What precisely am I paying for? Redefining worth within the age of AI
It is the question that every consultant fears. A client questioning the value a professional services team delivers.
AI tools are disrupting the traditional professional services delivery model with clients expecting more defined, tangible commitments to deliver value before the project begins.
ERP Strategist for Professional Services Organisations, Unit4.
This approach places far greater emphasis on the service provider to demonstrate they are producing results that mean something to their client.
This is highly risky for a professional services organization. It must take on the burden of time and materials costs and expenses to complete a project, but what if a client is reluctant to pay because they do not like the outcome?
Redefining value
Redefining value in the age of AI is quickly becoming a major strategic challenge in professional services industries.
The perception among clients is that AI is delivering efficiencies and savings through IT automation which should translate into lower bills from their consultancy partners.
Of course, there will be scenarios where that is possible, but if the use of AI is only a discussion about cost reduction, it will become a race to the bottom in terms of commoditizing services.
Every professional services company wants to avoid that scenario, so the key is to develop metrics which demonstrate how AI adds a tangible return-on-investment.
What if it could enable clients to charge their customers more by building new systems that are unique to that industry?
What value are you adding?
Asked this question, “If you’re now using AI to automate the services I am buying, what value are you – the consultant – adding?” then surely the most powerful response is showing how AI enables consultancies to help their clients do things competitors cannot.
Specific metrics will be required to show how a firm is positively impacting the client’s bottom line, but their definition is still being shaped.
Similar to the early days of cloud computing, there was much talk about it revolutionizing IT infrastructures. Yet, it took nearly a decade before we saw standardized outcomes and ROI.
Creating challenges
This creates a challenge for professional services organizations today, as it puts client relationships under pressure at a time when firms are fighting to sustain their revenue streams and find new growth.
However, having spent time with leaders in the industry I am consistently hearing that adhering to certain principles enables successful organizations to maintain stable client relationships through this AI-led disruption.
1. Expectation management: in any professional services organization the mantra should always be “no surprises.” Having to explain that a project will be late is the most difficult scenario for managing client expectations. With AI supporting the implementation team, there is greater expectation that potential delays can be identified and avoided using predictive analysis.
2. Transparency: given all the questions about the use of AI in professional services, transparency is the best policy to maintain a stable client relationship. Not only do clients need assurances their data is protected, they want to understand how it is being used and be able to trust the decisions the AI is making. This does not mean giving clients an “access-all-areas” pass but understanding breeds confidence in the extra value being delivered.
3. Disciplined delivery: If AI adoption means you are using an outcome-based delivery model, it is crucial to avoid scope creep. This requires a disciplined approach to delivery management, ensuring that any additional requests are identified as falling outside of the agreed remit and are billed separately. This also helps with expectation management. If the client and delivery team are collaborating effectively there should be no surprises around the expected outcomes.
4. Defining value: Clients must be able to see what the value is for their business – whether it is increased productivity, reduced cost or new revenue streams. Firms stake their reputations on the knowledge and expertise they can offer, because it gives them the confidence that they can delivery results. However, with the introduction of AI, it is vital to show how completing a project will help clients to do something better and impact their bottom lines.
5. Talent: For firms to adjust to the impact of AI, they will need expertise and skills that distinguish them from competitors. The days of the pyramid model of consultancy skills may be over, with smaller groups of highly skilled experts (think chartered accountants or architects) managing teams of data consultants and product management, who understand how to use AI to respond effectively to client requirements.
6. Business model: some commentators are talking about diamond or obelisk shaped business models. Ultimately, AI should enable greater agility and more responsiveness to clients. Therefore, consultancy firms must ensure they foster more dynamic, collaborative organizational cultures and operational structures to be successful.
Final words
Speaking to clients, it is clear that firms in a variety of sectors are still working through their understanding of AI and what it means for their future strategies.
It is irrefutable that organizations willing to embrace AI now will get a head start on their rivals, and this will see a re-ordering of the professional services industry.
Above all, though, the definition of value is going to change, so every firm must be prepared to answer that question: “So what am I paying for?”
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