Change is accelerating all around us, is your firm ready?
The professional services industry is experiencing a massive turnover. In the accounting industry alone, it is estimated that up to 75% of CPAs will consider retiring by 2025. As “experienced” consultants look to a long-anticipated life of leisure, new practitioners are coming to the industry with a Google mindset. This new generation of digital natives has grown up with Google. They are accustomed and expect to find and consume the data, information, knowledge and guidance quickly and easily, and to conform to the way they work. Everything they need to know has always been available to them simply by typing in a keyword.
When they come to your firm expecting to have all the critical policy and procedural information at their fingertips, they are soundly disappointed when you point them to a 2001 SharePoint site, or worse yet, your analog law library. Your young practitioners are looking for the information they need to excel in their work and career. Professional services firms will need to shore up their content to attract and retain new professionals.
Moreover, the knowledge your firm has amassed has likely not had much governance. Rarely has it been revised, edited or audited, resulting in thousands upon thousands of pieces of unimportant content that is impossible to sift through. A simple search result can amass literally hundreds of pages of results. Your content is like the old ad for the Roach Motel. Content can check in any time it wants, but it can’t check out. Or the Hotel California…you get the analogy. Not all content is created equal.
Historically, the process of creating and managing content has been viewed as an administrative line item--a cost center. Interestingly, the entire brain trust of your firm, developed over years and years, eventually became viewed as a corporate liability. Don’t you think it’s finally time we change this mindset and begin to view your firm’s content as a corporate asset instead?
This article begins to explore ways in which you can assess whether your professional services firm is finally ready to take on the challenge of making the investment to transform your collective knowledge, the very thing that characterizes your consulting prowess, from a corporate liability into a corporate asset.
Professional services firms generate their revenue through the work of their practitioner employees and partners. The value generated depends on following the established rules and policies produced by independent standards and review boards. More importantly, each firm typically produces its own guidance and interpretation of the legal regulations they represent. This is your corporate asset.
The Current State of knowledge management at Professional Services Firms
Virtually every professional services firm has implemented a knowledge management system that creates, catalogs, presents and manages the myriad types and forms of content. This content is necessary for their clients and practitioners to conduct business and provide accurate, timely, and valuable consultative services.
In most cases, these systems have taken on a life of their own and have grown into massive repositories requiring full-time resources to manage. This management function includes keeping content up-to-date and adding new content as required by the firm and the industry. Typically, the company’s “experts” determine the content's structure. As a result, the user experience to deliver this content was also designed and implemented to meet the way they work. Or, to put it another way, most knowledge portals are developed by SMEs to be used by SMEs. No wonder a second-year junior associate risks the firm’s reputation by turning to Google to get timely answers to their questions.
Luckily, with advances in computing power, artificial intelligence, and the application of design thinking to knowledge management, there are various solutions available to your firm. Taking advantage of an Intelligent Knowledge Portal solution can offer everyone at your firm an effective, accurate, and easy-to-use tool and resource to help them conduct their engagements efficiently and produce the highest quality work product.
Is your firm ready to transform your content?
At Tahzoo, we have helped global enterprises improve the quality, efficiency, and effectiveness of their knowledge base systems, portals, and digital engagement for over a decade.
We’ve worked with leading professional services firms including big 4 accountants, global law firms and industry leading management consulting organizations, to help them assess their readiness for content transformation and then provide and maintain a roadmap for that transformation. As we work with our clients, here are the areas we begin to assess:
- Potential - What is the potential reward for implementing an intelligent knowledge portal?
- Readiness – How ready is your organization to initiate an intelligent knowledge portal?
- Awareness – How aware are you of the various considerations required when considering an intelligent knowledge portal?
- Capacity – How much change will be necessary to implement an intelligent knowledge portal initiative at your organization successfully?
- Impact – How will an intelligent knowledge portal initiative impact your business?
These five dimensions provide us with the necessary lenses to get started and begin to outline a roadmap to move your firm in the right direction. It’s not uncommon for us to use this scorecard to assist our clients in developing a comprehensive business case to better provide an economic justification for investment in an intelligent knowledge portal. In addition to generating a business case, this scorecard becomes an important stakeholder consensus-building tool too. Because ultimately, a decision to re-tool your corporate knowledge requires buy-in from the majority of stakeholders, especially from the C-Suite. Let’s examine each dimension in more detail.
An intelligent knowledge portal is a lot more than an information retrieval tool. It can act as a platform for content authors, contributors and organizational consumers. It allows your professionals to collaborate, browse, search for and consume necessary information. It can provide guidance, learning, and shared experience representing your intellectual property and the unique value of your firm's collective wisdom and knowledge.
This collective effort can best be summed up as a combination of above and below-the-line impact on your business.
Below-the-line impact refers to the productivity and operational rewards. Typically, these impacts are measured in terms of productivity – how much time and effort are required for an individual or team to accomplish an activity or set of tasks?
A professional services firm can view productivity as subjective, but there are methods for tracking productivity elements and assigning a financial value to them. For example, the firm's associates can be anonymously polled periodically about how long they spend every day looking up information. If the result averages at 30-minutes to locate and consume a topic, that can be used as a baseline measurement. This output is calculated by estimating a practitioner’s average billable hour times the amount of time spent per month. In this hypothetical case, the average billable rate is $100 per hour. There are 1000 practitioners, and they work 21 days during the month. So, the estimated cost is $100 per hour x 0.5 hrs./day X 21 days X 1000 people = $1,050,000 per month.
The most important part is not the precise calculation but the trend over time. Over one year, if you could reduce the time spent by 10%, your firm could potentially save over $100,000 per month. This back of napkin calculation is valuable when making a business case for taking on an intelligent knowledge portal initiative.
Above-the-line impact refers to the impact on the brand, market eminence, client loyalty, new account acquisition, and ultimately revenue and profitability. In professional services firms explicitly organized as partnerships, sales and marketing are generally not spoken about in polite company. The number of billable hours, receipts, and client churn are significant in partner meetings and when assessing compensation for everyone at your firm. But what is the connection between an intelligent knowledge portal and your firm's financial results?
When we talk about a company's brand equity, the first thing that comes to mind is B2C companies such as auto manufacturers, retail chains, and consumer products like soft drinks and cell phones. We don’t usually think about brands in professional services firms like law firms, real estate companies, or HR consultants or auditing/accounting firms.
For these types of businesses, their brand is directly connected with their reputation. It is their reputation that is the prime determinate of their ability to win and retain accounts.
Intelligent knowledge portals democratize data. With an effective system for capturing, organizing, and presenting the companies IP, professional services firms can deliver higher quality, more efficiently, and with fewer errors – all keys to establishing and maintaining the firm's reputation. The democratizing of data means the firm's most experienced partners will be able to convey their knowledge, expertise, and unique perspective to everyone across the firm, including the newest junior practitioner. This, in turn, increases work output overall and ensures delivery of the highest quality work product in line with the firm's guidance and policies.
Sometimes you don’t know what you don’t know. Other times you don’t know how to find out what you don’t know. And in all cases, you don’t know if you can trust what you are being told you don’t know. It’s a long way of saying that if the first thing you do is to invite several software vendors to pitch their versions of an intelligent knowledge portal, you must be mindful that their job is to sell you software, not to improve your business. That’s your job.
An intelligent knowledge portal is a lot more than technology. It involves organizing your content with the proper taxonomy, making sure you get the metadata right, and most importantly, presenting the search for content in a user experience designed around how your practitioners search for, consume and use the content they need.
The good news is that there are a lot of suitable content technologies in the market. The bad news is that choosing the wrong one for your firm may have disastrous and long-term impacts. It’s like taking a whitewater river trip down the Colorado River. There are ten ways to shoot the rapids, but nine of them may get you killed. So, it’s critical to pick not only the right equipment but the right guide as well.
Your best solution is to find a services partner that can steer you through the entire engagement from strategy to vendor selection, implementation, operation, support, and most importantly, through the change management process required to drive adoption and produce intended outcomes. It’s the services partner’s job to maximize your awareness and your ability to make the right choices at every bend in the river.
The introduction of an intelligent knowledge portal is a significant undertaking. It will require new technology, revamped processes, and a considerable amount of change management to successfully drive adoption across the firm. The key to success is tied directly to your readiness to undertake such an initiative before your first kick-off meeting.
In traditional hierarchically oriented companies, the conventional wisdom begins with finding an executive sponsor, ideally the CEO, CMO, or CIO. These roles can act as the champion for the initiative and provide access to the resources, budget, and time to shepherd things from beginning to end. In a professional services firm where there may be partners who wield influence, the need for consensus building at every step of the journey becomes paramount.
You need an executive sponsor to approve the budget and resources, but you can’t rely on them solely. Constant communication at all levels of the firm is critical to keeping people up to date about what is happening, what will be happening, how it will affect them, and what it will do for the business. There is no such thing as over-communication.
A crucial part of this communication will be the use of observable, measurable, and repeatable metrics to provide factual data that will demonstrate the progress and value of each step of the program. The old saying goes that it doesn’t count if you can’t measure it, which is especially true in the accounting industry where data is supreme and indisputable.
Every major initiative stretches the comfort zone of the organization. The reality is, no matter how much people may complain about the status quo, they will almost always go with what they know rather than making significant changes. This is especially true among professional services firms that are conservative by their very nature, often valuing tradition over innovation.
Newton's first law of motion states that a body at rest will remain at rest unless an outside force acts upon it. Organizations tend to operate in the same way. However, not all organizations require the same outside force to overcome inertia and begin to change. Sometimes the outside force is thrust upon it without the option to remain the same.
If a significant change occurs in GAAP accounting standards, accountants have no choice but to begin using the new rules. However, if a colleague says they've found a great new way to adjust your office chair, you may or may not heed the advice despite its efficacy or good intent. Unfortunately, introducing a new intelligent knowledge portal may be much more like the latter than the former.
It is up to the initiative leaders to make the case to the rest of the organization. They will need to provide a convincing business case that the new portal is better not only for the company and the client but also for a better experience for the practitioner user.
To be successful, the organization must have the capacity to accept and embrace change. The program team must devote sufficient energy to support the initiative to get the entire organization aware, up-to-date, and involved in the entire process. Of all the factors, change management will have the most impact on the success of the overall initiative.
The Fair Exchange of Value - The key to creating a positive impact on the business is understanding and embracing the fair exchange of value. In an intelligent knowledge portal, the firm desires to communicate specific information, policies, and procedures resulting in successfully completing the practitioners' work product. Typically, this may mean conducting an audit with zero defects, on time, and to the client's satisfaction. This is the firm's definition of value received.
On the other hand, for the practitioners, the desired outcome is for them to complete their work as effortlessly as possible without errors. They want to complete their tasks so they can go home to their families at a reasonable hour, get positive notice and recognition from their manager or partner, and potentially advance their careers.
TCO vs ROI - As discussed above, the most impact can be classified as either being above or below the line contribution. These impacts can typically be measured in terms of two primary metrics. A key metric for TCO or total cost of ownership for the below-line contribution is usually associated with productivity gains or cost reductions.
TCO calculates all the costs associated with the people, process, and technology required to achieve the desired result. The goal is to reduce the total cost of ownership. This may reduce the software licensing costs of the tools, but more likely, it will reduce costs by reducing the time it takes to complete a task or the number of resources involved.
In a previous section, we reviewed how to calculate productivity gains by reducing time spent searching for content. A reduction of time equals a reduction in costs and potentially a reduction of resources required. For example, typically, when a practitioner can't find what they are looking for on the portal, their first remedy is to ask a colleague. Now two people are involved in the search, significantly increasing the total effort required for the task completion.
TCO management rarely accelerates the growth of a firm. The reduction in costs may lead to a reduction in services, offices, or areas of expertise. So, while TCO is a valid metric for the short term, we believe that ROI is the better metric to help the business grow and become even more successful.
ROI, or Return On Investment, is predicated on the importance of investment as long as that investment leads to positive outcomes. ROI is typically expressed in terms of incremental revenue over costs. In implementing an intelligent knowledge portal, the measurement of ROI may be more elusive and require a longer viewpoint. Suppose the intelligent knowledge portal leads to increased productivity, greater employee satisfaction, and improved work quality. In that case, it should lead naturally over time to contribute to the firm's reputation, ability to win new accounts, and maintain the loyalty and continued business of existing accounts.
What’s the next step?
As you may imagine, we spend a lot of time at Tahzoo thinking about these things. We’d love to have the opportunity to speak with you about your unique challenges.
Let’s meet and see what we can do to help you plan, design, implement, support, and measure your efforts around an intelligent knowledge portal.