The AI Daily Brief: Artificial Intelligence News and Analysis - 13 Ways AI Will Change Consulting and Professional Services

Starting point is 00:00:00 Today we're discussing 13 ways that AI will change professional services and consulting. The AI Daily Brief is a daily podcast and video about the most important news and discussions in AI. Thanks to today's sponsors, KPMG, Blitzy, and Super Intelligent, and to get an ad-free version of the show, go to patreon.com slash AI Daily Brief. All right, friends, while I am traveling today, and so we're doing something a little bit different, but I think a ton of fun. I recently wrote a post on LinkedIn called How AI Will Change Consulting and Professional Services that has generated just a ton of conversation.

Starting point is 00:00:37 Now, my particular vantage point on this is both, one, the general observations that I get by doing the show every day, but two, the dozens of consulting partners that we are now onboarding to the super intelligent consultant partner program. Every firm out there right now is trying to adapt to AI and agents, and they are very frequently looking to external support to do so. One of the things that makes consulting and professional services firms such an interesting category of company to watch around this transformation is that they are almost doing double duty here, where they're thinking about their transformation internally and how they adopt all these new

Starting point is 00:01:12 systems themselves, but they're also trying to distill the best of what they're learning and what they're seeing and presenting it to their clients and customers. I think that there's a temptation to think that because ChatGBTGBT and all these models can do so much of what it feels like some of these firms do, that maybe there is an extinction event coming. for professional services. And I do think that very inevitably, a lot of parts of what these firms do will be AI and agentified. At the same time, I think that some very core principles are going to remain. I think that there will always be a demand to be able to pay people to do the hard things for you. I think that enterprises will always want the external validation and even rubber stamping

Starting point is 00:01:55 that professional services firms can provide. I think that enterprise buyers will be attracted to the aggregate knowledge and aggregate experience that professional services firms have in supporting lots and lots of firms like them across a wide variety of issues. And yet with all of that, I still think that we're going to see some radical changes in how consulting and professional services works. A couple caveats. I am speaking in ridiculously generic and generalized terms. There is, of course, going to be a huge array of how this shakes out based on different focus areas, different industries, all that sort of stuff. And two, ultimately, I don't know any better than you guys.

Starting point is 00:02:32 I'm just putting on my future spectacles and seeing what I can in tune, but all of this is just bets. So what we're going to do is go through these 13 categories of changes that I think AI is going to bring to consulting and professional services, and I will go over each briefly. Number one, certain big categories of current billings do get wiped out. The point here is that while I think consulting and professional services do have lots of opportunities in the future. I think they're going to look different than many of today's services. And I think that entire big chunks of activity now that make up big parts of enterprise spend are just

Starting point is 00:03:06 out the window. Some of them are kind of generic. I think, for example, the cost of discovery broadly defined is falling dramatically. This is obviously what we get out with our agent readiness audits, which compress a process that previously would have taken two months and $200,000 into two days and, well, a hell of a lot less than that. But I also think that there are, for example, big chunks of legal and accounting tasks to say nothing of business process outsourcing that are just going to go straight to the robots. I think firms that try too hard to hang on to these lines of revenue that are clearly going the way of the dodo, rather than trying to find the new lines of business, are going to have a rough time of it. And speaking of changing, something that I see happening as well,

Starting point is 00:03:44 my bet is that big firms are going to try to move down from wherever they play now into a category that they previously ignored because they couldn't afford their services. So for example, big firms that only focus on the Fortune 2000 right now are going to try to move down into the mid-market. Firms that service the mid-market are going to move down into SMEs. Basically, to make up for loss scale, I think many big firms are going to try to offer lower-priced versions of their services to compete on volume. As firms agentify their own process, they're going to be able to deliver a version of what they do at a quality level they still find high enough to put their stamp on, but at a price point that's low enough to bring a lot of new companies into their total addressable

Starting point is 00:04:23 market. This is maybe the most positive opportunity for firms that AI allows them to go after companies and partners that they never would have been able to before. And there's going to be richness and excitement and a lot of room for really positive collaboration there. New business acquisition, especially thinking in different ways about it, is going to be hugely important for professional services firms as this all shakes out. Number three, I think the way that this plays out is going to be pretty enterprise by enterprise. I think different buyers are going to run into two different directions. I think some firms are going to ditch their consultants, but keep their headcount high and bring what were previously external professional services skills in-house,

Starting point is 00:05:02 thanks to AI. On the other hand, I think another category of enterprise is going to lose some headcount and design smaller, more nimble organizations that are powered by a flexible roster of partners and consultants. That will obviously create more rather than less opportunity for consultants and professional services firms. I don't think that either of these is right or wrong. I think it's going to be based on organizational culture, leadership, et cetera. Personally, I'm pretty inclined towards smaller, more nimble organizations powered by a flexible roster of partners and consultants, because I think it aligns also with people's first stop on their professional services journey being figuring out how far they can take it with AI. And I think that that's going to be pretty normalized. But like I said,

Starting point is 00:05:43 there's neither a right or wrong here. It's just that takeaway for professional services firms is that they're going to want to orient towards those companies that are making that specific decision to lean towards them rather than the ones that are running in the other direction. Another positive opportunity for firms is that new types of specializations are going to breed new practice areas. You might lose certain lines of business because the robots take it over, but there are going to be a whole new set of skills around integrating and operationalizing AI and agents that are going to create new categories of firms, new lines of business for existing firms, and are going to be some of the most in-demand services we see. Once again, this is why I think thinking about new

Starting point is 00:06:20 opportunity more than clinging to old, clearly declining opportunity is going to be where firms find a lot of success. Now we're moving into some bigger, more general changes. The first is that trust and organizational knowledge become the main asset. Broadly speaking, and obviously very reductively, I kind of divide the world into two categories of firms, specialists and generalists. specialists are firms who have some very, very particular thing that they do over and over again, some particular type of software that they build and customize over and over and over again, and they're just going to do that thing over and over and over again. I think that the majority, though, of consulting and professional services business is a little

Starting point is 00:06:59 bit more generalized. And I think in the context of a generalist partner, the main equity those firms have with their clients is, one, the knowledge of their client's business, and two, their clients trust. I think in a world where AI can do so much that previous knowledge and experience of the peculiarities and peccadillos of their clients and the trust that has been hard won over time of their clients are going to become by far their most valuable assets. And I think that they're going to become manifest in a new way that relationships take form and operationalize. Basically, I think that what I'm calling TGPs trusted generalist partners become effectively like general contractors.

Starting point is 00:07:43 They become orchestrators of partner ecosystems. Because their main assets are trust and their knowledge of their clients are going to sort of want to play air traffic controller for all the world of all the other things out there. They're going to be able to be nimble and farm out operational work to a network of specialist partner subcontractors. Basically, the TGPs or trusted generalist partners become the integration force for this whole new world of skills, knowledge, and actions.

Starting point is 00:08:09 Sure, big firms will still try to bring a lot of that specialist capability in-house, but I think especially a lot of smaller and more mid-sized consultant and professional services firms are going to take this sort of networked model where they really try to cement themselves as the core generalist partner with access to a network that they can spin up and down at a moment's notice, which also, by the way, keeps costs lower for a potentially increasingly cost-conscious enterprise buyer. Today's episode is brought to you by KPMG. In today's fiercely competitive market, unlocking AI's potential could help give you a competitive edge, foster growth, and drive new value.

Starting point is 00:08:45 But here's the key. You don't need an AI strategy. You need to embed AI into your overall business strategy to truly power it up. KPMG can show you how to integrate AI and AI agents into your business strategy in a way that truly works and is built on trusted AI principles and platforms. Check out real stories from KPMG to hear how AI is driving success with its clients at WWW. www.kmg.us slash AI. Again, that's www.kpmg.org.com slash AI. Today's episode is brought to you by Blitzy, the Enterprise Autonomous Software Development Platform with Infinite Code Context, which, if you don't know exactly what that means yet, do not worry we're going to explain, and it's awesome. So Blitzy is used alongside your favorite coding co-pilot as your batch software development platform for the Enterprise, and it's meant for those who are seeking

Starting point is 00:09:34 dramatic development acceleration on large-scale codebases. Traditional co-pilots help developers with line-by-line completions and snippets, but Blitzy works ahead of the IDEE, first documenting your entire codebase, then deploying more than 3,000 coordinated AI agents working in parallel to batch-build millions of lines of high-quality code for large-scale software projects. So then, whether it's code-based refactors, modernizations, or bulk development of your product roadmap,

Starting point is 00:09:58 the whole idea of Blitzy is to provide enterprises' dramatic velocity improvement. To put it in simpler terms, For every line of code eventually provided to the human engineering team, Blitzy will have written it hundreds of times, validating the output with different agents to get the highest quality code to the enterprise and batch. Projects then that would normally require dozens of developers working for months can now be completed with a fraction of the team in weeks, empowering organizations to dramatically shortened development cycles and bring products to market faster than ever. If your enterprise is looking to accelerate software development, whether it's large-scale modernization, refactoring, or just increasing the rate of your STLC, contact Blitzy at Blitzy.com.

Starting point is 00:10:34 that's B-L-I-T-Z-Y.com to book a custom demo or just press get started and start using the product right away. Today's episode is brought to you by Super Intelligence. Now, you have heard me talk about agent readiness audits probably numerous times at this point. This is our system that uses voice agents and a hybrid human AI analysis process to benchmark your agent readiness and map your agent opportunities and give you some really pointed actionable next steps to move further down the path in your agentic journey. But we're coming up on the slow time of the year, and if you want to use this time to get out ahead of peers and competitors, we're excited to

Starting point is 00:11:10 announce something we're calling Agent Summer. The idea here isn't that complicated. It's basically just an accelerated program to get you agentified and fast. First of all, it's going to include an agent readiness audit, figuring out where your biggest agent opportunities are. Next, we're going to support both your internal change management process, helping you figure out AI policy, data readiness, things like that, as well as doing action planning around the agent opportunities that are most relevant for you. And finally, we're going to connect you to the right vendors to actually go and deliver this. Now, for this, we want to work with a very small handful of companies that really want to move. We're going to be bundling more than $50,000 of services

Starting point is 00:11:43 for something that starts closer to $30,000. And so if you want to use this summer to jump ahead on your company's agent journey, email agent at besupor.aI with summer in the subject line, claim one of these limited spots, and let's go have an agent summer. I think we see a massive amount of what I call Jerry Maguire. I think we're going to see a lot of partners at big firms realize that they, not their firm, but they themselves are the trusted generalist partner, and they're going to realize that they don't really need their firm's resources to compete anymore thanks to the network model we just talked about previously. They're going to leave to start their own small practice with one or two clients. They're going to build and take advantage

Starting point is 00:12:20 of their network of specialist partners. And they're going to be able to design businesses that are really fulfilling and enriching that they control and massively increase what you're going to be able to types of business they could take on, thanks to AI and agents. In general, even beyond the Jerry McGuire, I think all consulting and professional services firms are likely to see headcount decreases. In part, that's because I think, as I said, we're going to see a wider array of smaller firms and practices. But I also think that the nature of even how business gets done within big firms will involve very small teams of consultants managing large forms of agents as the default model. In fact, I think that the model of small teams of consultants managing large swarms of agents

Starting point is 00:13:01 is going to be the default whether that's being delivered by a small firm or a team within a larger firm. The prediction I had that I've gotten maybe the most commentary on, with frankly a lot of positive head nodding because I'm far from the first person to say this, is that I think we're going to see alongside all these changes some pretty significant business model changes. This won't happen all at once, and figuring out exactly how to do it will be bumpy. But I think that we're going to see billable hours type models, and generally models that are focused on the cost of inputs replaced by results-based models or models that are based on the quality of the outputs. Cost of inputs just makes way less sense in a world of AI, where all the stuff you used to charge for, the hours and hours that discovery

Starting point is 00:13:43 took, the highly specialized knowledge that now is just the province of anyone with a chat GPT account. All that sort of stuff makes it make more sense to focus on earning your money. for the value you provided rather than the time that you put into the work. And so I expect lots of pricing experiments that are based in some way on outcomes that give consultants and professional services firms durability and destiny with their partners are going to shift. Outside of that trust that we talked about before, I think that buyers are going to prioritize intangibles like taste, discernment, and judgment. I think when you're sitting there watching the outputs of dozens and dozens of different AI services, you're going to prioritize people

Starting point is 00:14:21 who you think just have great judgment and taste for picking what you should use. Actual production and output becomes cheap, but knowing whether it's quality remains difficult. The other piece, of course, of this is EQ, by which I mean that people are just going to want to work with people they actually like working with. If all the skills themselves and the knowledge are commoditized, you're going to work with people you trust and like, simple as that. One that I am completely convinced of, and that I'm very, very excited about, is what I'm calling PowerPoints become products. And what this representation is. And what this represents presents is a larger shift from planning to action, especially to the extent that I'm right that we're

Starting point is 00:14:57 going to see a move towards lower headcount, stronger, smaller, more nimble internal teams, managing large networks of external service providers for some period of time. They're going to be looking to their partners to actually do stuff, not just talk about stuff. I think we're going to see less pure play strategy and more strategy as embedded in current action. Now, that's not necessarily all that far different from how things are presented now, but the tools for professional services providers to do more and go farther are so clearly getting better. Even if you are not a technical firm, even if you're not promising that you're going to do the development of new products, there's no reason now, and I'm talking right now in May of 2025, that you as a non-technical

Starting point is 00:15:40 strategic partner can't be prototyping the products that you're talking about. I think all consultants of all stripes are increasingly going to have to build products or at least prototype those products as a normal part of what they do. And I think that this is way more exciting, way more interesting, and way more high value than endless sets of slides. And so to me, this change can't come soon enough. Number 12, there will be a change in how repeat business happens. And I think that the spoils are going to go to the consultants and professional services providers who set frameworks for and actually measure their own impact. Things change so far. fast now that quarterly reviews, annual reviews, are destined to leave both consultants and the firms

Starting point is 00:16:22 they're working with behind the eight ball. We are living in continuous iteration land, and continuous iteration requires data, measurement, analytics, and systems to make sense of it all. I think these are table stakes aspects of engagements now that consultants and professional services firms just have to build in an understanding and an expectation of how they are going to measure their impact. And that is actually part and parcel of, I think, a larger phenomenon, which is that in general, across all vectors, we are going to see a massive compression of timing expectations. Everything that takes two months now should probably take two weeks in the future, maybe even two days, maybe even two hours. Everything is just going to move way, way faster. And while there will be some amount of

Starting point is 00:17:04 organizational or institutional inertia, I think the firms that succeed in this new environment will be those who have designed systems such that it is not them and their side that is slowing things down. It's whatever organizational inertia they have to deal with from their buyers. That is the constraining factor. Simply put, faster is generally going to win. Now, there are dozens of other predictions and thoughts that I have had and that others have shared. Maybe at some point we'll do a part two of this. But for now, that's my bet on how AI will change consulting and professional services. Thanks for taking this fun little journey with me. Appreciate you listening or watching as always. And until next time, peace.

The AI Daily Brief: Artificial Intelligence News and Analysis - 13 Ways AI Will Change Consulting and Professional Services

There aren't comments yet for this episode. Click on any sentence in the transcript to leave a comment.