New Mavenlink Report Reveals Rapid Transformation in the State of the Services Economy
Second Annual State of Services Economy Report by Mavenlink Finds 75 Percent of Services Organizations Are Moving Toward Project-Based Work; Executives State “Conditions are Changing More Quickly Than Ever”
Mavenlink, the leading provider of cloud-based software for the modern services organization and a G2 Crowd Leader, in conjunction with Research Now, the global leader in digital research, has released the annual State of the Services Economy report for 2018.
The report uses research compiled from a survey of 576 executives working in professional services industries, including IT services, consulting, marketing, advertising, and media. Key trends unveiled include rising client expectations of performance, decreasing budgets, disrupted resourcing models, new and leaner competitors, and increasing difficulty meeting profit targets.
At the time of the announcement, Ray Grainger, CEO of Mavenlink, said, “In its second year, the State of the Services Economy report and its underlying market research are driven by the desire to better understand the state of transformation the services industry is experiencing. If last year’s report uncovered a theme of recognizing change, the theme this year is taking initiative—it encompasses opportunity, creativity, and resourcefulness.”
Ray added, “It (the report) builds on last year’s findings to help organizations understand the near-term priorities and best practices to find success within the Service Level Economy—for example, the use of trusted talent networks of consultants to enable a more liquid workforce, strategic changes to technology infrastructure, and more mature processes surrounding resource management and collaboration.”
Key Findings on the State of the Services Economy in 2018
- Services are moving from retainer-based to project-based models: 75% of services organizations are moving to project-based work.
- A wide breadth of service offerings is a widely acknowledged business necessity, driven by client demand: Clients are asking for more diverse, more specialized offerings. 89% of leaders said their organization delivered a wider variety of services to clients over the course of the year. 74% of respondents said these new services were primarily one-off projects.
- Competition is growing steeper: 79% of respondents said there had been an increase in competition, a big spike as added pressure from new entrants pushes service providers to work harder to retain existing clients and find new ones.
- Operating a services organization is significantly harder: Nearly half—49%—said conditions surrounding service businesses are changing faster than ever.
Distinguishing Characteristics of High Performers in Services
The 2018 State of the Services Economy report also identified and separately tracked responses from top performers—those that reported achieving 91-100% of their targets in all of the following areas: projects delivered on time or early, projects delivered within budget, frequency of hitting forecasted revenue targets, and frequency of hitting forecasted margin targets. Common elements among high performers include:
- Focus on Data: High performers reported more focus on data governance and data quality in order to make smarter business decisions. Data security and leveraging data were listed as their top two challenges in 2017. They are also stated leveraging data to run their business as a top challenge in 2018.
- Leveraging a Liquid Workforce: While high performers agreed with the global population on the challenges of effective resource management, they report more maturity in leveraging of external talent networks. 94% of high performers strategically leverage external talent networks (e.g. contractors and services providers), as opposed to 76% of the rest of the population. They are also more likely to state that contractors are “critical” (70%), while rest of population says “important” (50%). 97% of high performers also report that their ability to leverage a liquid workforce has “significantly improved” in the last 12 months, and less than 1% stated their ability to do so has stayed the same or gotten worse.
Ray continued, “Through the analysis of top performers we were able to identify a clear delineation between the practices and priorities of high-growth and high-performing organizations versus the market. The deltas between the global population and the high-performers cohort tell a very compelling story of sophistication and market opportunity.”
Ray said, “What once seemed impossible for service organizations is now easy to automate with modern process and technology. These leaders are setting a new standard for competition.”
The 2018 State of the Services Economy report compiled survey data from 576 respondents in professional services industries, including IT, marketing, advertising, media, and consulting. Of those respondents, 56 percent were from the U.S., with 19 percent from the UK and 25 percent from the Asia-Pacific region. Respondents were from organizations of all sizes, including 49 percent from companies with 999 or fewer employees, 30 percent between 1,000 and 4,999 employees and 20 percent with 5,000 employees or more.
Currently, Mavenlink delivers enterprise-class Software as a Service (SaaS) that transforms how services organizations work with distributed teams, contractors and clients around the globe. Mavenlink’s innovative technology platform enables teams of any size to successfully manage and scale their people, projects, and profits. Consulting firms, IT services organizations, creative agencies, and professional services organizations in more than 100 countries are running their businesses more effectively and predictably with Mavenlink.