The top ranked areas for investment among innovation active firms included technology (53%), staff training and expertise (47%) and operational efficiencies (35%), according to the newly released Commonwealth Bank insights report.
Innovation within the professional services industry also varies widely.
Of the professional services firms surveyed, IT services firms make up the greatest proportion of innovation-active businesses (66%) followed by accounting firms (65$ ) and management consultants (60%).
In addition to the financial return, almost half of innovation-active professional services firms surveyed rated better client outcomes (48%) and greater efficiencies (46%) as the top benefits of their innovation activity.
Comm Bank says that overall, the Australian professional services industry has recorded a significant jump in innovation activity over the past 12 months, ranking well above the national average.
The research shows that 56% of firms are now actively innovating – up from just 44% in 2016, outstripping the national average across all business (47%).
And Comm Bank says these firms are also taking a proactive approach to innovation, driven by improving productivity (51% of firms), while 45% of firms pointed to increasing the quality of their client offering.
Taking advantage of emerging technology was also a top reason for the innovation push by 35% of firms. This compares to only one in ten firms responding to declining revenues or the changing workforce, and just 12% reacting to the need to protect their firm against disruption.
According to the report, focus areas for new investment include technology, with 66% of accounting firms and 64% of law firms investing in new IT capabilities such as software, cloud technology or data and analytics. Accounting firms are also responding to a need to improve efficiencies (46%) while law firms are wanting to take greater advantage of emerging technologies and solutions (53%).
National Manager, Professional Services, at Commonwealth Bank, Marc Totaro said: “It’s encouraging to see firms taking control as the market for professional services continues to undergo immense change. We are seeing firms adapt their internal processes and service delivery models in a range of different ways, but no matter which sector they operate in there is one striking commonality – adjusting to changing client needs.”
When extrapolating the average increase in value from innovation across the broader professional services market in Australia, the Comm Bank says its research suggests that innovation has injected $12bn into the national economy over the past year.
“While factors such as a lack of time, budget and skills are still inhibiting innovation for some firms, it’s clear that innovation is delivering tremendous value. Firms are realising a commercial return on their investment in innovation of almost three and a half dollars for every dollar invested, and they are more efficient at deploying their available capital compared to the average business,” Totaro said.
“Businesses are also investing in streamlining internal processes and ultimately driving more value for clients. As the top investment area, technology can play a significant role in supporting internal processes, and freeing up staff to focus on the client.”
While more than one in two legal services firms (55%) are actively innovating, this falls to just 45% for architectural and engineering firms, while only a third of scientific research groups say they are pursuing innovation.
And the report reveals that management consultants are the least likely to invest in technology (41%) compared to other sectors, however they topped the rankings for investment in sales and marketing (36%), customer centricity (26%) and domestic or overseas expansion (23%).