Certinia 2025 Global Service Dynamics Report - as PSO utilization rates stall, will AI help?

Every year, Professional Services Automation (PSA) vendor Certinia commissions a global survey to get the views of professional services practitioners in the tech industry on a range of topics. This year's survey came out last month, and inevitably majors on AI adoption. But digging into the findings, it's evident that the sector still struggles with the perennial challenge of resource utilization, while most firms' efforts to improve efficiency continue to be hampered by disjointed processes and data. Which raises the question, will adoption of AI help or hinder that quest?

At least the survey reveals some encouraging signs of optimism across the sector. Over a thousand tech industry professional services executives and practitioners were contacted by an independent research firm during April and May this year. Participants came from a range of company and Professional Services Organization (PSO) sizes, with 31% each drawn from the US and UK, with other respondents coming from Canada, Australia, Singapore and New Zealand.

Among the challenges cited by respondents, a third (34%) cite hiring to keep pace with demand, which seems to me like a good challenge to have — certainly a better one than the one-in-five (21%) who say they are facing lower demand for professional services. For most firms, the headline challenges are the familiar ones of economic change, pace of innovation (this year described as 'AI innovation'), rising cost of labor, and increased competition. Rising customer expectations and compliance requirements complete the list.

It's also encouraging to see that almost two-thirds (66%) of the businesses surveyed think of their PSO as a profit center, with just 11% still viewing it a cost center, while the rest rate it as break-even. Those aiming to make a profit are an optimistic bunch, with more than twice as many (23%) targeting margins above 40% than managed to achieve this last year (10%), while another quarter (25%) are aiming for margins in the 21-40% range, a third more than the 18% who achieved this last year.

Resource utilization headwinds

But despite these high hopes, the survey reveals that the practical reality of driving growth and efficiency has run into some headwinds. A key metric for PSOs is resource utilization — the proportion of working hours that engineers and consultants spend on work that can be billed to clients, as opposed to non-billable activities such as travel, training and administration. Here, the survey suggests that the sector has gone backwards in the past year. Whereas half (50%) of all respondents last year reported very healthy utilization rates of 65% or higher, this proportion dropped to 38% this year. Those who fell back joined the two-fifths of respondents (40% this year, up from 30% last year) whose utilization rates were in the 50-65% range. The remainder (21% this year vs 20% last year) languished in the 0-50% range.

It's no surprise then to find that the top strategic goals cited by respondents are increased profitability (62%) and operational efficiency (61%), even outpacing growing the customer base (50%). Other priorities are listed as increased AI usage (55%) and customer satisfaction (54%).

Certinia's interpretation of the findings is that company profitability, along with success in operational metrics such as resource utilization, is determined by technology choices. Firms in that 40%+ profit bracket are more likely than the industry average to use PSA solutions, whether commercial or homegrown, at 50% versus 37%. They're even more likely to use project management tools to manage and measure efficiency, with 52% using commercial PSA and 59% using home-grown tools, versus an industry average of 40%. There's less divergence when it comes to resource allocation, but the high-profit companies are still ahead in their use of automation, with 60% using HCM solutions versus 54% for the industry average, and less likely to depend on collaboration tools (45% vs 54%) and shared drives (35% vs 47%). Certinia notes that higher utilization rates often correspond with higher profits — "47% of organizations reporting utilization rates of 71% or higher are also among the most profitable PSOs surveyed."

It's a logical conclusion to draw — more automation, tighter collaboration and better insight into real-time data ought to produce better results. But correlation is not causation. Maybe the more profitable companies are more likely to have automated their processes simply because they have more budget available to spend on technology solutions. When it comes to spreadsheet usage, it turns out that even these high-performing companies are still using them to fill gaps in their operational processes, with very little difference in usage from the average across the board, and slightly above-average use of spreadsheets for resource allocation.

AI adoption

This track record doesn't bode well for the impact that AI might have, despite the evident enthusiasm recorded in this year's survey. A surprising 44% of respondents said they had already started using agentic AI with their commercial PSA software. A further 39% said they had plans to do so within the next 12 months, and all but 3% saw their organizations using it sooner or later. Generative AI in general was seen by at least half of respondents as valuable for activities such as project status generation, customer account summarization, project template generation and meeting summarization. The more established technology of predictive AI also got a thumbs-up from a majority. The most profitable firms were particularly keen on "building, buying and hiring for AI," as the report puts it, as a key part of their strategy to mitigate external challenges.

But obstacles remain to AI adoption. 35% cite either compliance issues or a lack of internal AI skillsets. 31% have difficulty determining which AI technologies to select, and 30% cite competing priorities. A notable 29% say that current AI solutions are failing to deliver expected business value, perhaps a harbinger of problems ahead. As David Gehringer, Principal at Dimensional Research, which carried out the research, comments:

The velocity of AI adoption in the services sector is remarkable. However, the data also clearly indicates that a significant profitability gap is emerging between firms that have the foundational data and systems in place and those that are simply chasing the technology.

My take

As you'd expect, the conclusions that Certinia draws from the research center on the importance of "investing in a unified PSA platform ... for strategic AI adoption." It's a logical position — it's clear from the survey that firms are suffering at the moment from a lack of unified data and automated processes, leaving them far too reliant on spreadsheets and other workarounds to plug the gaps. It therefore makes sense to follow the lead of those higher-margin businesses that have invested in automating their professional services operations and are now investing in their AI strategies.

But simply adding AI on top of existing data and processes isn't going to be the silver bullet that fixes those issues. There are plenty of other surveys that bear witness to some of the potential drawbacks of AI. As with any technology, how you implement it is just as important, if not more so, than what you implement. There's the added danger that today's AI technology makes automation so much easier to put in place that it often leads firms to automate processes that weren't working well in the first place. A good example here would be choosing to automate all those spreadsheet-based workarounds instead of taking steps to eliminate the data integration bottlenecks that make them necessary in the first place.

The right starting point is to take a look at the processes and where they can and should be improved, at the same time as thinking about what metrics are most important and how to reliably measure them. It's only once those outcomes are clear that it makes sense to start thinking about the technology required to achieve them. In the end, therefore, Certinia's advice to put in place a unified PSA platform is well founded, because this provides a proven mechanism for streamlining operational processes and bringing the relevant data together. Once these are in place, AI can then work with the right data within the context of a well-defined process framework to deliver further operational insights and improvements. The professional services industry is right to be enthusiastic about the potential of AI, but to gain the full benefit, firms have to get their house in order first.