AI can deliver significant benefits to professional services industry
Artificial Intelligence (AI) can deliver significant benefits to the professional services industry, according to three leading experts in the field. Matthew Howard, a director of AI at Deloitte, Shamus Rae, Head of Innovation and Investments at KPMG and Euan Cameron, AI Leader at PwC, explore the main opportunities and challenges of AI for professional services firms, in the run up to the event ‘AI for professional service firms’ where all of them will be speaking.
Artificial intelligence (AI) is an area of computer science that aims at the creation of intelligent machines that work and react like humans. According to McKinsey & Company, AI is now delivering real value to serious adopters, with research from the consulting firm revealing that globally, investors sunk between $26 and $39 billion into developing AI in 2016, with tech giants driving most of the boom. Due to its broad implications for the labour market in every sector, AI will likely impact a diverse range of processes and industries – including everything from language translation to medical advice.
As appetites for the use of technology across a multitude of sectors grow, as many as 5% of global jobs could be set for complete automation in the coming years, according to one estimate. With digital disruption threatening to overwhelm unprepared companies who attempt to leverage revolutionary automation technologies without a long-term plan, many global companies have been seeking help on the matter, leading to a boom in demand for professional services.
The revenue opportunity
However, while professional services are benefiting already from the phenomenon of AI, the industry has, in the eyes of experts, seen nothing yet. Just as the technology impacts clients across all industries, from retail and banking to logistics and pharmaceuticals, so too will it impact professional services.
As Euan Cameron, AI Leader at PwC, explains, AI represents a huge revenue opportunity for the professional services industry. This is because, historically speaking, change has benefited the professional services industry, as businesses seek external expertise to adapt to new market conditions. In that respect, AI will bring a lot of change, and clients are already turning to consultants, lawyers and other advisors to help them navigate the AI challenges that lie ahead. Digital transformation consulting has already grown into a $23 billion industry, while established brands have drafted in consultants to help them leverage automation and AI to downsize staffing costs, as was the case with McDonalds' recent hiring of Capgemini.
Cameron contends, “More than ever, clients need advice and insight to help them understand the effects of AI both today and in ten years’ time so that they can plan accordingly. The potential market opportunity to create value (and share in that value creation) is huge.”
The role of the professional services industry in this regard is two-fold. First, specialists must aid clients by focusing on the ‘engine’ – helping customers understand the technology that they hope to implement, and making sure their IT infrastructure is actually up to the task of working with AI. Secondly, consultants need to help the client understand the best destination that their transformation could help them travel to, and design the appropriate vehicle to get them there. This means designing and managing the change and embedding the change within organisations down the line – a bespoke, holistic process that sees consultants develop strategies and see them through to their execution.
“Arguably AI is more complex to understand and control than other technologies that have come before it because (by its very nature), its behaviour evolves and changes over time. This is where professional services can add a great deal of value – by helping clients get to grips with these issues and assist them with the process of business transformation that accompanies any influential new technology”, says Cameron.
Further to that, Matthew Howard, a Director of AI at Deloitte, adds, “For professional services, the real value of AI – aside from how it can help work internally – is how advisors can build services on top of often pre-existing technology platforms.” AI could even contribute more than technologies that have led to consulting booms in the past, such as the TQM wave of the 80’s, ERP in the 90’s and 00’s, or automation over the past decade.
A good example of this is the shift from the traditional consulting or accounting on hourly/fee basis to subscription model. McKinsey are presently leveraging technology within McKinsey Solutions to provide AI continuously through its smart solutions and insights to clients for a monthly fee. Beyond the traditional platform of hourly consulting, AI can be used to provide non-stop solutions to clients.
Another point is that AI will help professional services firms better serve the needs of their clients. Shamus Rae, Head of Innovation and Investments at KPMG, says, “Currently firms have a people-first, technology-second strategy. Yet our research shows that in ten years’ time, clients will expect their first interaction with a professional services company to be via a device.”
The productivity opportunity
Beyond the market opportunity to benefit from the needs of others to leverage new technology, Cameron contends that the professional services firms could also add substantial value by deploying AI in their own backrooms.
Whilst initial applications of AI will focus on processing data, in time it will evolve to address to increasingly complex applications and return insights for business. In an industry that relies on understanding vast amounts of data every day, AI can also offer significant productivity benefits to professional services firms – displacing repetitive work which can be assigned to AI, and freeing up humans to add value elsewhere instead with their creativity, empathy and emotion – all of which are key to interpretation. AI also frees up employees’ time to do more valuable and often more interesting tasks, adding more value to clients.
Cameron states, “Many professional services workers, freed from the shackles of more mundane tasks (data manipulation, document production, template completion etc.) will have the ability to dedicate more time and concentration to the second more value added part of their job – the ‘thinking’ parts where real expertise and insight can be added.”
In this regard, AI represents a major boost for internal operations. According to Howard, “Being able to correlate that data and make it meaningful – fast – is one of the most attractive advantages of AI. This is especially true as information analysis becomes increasingly commoditised and firms have to prove they are using the very best technology in order to win and retain clients.”
Rae meanwhile gives an example in the M&A space. “When M&A consultants look through documents in a deal room, which can contains thousands of documents, AI can help them find the required information more quickly.”
Embracing Artificial Intelligence
However, embracing AI is, also for those that are advising on the matter, no easy task. Professional services means firms should first understand the technological side of things. Howard asserts that, “Firms must ensure that they understand the technology as it evolves, and invest where it matters most, in order to reap in the rewards.”
The key is to be smart, followed by investing at right time. If firms invest too early when the tech is not mature enough, they may overspend. If they though invest too late, they risk ceding valuable ground to the industry’s frontrunners. This uncertain position also means that the human capital side of the industry must evolve quickly, becoming more fluid in order to keep in line with technological changes.
Howard continues, “The skills profile of the individuals we recruit into professional services is changing. We are seeing an increased need for not only traditional management consulting and accounting skills, but increasingly also data scientists and coders.”
“We need to have a greater understanding of how technologies are changing the work place in order to understand what skills are needed for the future,” Howard adds, before suggesting that the professional services industry is not alone in this issue. “Businesses, educators and policy makers need to work together to understand how people can be prepared for the changes facing the workforce.”
This change will mean that people strategies in the industry integrate employee culture closely with AI strategies in particular. Numerous roles will need to be re-defined, and many people will need to be up-skilled or redeployed into new areas. As an industry, the sector will need to be much more disciplined about how it recruits and retains people with in-demand skill-sets, especially technologists.
Rae adds, “To be considered innovative and ahead of the game, the net result is that professional services will need to flip the coin, putting tech first and people second. Moving to a technology first, people second approach will necessitate cultural change. Think about the calibre of people you need to be able to manage that shift and the disruption it will bring to your organisation.”
Areas for planning
With the impending implementation of the GDPR, meanwhile, data governance must be solid. The cost of failing in this regard could be huge. In one recent example, the Hilton Hotel chain was fined $700,000 for a data breach in New York state. However, under the GDPR, which covers firms even outside the EU who handle the data of citizens, that fine could have been $420 million. In Hilton’s case, this roughly translates as $2 per lost record versus $1,200 per lost record.
Beyond the protection of data stored, professional services firms also need to begin thinking about how to sort the wheat from the chaff, as that same data will be used to build its AI capabilities. “Data is like water for professional services firms,” Rae explains, “and you’ll need that data to train the AI system. You therefore need to start thinking now about to clean it and remove any unconscious bias. It’s the age-old adage, bad data in, bad data out.”
Though AI implementation will require substantial investment, simply throwing money at artificial solutions is no guarantee of improved business methods. Investment will need to be focused in the right place at the right time, in order to generate value for the business, while being targeted at methods to be more competitive and innovative. “AI needs careful thought and implementation for its true value to be realised”, Cameron recommends.
Change our lives
All of this might seem daunting to professional services industry stalwarts who are used to a traditional way of doing things, which has yielded successful results for years previously. However, this trepidation should not put firms off from considering investing in AI. Indeed, should they fail to engage with the technology, they could be left behind rapidly by the rest of the market.
In conclusion, Howard states, “AI is going to change the way we all work and live our lives. Those professional services firm who are ready to embrace the disruption – have the ability to be the winners in this.”
Rae says in addition that those that are hesitant shouldn’t be, “I would say to companies hesitating in investing in AI because they think there is a secret development being worked in somewhere in an underground lab – there isn’t. Don’t wait. The tech exists to transform your business now.”
At the same time, while AI seems certain to be part of the future of the professional services sector, it is key not to forget ethical questions raised by the technology. It can be dangerous, according to Cameron, who concludes, “Whilst it might be alluring to be the party that can make sense of the black box, the need for transparency and broader understanding across society, government and business has never been greater. All parties need to work together to ensure AI is deployed efficiently, safely and ethically for all stakeholders. Professional services firms have a very important role to play in achieving this goal.”
Matthew Howard, Shamus Rae and Euan Cameron will share their vision on how AI will impact the PS industry during the event ‘AI for Professional Services’, UK’s largest AI event specifically for professional services, bringing together law firms, in-house counsel, general counsel, consultancy and accountancy practices.
