Each year Mid-Market Monitor generates insights that give leaders of professional firms plenty of reasons to pause and reflect on the strategic choices ahead for their market.
This year Meridian West’s annual study of buying behaviour among CEOs and CFOs in the mid-market draws attention to one of the most important strategic dilemmas facing professional firms: to what extent should firms embrace technology and automation as part of their service delivery?
There are plenty of reasons for established firms to make significant investments in technology, not least because clients increasingly expect them to do so. 41% of CEOs and CFOs interviewed say audit and advisory firms should better integrate technology into their service propositions. Just 12% disagree.
Increased talk about technology and automation has raised expectations.
Clients want a more efficient service, and to see cost savings passed on as a result.
“I want to see slicker use of technology in auditing to reduce costs and make the process quicker and seamless. When carrying out audits to identify operational opportunities for the clients to use technology in a way that will reduce risk and save money.”
Other clients see technology’s potential to bring greater transparency to the way in which projects are managed and to give real time information about progress, billing and outstanding tasks.
“I would like some sort of tracking tool so that when we are doing the audit we can see where something is up to, whether it’s been reviewed, sample checked or signed-off by one of the partners.”
Disruptors such as Xero and Quickbooks have made inroads by offering lower-cost, self-serve accounting software to SMEs. They have raised the bar about what technology can do and how simple it should be to use. The good news for established firms is that only 19% of mid-market organisations say these new market entrants offer a viable solution for their business. Executives are clear: they want to see innovation from their existing trusted providers, not just from disruptors.
The same principle has been operating in the legal sector for some years now. General Counsel and in-house lawyers have been under pressure to reduce their legal spend; they have taken a fresh look at their legal resourcing models, including how they best utilise technology. Traditional law firms have responded by adapting their business model to offer more flexible resourcing options, many of which have a technology component.
However, this year’s Mid-Market Monitor also presents a compelling counterargument that should make firms think again about the inevitable path to automation. CEOs and CFOs argue that investment in technology and automation shouldn’t come at the expense of investing in people and skills.
“I’m not sure they should be investing in the technology side of things. Investing in their people is more important.”
A frustration with a perceived lack of commercially-savviness among professional advisers leads 70% of mid-market executives to say that professional firms should invest in boosting the sector expertise of their staff. The firms that do this will reap benefits. 64% of buyers say they would be willing to pay more for a business adviser with broad commercial acumen, not just technical expertise.
Yet these alternate views about technology mask a more immediate challenge: almost half (47%) of the mid-market executives interviewed are on the fence. They are undecided about the opportunity that technology poses for their relationship with professional firms. They may not be aware of the potential of technology, or are yet to be convinced about the value it brings. They are, however, open to find out more.
To rise to this challenge firms need to show how technology and automation will actually improve the client experience and add value. Failure to make a positive case for technology innovation will likely breed scepticism that it is only used as a way to boosting productivity, and hence margins, at the expense of vital investments in skills and personal relationships.