Looking at 2013 through the lens of broad, macroeconomic indicators here in the US, one might be tempted to take at least a cautiously optimistic view of the state of the world. Unemployment continued to fall to its lowest level since the financial crisis, the stock market performed better than it had since the late 90’s, and growth in developed economies finally started to catch up with emerging markets. While this broad, wide-angle view may be sufficient for some, if you’re reading this, you’re probably more interested a close-up picture of what this all means for the professional services market. This report provides that closer view and much more.
SPI’s 2014 Professional Services Benchmark Report paints a portrait of the professional services landscape—a picture much less idyllic, punctuated by remnants of battles past and portents of challenges ahead. The professional services industry saw revenue growth slow to its lowest level in five years, and nearly 15% of firms contracted rather than experiencing any growth at all. This slowing growth, driven in part by commoditization and rate erosion, was accompanied by a sharp decline in billable utilization, a spike in attrition, overcapacity in both billable staff and non-billable overhead, and a precipitous falloff in profitability. In fact, most of the key professional services metrics deteriorated—suggesting that in order to survive in 2014, professional services firms will need to reconsider strategies and refocus on efficiency and productivity. Continue reading
Over the past few blog posts we’ve examined how service organizations can enhance their profitability by implementing a professional services automation (PSA) solution. We covered increasing utilization, improving project margins, and using PSA software to deliver more successful projects. Today, we’ll take a look at professional services software from an operational efficiency perspective—delivering more with less.
Because services automation software contributes to every aspect of the delivery process, it should come as little surprise that PSA solutions can help increase an organization’s delivery and revenue efficiency. From managing the supply and demand of resources to automating the billing and project accounting process, organizations that run on a professional services automation platform are able to do more, with less.
Focus on Efficiency
Services firms sometimes have a myopic focus on increasing their resource utilization—or the percentage of billable hours that employees work. Although high utilization will strengthen a firm’s bottom line in the short-term, over the long haul it can lead to employee burn out, result in high churn, and is ultimately unsustainable. To maintain healthy utilization levels, and overall profitability, service firms need to run an efficient delivery operation. The fewer non-billable or overhead hours worked, the stronger the organization’s bottom line. Continue reading
In our last blog post, we talked about how service firms can increase project profitability by implementing a professional services automation (PSA) solution. That post was squarely focused on the bottom line. Today, we’ll talk about one of the keys to achieving those bottom line results: being able to deliver more projects successfully.
Success is measured by a number of factors in addition to just the bottom line. On time delivery, quality of work and referenceability are all performance indicators that, when in line with expectations, create a feedback loop fueling growth. Each project completed broadens a team’s skill set and an organization’s capabilities. Each lesson learned helps produce more accurate and competitive proposals in the future. Each satisfied client helps validate the value in the service being offered. Continue reading
“How can I learn more about what Projector can do?”
“How can I make sure we’re getting all that we can get out of the system?”
“I’m not even sure what questions to ask…I don’t know what I don’t know.”
We’re used to fielding these sorts of questions from prospects—people thinking about implementing Projector as their new Professional Services Automation solution. Every once in a while, though, we get these same questions from one of our current clients. Perhaps the people who were originally trained left. Maybe the business has changed. Or, the organization may just have started simple. Now it wants to expand its use of Projector.
Whatever the reason, we didn’t have a great answer…until now. Continue reading
In our last blog post, we talked about how utilization and profitability were two sides of the same coin and dove a little deeper into the first side: improving utilization. Today, we’ll talk about profitability, the flip side.
For professional service firms, where knowledge is the product, maintaining healthy profit margins is nothing short of an art. It takes a lot of skill, a little bit of luck, and reliable processes and systems to ensure that your services team is running at maximum efficiency. If only one of the many factors affecting profitability falls out of sync it can have dramatic results on the bottom line—a project runs over budget and its margins shrink, key resources are over-worked leading to constant employee churn, or loose systems are employed that let billable time slip through the cracks. Continue reading
In the professional services business, utilization and profitability are two sides of the same coin. It’s quite simple to optimize one at the expense of the other, at least in the short run. Discount your rates heavily, and your utilization will soar, but to the detriment of profitability. Overwork your people without investing in training and professional development, and you’ll see great utilization today, only to see mass exodus kill profitability (and morale) next quarter. Figuring out how to optimize both at the same time is one of the real keys to running a successful services firm.
In our last blog post, “Infographic: 8 Fast Facts about Professional Services Automation“, we talked about some recent studies that showed how organizations using PSA software like Projector were able to keep their people busy and profitable at the same time. What we didn’t really talk about is how professional services management software does this, so let’s dive into the first half of that story today. Continue reading
I’m a writer…and a reader. I admire the elegant turn of phrase, the graceful arc of a tale well told, the inescapable logic of an argument well made.
I’m also a visual person. I relish diving head first into a great photograph, letting it lead my eye around like a puppy on a leash. I love the way a simple diagram can express a complex concept with an efficiency not possible with an ocean of prose.
Finally, I’m a quant. I have a firm belief in data. 93% of business executives agree with me that, looked at in the right light and presented in a compelling manner, numbers can tell a great story. (OK, I made that statistic up.)
We put all of that in a blender along with my role as the product manager for Projector and hit puree. Out popped an infographic that explores the impact that a professional services automation solution can have on your services business…an infographic that we’re rather proud of. Continue reading
We’ve talked with thousands of companies as they are evaluating software solutions and have noticed a few approaches that work well and a few others that have, let’s say, fallen short.
Everyone takes a different approach. Some like to dive in head-first and prototype their business within a tool. Others like to perform a formal needs analysis and go through a traditional RFP or proposal process.
The most successful companies tend to approach their vendor selection with an open mind, a clear understanding of their goals, and a desire to view their software vendors as partners. They focus on tangible business results—improved resource utilization or better on-time delivery—instead of a laundry list of features that they think they need. In this post I’ll take a look at a few strategies companies should consider while looking for a new software solution.
1. Conversations, not checklists
The traditional method of software selection is a very structured process. Organizations formulate their requirements, ask stakeholders for input, compile a list of features, rate them based on importance, and send their list off to vendors as an RFP. This process seems rational, but with all of the complexities of modern business software, it often times results in a less than thorough evaluation. It is focused on the current shortcomings of an application or process that is being replaced instead of the actual business reasons behind the software’s functionality. Continue reading
Last week, our head of business development, Barry Franklin, had an interesting conversation with a prospect who was interested in learning more about Projector. That conversation went something like this:
||Can you forecast revenue accurately in Projector? Because if you can’t, this will probably be a short conversation.
||Yes, no problem.
||What about for fixed price projects?
||What if the project is already underway?
||That’s not a problem.
||Definitely. Let me explain…
A few years ago, I had a slightly different, but related conversation with the CFO at an organization that had just started using Projector. That conversation went something like this:
||We have to be able to perform trial rev recs in bulk at the end of each week. How easy is this to do in Projector?
||Can you tell me a little bit about why you need to do this?
||Well, it’s the only way to see where we are on fixed price projects. (Pause) Isn’t it?
||Not really. Let me explain…
We talk with all kinds of prospects and work with all kinds of clients. Some are just starting up their professional services firms and may not know the term “Professional Services Automation” (PSA). Others have decades of experience running services firms, understand the complexities of managing long-running fixed price projects, and have been burned by other PSAs or clumsy business processes in the past.
The two people with whom we had these conversations were obviously among the latter category… Continue reading