The Challenge for Service Firms

12.07.2011
As I write this week's post, I'm preparing to travel to Nebraska to teach two continuing education classes for a national CPE provider. They emphasize the balance between cost control and revenue growth -- the key issue facing many finance departments.

My classes focus on preparing internal controls and audits to emphasize risk management and productivity. But I would also argue that these classes are as much about giving audit firms and finance departments a way to differentiate themselves in the marketplace.

While companies that sell physical goods still face pricing pressure, professional service companies confront a major tipping point in their quest to be unique, and to command premium pricing.

In a discussion I had last month with a local CPA firm partner about his firm's plans, he outlined ambitious goals that had been set for the next five to ten years. When I asked him how those goals would be achieved, he answered that the firm would extend many of its existing audit and tax clients into higher-value services like succession planning and business valuation.

I would argue that this type of growth will also require staying out of the perceived commoditizaton of the firm's core services.

In this age of knowledge sharing --- and information overload -- service firms often can seem outdated. After all, who needs human expertise when smartphone apps and outsourced labor are available?