The State of the Services Economy UK Edition
The following are highlights from the 2018 State of the Service Economy UK Edition, the only report that specifically looks at what is happening in services industry.
Mavenlink, in conjunction with market research firm, Research Now, surveyed 576 executives (director and above) from various service-centric industries—marketing, IT services, and business consulting across North America, Europe, and Asia-Pacific regions—in order to better understand the current challenges and opportunities they are facing as they undergo transformation.
A large number of disruptions impacted services industries, in multiple ways, over the past 12 months. Client expectations of performance continue to increase, budgets are decreasing, resourcing models are being disrupted, new and leaner competitors are popping up, and it has become increasingly difficult to meet profit and margin targets the old way, just to name a few. Perhaps capturing the year best, one survey respondent simply stated “everything” when asked what the top challenges of 2017 were.
If it feels like the world is spinning faster, you are not alone. This unrelenting pressure and complexity sets the backdrop for the 2018 State of the Service Economy UK Edition. It also shows no sign of slowing. 63% of executives said that it has become harder to operate a services business in the last 12 months, compared to 52% in last year’s report. Furthermore, the percentage of executives that said the conditions to operate a services business are changing “more quickly than ever” more than doubled from 21% in 2017, to 52% in 2018. That in itself is an astounding fact—nearly half of the executives surveyed said the speed of change we are witnessing is unprecedented.
UK Services Businesses Are Feeling the Squeeze in 2018
While the data this year found that the global population agreed that improving margins and revenue were the top two challenges in operating a services business in 2017, the UK respondents reported being the most challenged on these key financial measures.
UK respondents were significantly more likely to state that margins, utilisation, and revenue were trending down in their business, with the biggest impact to margins— nearly ⅓ of UK services organisations executives stated that margins are trending down.
Looking to 2018, UK services organisations rated the top business pressures as increased industry competition, limited access to required skills, declining profit margins, and decreasing client budgets.
Managing Resource Supply & Demand: A Potential Blindspot
Historically, services organisations have managed the planning and scheduling of resources through informal ways, leveraging tribal knowledge. For example, resource planners with years of history and close working relationships with many personnel typically use conversations across the office, email, and spreadsheets to manage the process.
As the complexity of delivering services continues to accelerate—for example, increased competitive pressures and the necessity to have access to specialized and diversified technology skills—so has the complexity of resource management. As people-powered businesses, the risk of getting this wrong is margin erosion, employee burnout, and even business solvency.
One of the most compelling findings of the 2018 State of the Service Economy UK Edition report was the disparity between the maturity of resource management processes of the UK versus the global population. The UK was less likely to have implemented the breadth of resource management best practice presented in the survey, including processes such as time tracking and forecasting resource demands.
Clearly this is a known issue as UK services executives were more “likely to implement” every single one of those processes in the next 12 months. If the UK respondents follow through with stated intentions to address resource management challenges and implement the processes and systems required today, the industry may see a boost in productivity and profit margins in the coming year.
Slow Technology Adoption Puts UK Businesses at Risk
As with many other industries, the services industry is in the midst of digital transformation. Services organisations have been forced to become more digital, and in the process adopt services-centric technologies that are helping to improve performance and operations.
According to the data, the UK services industry is facing the most challenges developing and applying technology. In 2017, services organisations in the UK were the most likely to state that implementing the right technology was a major challenge. In fact, it was the top challenge in 2017, behind increasing margins and profitability. UK respondents were the most likely to state they were not using technology effectively. This is having a significant impact on their ability to operate effectively—they were also less likely to have real-time information in their business, and more likely to state they don’t trust the data they can access.
Looking to the future, investment on IT should increase substantially as it was listed as the top priority of 2018. This is an indication that services businesses will be focused on transformation and innovation in the near future.
To learn more, download the 2018 State of the Service Economy UK Edition report.