16% sta ted a lev el of Ex cel us e higher than 90% ). The surv ey clea rly confirms tha t Ex cel is still a n imp orta nt tool for orga niz ing b usiness, a nd this is p a rticularly tru e for sma ller companies. SOFTWARE-RELATED ASPECTS OF IMPORTANCE The app lication land scap e p la ys a key role in toda y s p rofessiona l serv ices business. La rge pa rts of the business d epend on it toda y. The clea r ma jority of the surv ey resp ond ents attached high or some relev ance to b eing ab le to enhance or expand the ex isting systems a s well a s to p rov ide mob ile supp ort for business p rocesses and functions. These answ ers reflect great interest in a dv anced app lications that p rov id e flex ib ility and the p ossib ility to resp ond to sp ecific need s, which can b e a way to d ifferentiate from comp etitors. The av ailab ility of cloud solutions and of usa ge-ba sed 10

11 PAC - a CXP Group Company, 2016 pa yment mod els is only slightly less relev ant. The highest p riority, how ev er, is atta ched to fast and easy imp lementation, which underlines the fact that p rofessiona l serv ices companies a re highly ca utious a nd cost sensitiv e when it comes to I T investments. Relevance of selected software-related topics Fast and easy implementation 39% 51% Extensions: the flexibility of adding business capabilities in existing system(s) 26% 57% Enhancements: the availability of add-ons to enhance the existing system(s) 18% 63% Mobile support of business processes and mobile access to business functions 29% 51% Software as a service/saas 25% 52% Payment per use 14% 57% high relevance some relevance Fig. 8: Relev ance of software-related topics 11

12 4- FOCUS ON SPECIFIC AREAS OF THE PROJECT AND SERVICES BUSINESS PROJECT MANAGEMENT: AGILITY AND SPEED OF REACTION Most p rofessiona l serv ices firms recognize the imp orta nce of p roject mana gement. Consistently and p roperly app lied, it helps to control sp end ing and imp rov e p roject results. The p rojec t mana gement d iscip line can ma ke b usiness more efficient, sa tisfy customers, emp loyees, a nd other sta kehold ers, and lead to a comp etitiv e a d v antage as a result. Consistent and p rop er p roject mana gement imp lies that a ll relev ant p roject- and customer-rela ted informa tion is at hand on a v ery granula r lev el whenev er it is need ed. Only then is it p ossib le to mea sure the v alue of a single specific p roject. H owev er, in the ma jority of p rofessiona l serv ices companies, toda y s system land scap e d oes not comp ly w ith this req uirement. Only a qua rter of surv ey resp ond ents sta ted that they could check the p rofitab ility of a p roject w ith minima l effort a t a ny time. Roughly a third of the compa nies (31% ) ad mit that this in theory rather simp le requirement is solv ed in effectiv ely. That p robab ly includ es sev era l compa nies tha t cannot reliab ly check the p rofitab ility of a p roject at a ll. How effectively do professional services companies Evaluation on a scale from 1 for not effectively at all to 10 for very effectively not efficient scale 1-3 semi-efficient scale 4-7 efficient scale 8-10 Average rating check the profitability of single projects any time at the push of a button? 31% 44% 25% 5.2 respond almost immediately when a project runs into trouble? 35% 49% 15% 4.6 respond rapidly to a change in customer demands? 36% 53% 11% 4.2 Fig. 9: Lev el of effectiv eness with regard to project management tasks PAC - a CXP Group Company,

13 PAC - a CXP Group Company, 2016 I t is not surp rising that ev en fewer p rofessional serv ices compa nies feel tha t they a re ab le to resp ond quickly to cha nges in an efficient way. Cha nges can either b e p roject-related (e.g. p roject no longer on time or on b ud get) or customer-related (e.g. an ad-hoc cha nge request during the p roject). In these ca ses, a ction tha t is obv iously more cha llenging tha n simply rev iew ing a status, such a s checking p rofita b ility, is req uired. PROFITABILITY: TRANSPARENCY AND GRANULARITY P red icting costs and efforts for a serv ice or p roject is d emand ing for p rofessiona l serv ices compa nies because the estimation of w orkload s and ta sks is more complex when p eop le a re inv olv ed a nd the lev el of manua l w ork is high. Consequently, hav ing cla rity on p rofitab ility is a ma jor concern for p rofessional serv ices companies, which is why we ha v e a nalyzed this topic in more d etail. W e a sked surv ey resp ondents to rate the imp orta nce of hav ing a high lev el of transp a rency with rega rd to p rofitab ility in v arious d imensions. S urv ey results und erline tha t p rofessiona l serv ices compa nies require high cla rity and p recision w ith rega rd to p rofita bility in genera l. All d imensions were rated a s highly or somewhat important b y a clea r ma jority of surv ey resp ond ents. Hav ing a clea r v iew on p rofitab ility b y p rojects rec eiv ed the highest sha re of confirmation a s b eing highly imp orta nt. K now ing the p rofita bility by region is relev ant for few er resp ond ents a s it strongly d ep end s on whether p rofessiona l serv ices companies a re d oing b usiness locally or internationa lly. Relevance of transparency with regard to profitability Profitability by customers 42% 48% Profitability by projects 50% 40% Profitability by business units 41% 48% Profitability by particular offerings or services 42% 46% Profitability by employee 31% 53% Profitability by regions 30% 45% high relevance some relevance Fig. 10: Relev ance of transparency with regard to profitability information 13

14 Hav ing high tra nspa rency on p rofitab ility and being ab le to mea sure this on a high lev el of granula rity requires a high lev el of integration w ith rega rd to da ta and systems. P rofessiona l se rv ices compa nies hav e room for imp rov ement here. At the moment, only a sma ll p ercenta ge of surv ey resp ondents (16% ) state t hat they can retriev e informa tion on p rofitab ility in rea l time and w ith a high lev el of automa tion. For most companies, more effort is req uired a s they a re either receiv ing the information dynamica lly (31% ) or manua lly (49% ). I t b ecomes clea r that there is still a w id e gap b etween the optima l sta te (i.e. hav ing high transpa rency on p rofitab ility in v arious d imensions) and the rea l situation (i.e. how p rofitab ility informa tion is a ctua lly retrieved). Current retrieval of profitability information Today, information on profitability is received 16% in real time and highly automated 31% dynamically 49% manually Please note that 4% of respondents stated that they did not know PAC - a CXP Group Company, 2016 Fig. 11: Current status of the retriev al of profitability information 14

15 FINANCE & ACCOUNTING: USEFULNESS OF VARIOUS ASPECTS Surv ey resp ond ents w ere a sked to ev alua te the usefulness of v arious a sp ects that a re relev ant for the fina nce a nd a ccounting d epa rtment, and for the genera l ma na gement of a p rofessiona l serv ices firm. The results show that ea ch p re-selected a spect was ra ted v ery useful by the ma jority of resp ond ents, while none of the top ics clea rly stood a bov e the others. The av ailab ility of deta iled information and transpa rency on the utilization of emp loyees wa s giv en the highest p ercenta ge of ratings a s being v ery useful (63% ). H owev er, other a sp ects such a s receiv ing cost- related information insta ntly or b eing a ble to close the books q uickly w ere rated as v ery useful b y almost a s ma ny respondents. Usefulness of various aspects for finance and accounting Would be very useful Detailed information and transparency about the utilization of employees Retrieving project-related cost allocation at the push of a button A short timeframe for closing a quarter or a year s end Instant control of project- or customer-related KPIs A high transparency level with regard to the company s liquidity situation A high transparency level with regard to bench times of employees Retrieving the number of unbilled days at the push of a button 63% 61% 57% 56% 56% 56% 53% An integrated view of intercompany relations % Easy and integrated recruitment and sourcing of external staff 51% PAC - a CXP Group Company, 2016 Fig. 12: Rating of usefulness of selected aspects for finance and accounting 15

16 PAC - a CXP Group Company, 2016 ANALYTICS: ABILITY OF REAL-TIME MANAGEM ENT Asp ects such a s the ones describ ed ab ov e req uire a dv anced ana lytics. I f companies a re a iming to retriev e up-to-date information to supp ort d ecision-ma king at the p ush of a b utton, it should id ea lly b e av ailab le in rea l time. We a sked the surv ey resp ondents whether their ana lytics systems a llow for rea l-time mana gement of the p roject v alue cha in and if yes, whether that cov ers the whole p roject v alue cha in or only p arts of it. The result ind icates tha t rea l-time ana lytics ha s rea ched a certa in lev el of maturity in p rofessiona l serv ices firms. The clea r ma jority of these companies have the ab ility to ana lyze and ma na ge at lea st some comp onents of the p roject v alue chain in rea l time. 84% of survey respondents confirmed that real-time analytics is available for a few, many, or all components of the project value chain H owev er, the ab ility to ma na ge the entire p roject v alue cha in ba sed on rea l-time d ata is still fa r from being standa rd (7% ). A high p ercenta ge of resp ond ent s cannot d o this in rea l time at a ll (13% ), w ith a n add itiona l 3% who d id not know the a nswer to this question. It therefore seems a s if there ex ists a solid ba sis for rea l-time ma na gement that p rofessional serv ices firms ca n expand further. Current status of real-time analytics How many components of the project value chain can be analyzed in real-time today? no components 13% I don't know 3% all components 7% most components 22% a few components 55% Fig. 13: Current av ailability of analytics that allows real-time management 16

17 COLLABORATION: ABILITY OF REAL-TIME MANAGEMENT Know led ge work which is a t the core of p rofessiona l serv ices d eliv ery requires collab orativ e w orking env ironments. This is of pa rticula r imp ortance in times of d igita l tra nsforma tion, w ith routine a ctiv ities b ecoming increa singly a utomated a nd the time sp ent by emp loyees on comp lex ta sks and in d istributed tea ms increa sing. Conseq uently, technica l colla bora tion p latforms or tools a re need ed a s a found at ion that fosters tea mwork a nd knowledge ex change. Aga in, the surv ey und erlines tha t p rofessiona l serv ices compa nies a round the w orld hav e rea ched a certa in ma turity lev el w ith rega rd to collab oration technology. The clea r ma jority of surv ey respond ents (82%) confirm that collab ora tion p la tforms or tools a re av ailab le and in use. These tools a nd p la tforms a re fully integra ted into the ex isting system land scap e in only a round a q ua rter of the compa nies (26% ). S o aga in, we see enha ncement p otentia l a s a solid and integrated technica l fra mework tha t could further increa se the p rod uctiv ity of emp loyees a nd most p robably their satisfaction, too. Current landscape of collaboration technology Are technical collaboration platforms or tools in use and are they integrated? 56% 26% 18% have integrated collaboration platforms or tools in use have non-integrated collaboration platforms or tools in use do not have collaboration platforms or tools in use PAC - a CXP Group Company, 2016 Fig. 14: Current status of collaboration technology 17

18 MANAGEMENT: COMPLEXITY DUE TO DEMANDING BUSINESS CONDITIONS S ome add itiona l surv ey question s w ere closely linked to the top ic of colla bora tion. W e a sked resp ond ents und er which circumstances they a ccomplish their p rofessional serv ices b usiness today. In ter n al staff on ly, or in combination with external su pport? W e first a sked whether companies need interna l sta ff only or externa l contra cted sta ff to execute a p roject or serv ice. W e a lso wanted to know whether physica l good s (e.g. repa ir pa rts) need to be mana ged or consumed in ord er to carry out p rojects or to d eliv er serv ices. 62% of the professional services companies include external contracted staff and 58% use some kind of physical goods to execute a project or service The fa ct that the ma jority of compa nies not only w ork with interna l emp loyees b ut a lso hav e to mana ge externa l p eop le a nd physica l good s in a dd ition to their own p eop le underlines the high lev el of comp lex ity many p rofessiona l serv ices ex ecutiv es a re facing toda y. The shorta ge of sp ecific skills only add s to this. This a lso confirms that integra ted technica l colla bora tion p latforms or tools w ould help to rea lize p rojects or serv ices efficiently and smoothly. 18

19 Is bu siness done in differ ent locations? Surv ey resp ond ents were a lso a sked whether their comp any is d oing business in a d istributed env ironment due to na tiona lly or interna tionally d istributed loca tions, b ranches, or subsidiaries. 63% of the professional services companies work in a nationally distributed environment and 43% operate internationally This a ga in add s to the comp lex ity of the business in the ma jority of p rofessiona l serv ices companies and of mana ging this business. Apa rt from collab oration techniques, a spects of imp orta nce includ e multi capab ilities a s well a s ease of imp lementation and ea se of use in ord er to supp ort smooth business across a d istributed business env ironment. S ca lab ility might b e a nother relev ant a sp ect, in pa rticula r for the (ap p rox ima tely) 40% of resp ond ents who confirmed tha t their comp any is p la nning to expand (furthe r) internationally. Is tr avel r equ ired to deliver projects or services? La st but not lea st, w e wanted to know whether emp loyees in the p rofessiona l serv ices compa nies included in the surv ey need to trav el for their job s or not. I t is a lmost needless to sa y that in a dd ition to strong ma na gement a w orkforce tha t is trav ellin g on a regula r ba sis requires reliab le collaboration tools, ea sy-to-use a id s to mana ge trav el exp enses or routes, and most p robab ly mobile supp ort of key b usiness p rocesses a nd functions. MARKETING: THE PATH TO SEGMENT OF ONE 94% of respondents said that much or some travelling is needed for executing projects or services. The top ic of d igitalization is certa inly not new to most ma rketing and communica tion exp erts a nd the p rofessiona l serv ices industry ha s b een pa rticula rly quick to ad opt d igita l techniques such a s e-ma il ma rketing to rea ch customers a nd to adv erti se their offering. This ha s been pa rticula rly help ful because p rofessiona l serv ices cannot usua lly p resent haptic products or ma terials to their customers. H owev er, in these a lways on times, customer requirements a re changing a nd customer centricity goes a long w ith higher ind iv idua lization lev els in all a rea s ma rketing and communication includ ed. Ma rketing is a t its b est when a customer feels add ressed in a p ersona l a nd ind iv idua l manner. The era of segment- of-one ma rketing ha s just b egun, which req uires good content, good data 19

20 insights, and high ma rketing automation lev els in ord er to mana ge the d iv ersity in an efficient way. W e a sked surv ey resp ond ents to giv e an estimate of their company s current ma rketing performa nce a nd capab ilities. The results giv e a mixed p icture. Ab out ha lf of the respond ents (52%) consid er their ma rketing capab ilities and p erforma nce sa tisfa ctory but not outstand ing. Almost 40% seem to b e more satisfied w ith the w ork that their ma rketing and communication depa rtment or a gency is d oing. From an outsid e p erspectiv e, howev er, the results imp ly that only 7% a chiev e excep tiona l results in ma rketing a nd communication. In times of ev er- increa sing comp etition, p rofessiona l serv ices compa nies should be interested in becoming the b est in cla ss in ma rketin g and communica tions, especia lly in light of the ex cellent p rogress tha t ha s b een mad e recently with rega rd to the av ailab ility and functiona lity of tools to sup p ort the ma rketing d iscipline. Current marketing capabilities and performance immature 9% average 52% advanced 31% highly advanced 7% immature advanced Fig. 15: Current status of marketing capabilities and performance PAC - a CXP Group Company,

21 CONCLUSION The surv ey of 300 decision-ma kers from sma ll and mid-sized p rofessiona l serv ices firms a round the glob e rev ea led that the ma jority of industry p layers hav e the a mb ition of grow ing a nd further d ev elop ing their b usinesses. O n av era ge, they attach the highest p riority to the enhancement of serv ice d eliv ery and to the supp ort a nd grow th of b usiness, b oth w ith ex isting clients a nd new ones. At the sa me time, the surv ey showed that p rofessiona l serv ices compa nies a re awa re of the cha llenges tha t lie ah ead of them. The creation of a stronger foundation for growth a nd gov ernance and the imp rov ement of customer rela tionship management and retention a re considered to b e ma jor cha llenges in times of tough comp etition, dema nd ing customers, a nd v ola tile ma rket cond itions. Enha ncements to business p rocesses includ ing b etter efficiency, qua lity, a nd tra nspa rency a re of equa l imp orta nce to p rofessiona l serv ices companies. These aspects app ea r to be closely linked to the technologica l foundation of the b usiness. H ow ev er, while I T inv estments might help solv e the most p ressing issues, the red uction of costs is consid ered to b e another ma jor cha llenge. This might ma ke companies seek solutions that req uire limited up front inv estments (e.g. cloud solutions tha t a re calculated on the b asis of usa ge). On the one hand, the a na lysis rev ealed high sensitiv ity a mong p rofessiona l serv ices compa nies w ith rega rd to the v alue tha t an integra ted v iew of the p roject v alue cha in, adv anced ma rketing, or ana lytics can b ring to b usiness. On the other hand, how ev er, the surv ey exp osed significant room for imp rov ement, a nd it seems a s if most d ecision -ma kers who answered the surv ey q uestions hav e recognized and a cknow led ged the sub-optima l or ev en critica l a rea s. I n this surv ey, w e d id not sp ecifica lly a sk for IT-related inv estment p riorities b eca use a reliab le a ssessment w ould hav e b een d ifficult since business and IT d ecision-ma kers from d ifferent a rea s w ere inv ited to ta ke pa rt in the surv ey, and a ll these hav e d ifferent interp retations and limited v iews on IT-rela ted a spects a s fa r a s our experience shows. How ev er, the surv ey results clea rly suggest that p rofessiona l serv ices companies a re awa re of the p rogress that could b e ma d e in b usiness w ith the right technology to hand. Wha t does this mean? There is, of course, no officia l d efinition of what the right technology founda tion is for p rofessiona l serv ices compa nies. Accord ing to the surv ey, how ev er, sev era l cha racteristics receiv ed common app rov al, includ ing b road functiona lity and high integra tion lev els in comb ination with the ab ility to enab le a gility, flex ib ility, a nd speed. 21

22 TABLE OF FIGURES Fig. 1: Ba sic surv ey d ata... 3 Fig. 2: Top ics consid ered a p riority b y p rofessiona l serv ices firms... 4 Fig. 3: P rocess-rela ted cha llenges of p rofessiona l serv ices firms... 5 Fig. 4: K ey strategic cha llenges of p rofessiona l serv ices firms... 6 Fig. 5: K ey tactica l cha llenges of p rofessiona l serv ices firms... 7 Fig. 6: Ex amp le of the p roject v alue cha in... 8 Fig. 7: Different p ossib ilities for supp orting the p roject v alue cha in Fig. 8: Relev ance of softwa re-related top ics Fig. 9: Lev el of effectiv eness with regard to p roject management tasks Fig. 10: Relev ance of tra nsp arency with rega rd to profitability informa tion Fig. 11: Current sta tus of the retriev al of p rofitab ility information Fig. 12: Ra ting of usefulness of selected aspects for fina nce a nd a ccounting Fig. 13: Current av ailability of a nalytics that a llows rea l -time mana gement Fig. 14: Current sta tus of collab oration technology Fig. 15: Current sta tus of ma rketing capab ilities a nd performa nce

23 ABOUT SAP As ma rket lead er in enterp rise app lication softwa re, S AP (NYS E: S AP) help s companies of a ll sizes and industries run b etter. From ba ck office to b oa rd room, wa rehouse to storefront, d esktop to mob ile d ev ice S AP emp owers p eop le and organizations to w ork together more efficiently a nd use business in sight more effectiv ely to stay ahead of the competition. S AP a pp lica tions and serv ices enab le app rox imately 320,000 b usiness and pub lic sector customers to op era te p rofitably, a dap t continuously, a nd grow susta inably. W eb site: SAP SE - Walldorf Dietmar-Hopp-Allee Walldorf Germany 23

24 ABOUT PAC Found ed in 1976, P ierre Aud oin Consultants (P AC) is pa rt of CXP G roup, the lead ing independent European resea rch a nd consulting firm for the softw a re, I T serv ices a nd d igital tra nsformation industry. CXP G roup offers its customers comp rehensiv e supp ort serv ices for the ev alua tion, selection a nd optimiza tion of their softwa re solutions and for the ev alua tion and selection of IT serv ices p rov id ers, and a ccompa nies them in optimizing their sourcing and inv estment stra tegies. As such, CXP G roup supp orts ICT d ecision ma kers in their d igita l tra nsformation journey. Further, CXP G roup a ssists softwa re and IT serv ices p rov id ers in optimizing their stra tegies and go-to-market app roa ches w ith qua ntitativ e a nd q ua lita tiv e ana lyses a s well a s consulting serv ices. Pub lic organizations a nd institutions eq ua lly ba se the d ev elop ment of their I T p olicies on our rep orts. PA C - CXP G r oup Holzs t r M uni c h, G e r many Te l. : + 49 ( 0) Fax : + 49 ( 0) i nf o -ge r pac -onl i ne. c om w w w.pac -onl i ne. c om Cap ita lizing on 40 yea rs of exp erience, ba sed in 8 countries (with 17 offices w orldwid e) and with 140 emp loyees, CXP G roup p rov ides its expertise ev ery yea r to more tha n 1,500 ICT d ecision ma kers and the op erationa l d iv isions of la rge enterp rises a s well as mid- ma rket compa nies a nd their p rov iders. CXP G roup consists of three b ranches: Le CXP, BARC (Business App lica tion Resea rch Center) a nd P ierre Aud oin Consultants (PAC). For more informa tion p lease v isit: ac-online.com P AC s la test news: Follow us on Tw PAC_Consultants 24

25 DISCLAIMER, USAGE RIGHTS, INDEPENDENCE, AND DATA PROTECTION The crea tion a nd d istribution of this study w as commissioned by S AP. For more informa tion, p lea se v isit ac-online.com. Disclaimer The contents of this study were comp iled w ith the greatest p ossib le ca re. H owev er, no liab ility for their a ccura cy can b e a ssumed. Ana lyses and ev aluations reflect the state of our know led ge in July 2016 and may change at any time. This app lies in pa rticula r, b ut not exclusiv ely, to statements mad e ab out the future. Na mes and d esigna tions that a ppear in this study may b e registered trademarks. Usage r igh ts This stud y is p rotected by copyright. Any rep rod uction or d issemination to third pa rties, includ ing in pa rt, requires the p rior exp licit authoriza tion of S AP a s commissioner. The pub lication or d issemination of tab les, grap hics etc. in other pub lica tions a lso req uires p rior a uthorization. In depen den ce an d data pr otection This stud y wa s p roduced b y P ierre Audoin Consultants (P AC) w ithout influence from S AP a s the commissioner of the study. The pa rticipants in the study w ere a ssured tha t the information they p rov ided would b e treated confid entia lly. No statement enab les conclusions to b e d rawn ab out ind iv idua l comp anies, and no ind iv idua l surv ey da ta wa s pa ssed to the commissioner or other third pa rties. All pa rticipants in the study were selected a t rand om. There is no connection between the p roduction of the study a nd a ny commercia l relationship between the resp ond ents and the sp onsors of this stud y. 25

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