Investing in Technology Is the Number One Priority and Growth Driver for Professional Services Firms in 2023, According to New Research From Deltek
- Deltek launches 4th Annual EMEA and APAC Clarity Industry Study: Trends and Insights for Architecture, Engineering and Consulting Firms, finding investment in technology is a top priority for 45% of professional services firms
- Nearly two-thirds (74%) of A&E and consulting firms say they will lose market share within two years if they fail to make progress in digital transformation
- Beyond technology, three-quarters (74%) of organisations now place more importance on corporate social responsibility (CSR), environmental, social and governance (ESG) issues than they did a year ago
LONDON, May 16, 2023 /CNW/ -- The 4th Annual EMEA and APAC Clarity Industry Study: Trends and Insights for Architecture, Engineering and Consulting Firms report from Deltek, the leading global provider of software and solutions for project-based businesses, has found that in EMEA and APAC, investment in technology was a top priority for 45% professional services firms, followed by expansion into new markets (42%) and attracting new talent (40%). Further, the majority (79%) of architecture & engineering (A&E), and consulting firms plan to invest more in emerging technologies in 2023 with very few planning to lower their budget.
This may be indicative of the top concern senior decision makers have in 2023 – cyber-security risk/breaches (63%), which narrowly beats concerns around recession (62%) and inflation (61%). Senior managers in A&E, and consulting firms are aware of the tangible benefits of investing in technology. Two out of five felt it offered the largest opportunity to grow, either via investing in existing IT infrastructure (26%) or in technological innovations (15%).
Keeping pace with technology is also seen as crucial to maintaining a firm's position in the market, with nearly two-thirds (74%) of A&E and consulting firms saying they will lose market share within two years if they fail to make progress in digital transformation. However, these concerns are driving forward digital transformation plans, with firms feeling more confident they will be delivering in five years. Currently, 29% of firms rated themselves in "mature" (18%) or "advanced" (11%) stages of digital transformation, but this increases to 63% anticipating they'll be "mature" (34%) or "advanced" (29%) in five years' time.
Further, two in five (40%) say they are 'very' well-prepared to implement their top priorities for digital transformation. Amongst the small number that feel unprepared (8%), the primary reason is inadequate training and support for employees, highlighting a knowledge gap or lack of prioritisation in the business. This extends across the business, with most staff and senior decision makers being perceived to understand emerging tech to some extent, but less than half of staff (33%) and senior decision makers (43%) completely understand it.
The overall outlook remains optimistic, with 71% of firms saying that, compared to 2022, they are expecting to increase profits in 2023. However, over the next five years, the industry anticipates a number of trends will present challenges for project management. Half the firms surveyed say that adoption of Artificial Intelligence (AI) (51%), developing the right knowledge and skills (49%) and keeping pace with changing client expectations (48%) are their top challenges. Despite this, many firms are failing to track some critical metrics that can deliver key insights to the business.
The key performance indicators (KPIs) most likely to be tracked are margins (74%), net revenue (73%) and revenue factor (72%). The KPIs least likely to be tracked are backlog and net labour margin (both at 63%). When asked which KPIs are not tracked well enough, 27% of firms cited average collection period as the top KPI that is not tracked well while 25% noted client profitability and 24% identified backlog as needing the most work.
Beyond technology, three-quarters (74%) of organisations now place more importance on corporate social responsibility (CSR) / environmental, social and governance (ESG) issues than they did at the start of 2022, including a quarter (26%) that feel it is now significantly more important. A fifth (20%) place equal importance and just 6% feel it has become less important. Architecture (83%) and Engineering (76%) firms are more likely to have increased the importance of ESG/CSR issues since last year, than Consulting firms (65%). Similarly, the same is true for CEOs/MDs (78%), when compared to C-Suite/ Senior Managers (66%). This may be because it impacts their ability to do business, with 57% of firms saying that they are only planning to do business with socially responsible companies and a similar proportion (55%) saying that their clients apply the same rule to their suppliers.
It also helps with talent acquisition, with 62% of firms agreeing that employees working in a socially responsible company feel a stronger sense of purpose than those working for other companies. This is important as the research found that 67% of A&E and consulting firms are planning to increase their workforce in 2023. With the research finding 71% of firms plan to carry out more projects than in 2022, having staff to fulfil contracts is vital, with more than half (53%) of firms admitted to turning down profitable projects in 2022 due to resourcing issues.
Neil Davidson, Group Vice President for the Professional Services Sector at Deltek, summarises, "This year's report shows how 2023's global economic outlook is presenting the architecture, engineering and consulting industries with a variety of challenges. This has created a strong focus on investing in technologies to gain competitive edge. By tracking trends in KPIs, digital transformation strategies and robust CSR initiatives, firms can be more informed on what is impacting their bottom line, be agile enough to pivot and adapt to address any potential threats or seize opportunities, and have in place the credentials to future-proof their business. The research suggests that in 2023, the most successful businesses will be those that re-evaluate their priorities and direction – particularly in the areas of maximising investment returns, CSR and workforce management."
Download the full report here.
Methodology
Deltek surveyed 549 decision-makers from architecture, engineering and consulting firms with 25 or more employees about opportunities and challenges, technology trends, monitoring of key performance indicators, corporate strategies and governance and business development. The self-completion online survey was completed between February and March 2023 by senior decision makers such as CEOs, C-suite, and heads of department such as Finance, Operations, Delivery or Projects. This year firms from UK, Germany, Nordics, Benelux and Australia & New Zealand took part. It is worth noting that the UK makes up a third of the sample.
About Deltek
Better software means better projects. Deltek is the leading global provider of enterprise software and information solutions for project-based businesses. More than 30,000 organizations and millions of users in over 80 countries around the world rely on Deltek for superior levels of project intelligence, management and collaboration. Our industry-focused expertise powers project success by helping firms achieve performance that maximizes productivity and revenue. Learn more at www.deltek.com.
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