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R&D on information technology is expected to grow as firms seek a
competitive advantage.
Professional service firms are incurring a significant increase in research and
development expenditure to ensure that effective and competitive use is made of
information technology in e-commerce. As a broad indicator, an estimate of
approximately one per cent of gross revenue would be an appropriate measure of
current professional services R&D expenditure. Ten years ago this is likely to have
been almost negligible (at around 0.1 per cent of gross revenue). We anticipate
that figures of three per cent and five per cent are not unrealistic estimates for
professional service firm’s R&D expenditure in 2005 and 2010 respectively. This
spend is likely to be concentrated in the legal services sector on knowledge
management, development of e-services and development of information
technology. It is likely that this R&D expenditure will cause a shift from
traditional spending in ‘physical’ R&D. It will clearly be necessary for the
regulatory and taxation environment to take account of these shifts.
Survey Response: Duncan Giles, Blake Dawson Waldron,
IRG member, 20 July 1999
It has not been practical to quantify the additional costs that business
services firms will incur in order to meet the growing e-commerce needs
in a away that is reasonably representative of the sector at large.
5.4 New business models
E-commerce may force some business service organisations to reconfigure
the way in which they conduct their business. This may result in a change
in the compilation of the sector’s inputs, as some are reduced while
others are increased. For example the use of teleworking may reduce
office space costs (which are about 15 per cent of business service
organisation costs):
Significant reductions in both bandwidth costs and infrastructure accessibility
seem likely to occur in the 2000–2005 timeframe which will lead to very large
and perhaps ubiquitous adoption of very high bandwidth services, certainly in
the larger professional service organisations. Although teleworking (and the
paperless office) have been touted as one of the most visible manifestations of
the information economy for many years, it seems probable that this period will
see much more user friendly and acceptable home work environments (such as
effective video conferencing) and is likely to lead to the creation of teleworking
scenarios that offer a genuine and long term alternative to traditional office
based work. As this happens, there will be a downward pressure on salaries and
real estate costs which presently account for approximately 25 per cent and
15 per cent of professional services organisations’ gross costs respectively.
Survey Response: Duncan Giles, Blake Dawson Waldron,
IRG member, 20 July 1999
The view emerged from working group sessions of the Industry Reference
Group that it would be reasonable to foreshadow that approximately
five per cent less labour would be required to carry out current business
functions as a result of the internal efficiencies e-commerce would create
within the business services sector. It was also expected that there would
be a reduced need for consumables such as paper as information products
are stored and delivered electronically.
It is likely that 20 per cent of all legal services will be delivered electronically by
2005 and probably 40 per cent by 2010. Examples abound in the consumer
market in the areas of conveyancing, debt recovery, financing transactions and
registrations. Many of these services will be provided in the normal course
without any human involvement. Larger legal service providers will also utilise
electronic preparation and delivery of services and are likely to be best placed to
spend the significant amounts required on research and development of these
services and products.
Survey Response: Duncan Giles, Blake Dawson Waldron,
IRG member, 20 July 1999
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