Seven MegaTrends of Professional Services – #5 Modularization


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Continued from #4 Transparency. Full table of contents below.

MegaTrend Five: Modularization

One of the most important, yet least visible, implications of the current phase of information technology is the ability to break down business processes and activities into their components. Web services is a standard for how computer applications—or parts of them—can be integrated. For example, Microsoft’s .NET framework, which it launched with its $200 million “one degree of separation” campaign to emphasize how it enables different organizations to mesh their business processes together, is founded on web services.

The implications for professional services firms are profound. Services can now easily be “unbundled,” or broken down into their components. This allows clients to pick and choose which of these elements they prefer to do themselves, if they have the resources and expertise available. They can then allocate the other elements to different service providers, based on which one can do the best job at the lowest price. Technology now makes it straightforward to integrate these different elements into a single business process that results in the desired outcome.

London-based Lovells, an international law firm with over 3,000 people, has squarely addressed the issue of modularization in its offerings. For Prudential Property Investment Managers, the largest property investor in the United Kingdom, Lovells created an entirely new way of servicing its client, which it calls Mexican Wave. Prudential sends its property legal work to Lovells. If the work is complex, it allocates it to its crack lawyers who will do a great job. If it is a simple, commoditized transaction, Lovells farms it out to regional process-oriented law firms that can do the work well at a low cost. In this case, the work comes back to Lovells for it to do quality assurance before being sent to the client. Throughout, the client has access to an extranet that gives it complete visibility of where and how all work is being performed. Lovells recognized that there were different kinds of work, and it wasn’t the best firm to do all of them, not least because of its high cost structure. However this didn’t mean it couldn’t control the client relationship, assume responsibility for allocating the work into its elements, and send them to where they could best be performed.

An interesting aspect of Lovells’ Mexican Wave is the light it sheds on the perennial debate on “one-stop shops.” Yes, clients do value being able to go to a single provider that understands them well and that they trust. Yet they also want to go to the best value provider for each class of work. For some corporations, they will be swayed by the convenience of a single provider. For others—generally the more sophisticated clients—the advantages of superior cost and specialization outweigh that. Lovells has created a model which, at its best, provides the advantages of both of these models to its clients. The firm has recognized and responded to the MegaTrend of the Modularization of professional work.

Table of contents



MegaTrend 1: Client Sophistication

MegaTrend 2: Governance

MegaTrend 3: Connectivity

MegaTrend 4: Transparency

MegaTrend 5: Modularization

MegaTrend 6: Globalization

MegaTrend 7: Commoditization

Responding to the MegaTrends

Lead Your Clients into Knowledge-Based Relationships

Build Strategic Transparency

Create a Highly Networked Firm

Evolve Your Business Models

Developing and Implementing robust strategies