The Top Professional Services Technology Strategy
- Service companies use the PACE technology strategy to align the services and enabling technologies that maximize revenue growth.
- PACE aligns the methods service leaders use to create competitive advantages with technology that empowers and accelerates those advantages.
- The benefit of the PACE IT strategy is that it aligns software investment with business outcomes. It allocates more investment to the capabilities that drive the most business value and less investment toward capabilities that don't deliver differentiation or competitive business advantages.
A professional services technology strategy identifies the most effective technologies to improve project outcomes, customer engagement, business results and revenue growth.
It also defines the services tech stack, that is the suite of business applications that work together to drive the most important business outcomes, such as increasing customer acquisitions, customer share and customer retention.
But it's not realistic to acquire every helpful technology at once so the strategy is designed as a roadmap to be navigated over a multi-year period. The roadmap plots the specific technologies that best aid company growth objectives and future proofs your technology investments.
Without a tech strategy, most companies acquire piecemeal technologies to solve an urgent problem. That may help with the problem of the day, but quite often contributes to software sprawl, data siloes, lack of integration, and fails to contribute to a more strategic technology portfolio.
A Tech Strategy Design Approach
Starting with strategy may seem like common sense but for professional service company leaders unsure of what a strategy should include, how it should accelerate execution and what measurable benefits it should deliver, it's not commonplace.
A methodology can help. One we routinely use with clients is called PACE. It's a model that aligns business benefits with technology capabilities.
The PACE strategy aligns the methods service leaders use to create revenue outcomes with technology that empowers and accelerates those outcomes.
Not all revenue outcomes are equal, so PACE delineates and describes them as common ideas, different ideas and new ideas. It then aligns them with a technology portfolio that segments business applications into layers called Systems of Record, Systems of Differentiation and Systems of Innovation. Below is an example.
- Systems of record are needed for a solid, secure and scalable foundation, but by themselves generally provide little to no business differentiation in the competitive marketplace. As an example, Professional Services Automation (PSA) software facilitates project estimates, project plans, WBS and resource schedules.
These are all important tasks, but when designed for efficiency, and not effectiveness, they fail to create competitive advantage. That doesn't mean apps at this layer cannot be elevated to higher layers; they can.
These types of platform systems benefit the company by incurring fewer changes and longer life cycles.
- Systems of differentiation support the company's different ideas. For most service companies, different ideas permit the company to improve operations, outperform competitors, or take clients and market share away from competitors. The business benefits are worthwhile but often temporary. In many cases, the benefits are a zero-sum game.
Service software examples may include mobile-based time and expense capture to accelerate cash flow, project-based templates to improve services repeatability, resource management to increase staff utilization, business rules that detect and prevent contract deviations, automated project accounting (i.e., allocations, burden, overhead) for cost accounting purposes, or automated revenue recognition for more timely financial statement reporting.
- Systems of innovation support new business ideas – for new services, new markets and new revenue streams. Where systems of differentiation provide incremental gains, systems of innovation deliver order of magnitude gains.
Services examples may include white space mapping that identifies new client revenue streams, customer intelligence that surfaces market disruption opportunities, or professional services analytics that monitor key performance indicators and ensure services excellence.
These types of capabilities outflank competitors and realize new competitive advantages for the service provider. They drive the most powerful competitive advantages for the most successful service firms. But to achieve strategic or transformational change, these capabilities should be allocated more of the limited technology investment than technologies in the prior layers.
A single business application may cross all three layers. For example, a PSA system is generally a System of Record, but a PSA Next Best Action algorithm or a client self-service knowledgebase may be a System of Differentiation, while using Artificial Intelligence to detect project variances or projects at risk may be part of a system of innovation.
Different service companies may classify the same technology differently and the same application may change layers due to maturity or obsolescence. Also, a System of Record is required to support more agile Systems of Differentiation and Innovation.
An advantage of the PACE model is that it allocates more investment to the technologies that drive the most business value and less investment toward applications that don't deliver differentiation or competitive business advantages.
For this model to support business growth it's important that it and tech stack align with the customer lifecycle. Below is an example.
Many people believe PACE was created by Gartner. It wasn't although Gartner's promotion of this strategy made it very popular.
One other thing to consider. Growth technology research shows that most companies use a small fraction of their business applications. Start your strategy by assessing what you have and how much of it you are using. Using more of what you already have will reduce the volume of apps needed, decrease costs and accelerate time to value.
Investing in a model like PACE will significantly improve user adoption, software utilization and ROI. It will also create synergies among applications and increase their longevity.
In fact, without a clear tech strategy, the company is pursuing growth without designing the growth technologies that will most help. That will result in revenue goals being delayed, degraded or not achieved.