How can we use artificial intelligence as a catalyst to reimagine professional services?
Like many people, I’ve been following OpenAI’s launch of ChatGPT with fascination. I’ve even been joking with my kids on the ‘best use case’, ranging from rewriting the endings to their favourite films, to an inexhaustible source of bad ‘dad jokes’!
It was a lot of fun, but after the initial euphoria passed, I started to think about how ChatGPT – and similar artificial intelligence (AI) chatbots – will impact different industries in the future; especially my own: the business of professional services.
In professional services, a lot of our work involves collecting data, understanding it, applying rules to it, and then either giving advice or reaching conclusions. As a result, there are certain obvious use cases for AI-powered natural language processing tools. Some may argue that they will effectively replace the need for our business altogether and that large parts of the professional services industry will disappear!
As you’d expect, I don’t subscribe to that apocalyptic view, but as an industry we need to be at the forefront of the reinvention.
Step back in time
Professional services can trace their roots back to the 17th century or even earlier and when first appeared, there was obviously no technology. All processes were manual, quill pen, paper-based and fees were driven by the hours spent working for the client. Over the last 40 years we have seen data and technology increasingly integrated with the ‘human expertise’ – and some professional services, especially around tax, start the transition to a Software as a Service (SaaS) based business model to deliver advice. Parts of professional services are evidently on a journey to transition from a model of computer-assisted, human-driven value creation to a model of human-assisted, computer-driven value creation.
We have seen a lot of progress, particularly over the past 10 years, in terms of how our industry capitalises on the power of technology to deliver value to clients. For example, there has been a dramatic increase in managed service offerings, as well as the emergence of more SaaS businesses. During the COVID-19 pandemic, the industry also developed the capacity to deliver ever more complex projects to clients without setting foot on their premises – a reality unimaginable only 3 years ago. Professional services’ fee structures are starting to mirror the changing nature of business model, with client fees increasingly reflecting the explicit or implicit costs of data and technology – alongside professionals’ time – although the industry is still a long way to go in capturing the true value of the data and technology.
The EY organisation investment in technology and data indicates the sheer scale of the shift taking place. To date the organisation has invested over $2b in EY Fabric, a multi-cloud-based data, AI and infrastructure platform, making the EY organisation one of the world’s biggest consumers of cloud. There are 40,000 clients on Fabric and over 1.2 million unique client users, and the platform processes over 270 million client and employee transactions every day. We will invest over $1b in our new NEON audit platform and $750m in our Global Tax Platform.
We have a dedicated innovation and AI team working on specific technologies relating to machine learning and intelligent automation, including ChatGPT. We’ve already deployed 173,000 automation bots across the business and every year, we process over two million documents using optical character recognition technology. Additionally, we have worked with IBM to incorporate IBM Watson into some of our client products and we work with more than 100 ecosystem partners on the innovation agenda.
Pivotal moment for professional services
The EY organisation and professional services more generally have certainly come a long way in terms of how we deploy and integrate technology within industry. Still, we have not as yet fully succeeded in exploiting its transformative potential. Despite the substantial technological investments made by the EY organisation - the change in the nature and shape of the service consumed by the client has been slower than I would have expected. For example, 5% of our $45bn of revenue is direct software, license or technology related revenue, 50% of our engagements remain time and material and the majority of our people work out of major city campus offices.
Why is that?
Undoubtedly much of the challenge relates to change management; whether its technology adoption or changing client behaviour. Although people have access to state-of-the-art technology, they choose not to use it. Maybe poor user experience, initial set up or training effort may discourage while others may also have concerns around system security, or even lack confidence in their own digital skills.
It is crucial that professional services put as much investment and focus to overcome this change management challenge. We are at a tipping point in terms of how we can use AI and other technologies to revolutionise client service and the broader business model. Today we have a huge opportunity to completely transform the employee experience by leveraging the convergence of cloud, data, AI and end user productivity and communication tools and environments.
A key part of this opportunity will be giving users the ability to access data, analyse and execute transactions - without leaving the communication or software user environment they feel comfortable with. This will open up significant productivity and transformation potential by creating a more natural user experience - where much of underlying product and application functionality is screened from the user. When applying this to EY teams, who provide services in 154 countries through over 5,000 individual client applications, you can see this is a huge opportunity.
The same technology and approach will also act as a major catalyst to accelerate the shift of many more professional services to a direct consumption model by clients either on remote service or as a SaaS based offering. This will also see the shift in the pricing and engagement design – help enabling us to create more client growth through the underlying data, technology or software asset alongside the traditional domain knowledge of EY client professionals.
I think it was Bill Gates who said we overestimate the amount of change in the next 2 years - and underestimate the change in the next 10. While professional services are not going the way of the dodo – as a result of ChatGPT or any other technology – there will always be the need for ‘boots on the ground’ - subject matter experts to work alongside clients, advising them and supporting them through challenging situations.
But the way in which the domain expertise is both enabled and integrated into data and technology is changing – and it will change at an even quicker rate going forward thanks to AI. It is a powerful catalyst that can enable us to completely reimagine what we do, how we do it, and what we charge for. Professional services firms that embrace this reality – and the new era being heralded in by ChatGPT and its peers – will undoubtedly thrive and survive.
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