Professional Services Automation Blog

3 Things I Hate about Blog Posts with Numbered Lists

The Ubiquitous Numbered List


3 No-fail Ways to Improve Project Profitability

7 Example Proposal Templates that Can’t Lose

10 Things You Should Never Ever Say to Your Client

Blog posts with numbered lists are everywhere. Cognitive scientists believe they appeal to our brains’ innate desire for organization and structure. Marketers rely on them to increase engagement, lower bounce rates, and increase clickthroughs. Bloggers use them to put together content culled from disparate sources under the appearance of a unifying theme. Articles centered on numbered lists have become so prevalent that I’ve seen a new term to describe them: “listicals.”

Problem is, I hate blog posts organized around numbered lists.

Not in principle. I just don’t like them for the purpose of this blog and for the audience that we’re trying to reach. And, of course, I’m going to explain my reasoning with a numbered list. How could I not? Continue reading »

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Three Key Questions You Need to Answer When Measuring Utilization

HamletUtilization. Every professional services firm I’ve ever worked with—whether they’re a management consultancy, a digital marketing organization, a technology implementer—measures utilization. Every professional services manager—from the executive leadership level to delivery managers to department heads—tries to improve utilization. Every billable consultant is, at least in part, evaluated and compensated on utilization.

Problem is, not everyone has a common understanding of utilization.

On the face of it, utilization is a simple concept that just measures how busy people are. You take the hours they’re busy, divide by the hours they’re available and come up with a percentage. Compare that percentage to other firms, to other departments, to other people, and (at least in theory) you have a way of measuring performance…as long as everyone’s crunching the numbers the same way. In the immortal words of Hamlet when he was thinking about utilization calculations, “Aye, there’s the rub.”

Here’s what you need to think about when figuring out an approach to measuring utilization for your professional services firm:

Continue reading »

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Continuity and Change: Consistency in an Ever-Changing Environment

trendEvery year over the past decade, Service Performance Insight (SPI) publishes their comprehensive Professional Services Maturity Benchmark that provides a unique perspective into what’s going on in the professional services industry. Every year, I eagerly pour through the results to understand what’s new, what’s changed, and what’s different. This year, however, what really stood out was one factor that has actually stayed the same year after year: the fact that revenue growth (averaging 10.9% per year) has exceeded headcount growth (averaging 8.3% per year) consistently over the past five years or more.

This trend isn’t driven by services firms raising their pricing structures, which have remained flat or even shown a slight decline over the same timeframe. Rather, the dynamic is driven by organizations’ ability to become more and more efficient over time, as evidenced by overall 5-year trends of increasing utilization and profitability.

While there are many paths towards improving efficiency, SPI has identified the adoption of a Professional Services Automation (PSA) solution such as Projector as one of the key levers smart services firms utilize. Adoption rates of commercial PSA tools have consistently been in the 95% to 100% range for the top-performing organizations—a cohort that is growing twice as fast, is more profitable, has happier employees and clients, and enjoys higher utilization with less employee attrition than its peers. Whether or not they are part of the top-performing firms, organizations that have adopted a PSA solution demonstrate 78% faster growth, 6% higher utilization rates, and 25% better profitability than organizations that don’t use a PSA tool. Continue reading »

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Getting the Right DIRT on Time Reporting

Labor is the largest investment made by a professional services company. There are two important quality measures: accuracy and timeliness. Accurate time reporting leads to higher project profits and resource utilization, as well as greater customer satisfaction.

time reporting

The benefits of accuracy are:

  1. Better knowledge of project profitability and resource utilization
  2. Better process improvements through better knowledge of actual effort
  3. Correct payment of hourly workers
  4. Correct billing of clients

The benefits of timeliness are:

  1. Quicker feedback of work done into the planning process
  2. Faster billing (reduced DSO)
  3. More accurate time reporting

To improve accuracy and timeliness, measure DIRT.

Continue reading »

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The Importance of Performance Benchmarking, and How to Get Started

We talk about benchmarking a lot on this blog. And it’s for a good reason. Benchmarks imply that you’re actually measuring your progress. And that’s something we can get behind.

Measurement-2Too often the conversation is focused on the next big buzzword or some form of technology that promises to solve all of your problems. An important conversation for sure, but if you can’t measure where you’ve been, or if you don’t truly know where your problems lie, it’s all worthless.

That’s true for any business, but for professional services firms it’s especially important. Because there are little to no physical products in a professional services business, everything comes down to how effectively you are able to use time. This is often measured through an organization’s utilization KPIs, but in reality it is an attribute of every aspect of the business. From hiring a new subject matter expert to staffing a project or invoicing for your work, it’s the balance of quality and speed that drives results. Continue reading »

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About to Outgrow Your Accounting System? Look at Your PSA Software Instead

The Plot…

Outgrowing-Accounting-SoftwareA few years ago, a prospective client came to us and said they were interested in implementing Projector as their Professional Services Automation (PSA) tool. At the time, they were a small, 8-person start-up consultancy and Projector was probably overkill for their existing needs. They predicted, however, that they were going to grow, both in size and in complexity. And grow they did—like a weed on steroids. Within a few years, their staff expanded 25-fold, they started up operations in five different countries, and they expanded beyond their traditional consulting business model. They turned themselves into a very attractive strategic acquisition target for one of the largest and most well-respected global firms in their space, and still use Projector to this day.

…and Sub-plot

That narrative is one that any entrepreneur or business leader can and should rightly be proud of. That’s not the whole story, however, as there is a secondary theme that accompanies this main plot line. That sub-plot is a tale about how the company accomplished this entire process with a single set of systems: Continue reading »

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Is a Professional Services Automation Solution in Your Plans for the Coming Year?

Early September here in New England always represents a wonderful time of transition. The lazy days of summer yield reluctantly to the crisp crackle of autumn air. Majestic maples and oaks ready themselves for one final ostentatious display before settling in for a long, grey winter. Home gardens burst with the last of the summer’s bounteous harvest. Kids don shiny new backpacks and head back to the world of musty textbooks, swirling chalk dust, and sharpened #2 pencils.

This is also the time of year that professional services executives both here in New England and elsewhere ‘round the world turn their attention to planning for the coming year. It’s a time to start nailing down strategic goals and figuring out what people, processes, and systems need to be set in place to achieve those goals. It’s a time to measure progress to date and to figure out how to improve upon that progress in the coming year. For some, it’s a time to consider upgrading their old professional services automation solution to one that better works for their business. For many, it’s a time to consider implementing a PSA for the first time to support anticipated growth.

Is implementing a professional services automation solution in your plans for the coming year? If not, perhaps it should be. Continue reading »

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Driving Professional Services Success: How Marginal Improvements Payoff Big

Bar ChartOver the years we’ve noticed that the top performing professional services firms are always tinkering with their processes. Their growth strategy is a combination of selling more on the front end, and adjusting delivery operations on the back end. Seasoned managers are constantly evaluating incremental costs and benefits, and making a chorus of small changes that effect dramatic improvements in bottom line results.

For professional services organizations (PSOs) that have limited visibility into their staffing and delivery operations, focusing on incremental improvements may seem trivial. Who has time to focus on leveling resource demand to increase utilization rates by 0.5% when it might take a whole week just to understand current performance? Sure improvements in resource utilization translates into profitability, but doesn’t winning a new project do the same thing? Well…only sort of. Continue reading »

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Predicting Professional Services Variability with PSA Software

One of the reasons I love doing what I do is that it gives me the opportunity to work with a huge variety of professional services firms—from startups employing just a couple of founders to larger organizations with thousands of consultants scattered around the globe. No matter where they sit along the maturity curve, each organization faces unique challenges. Forecast-Variance-Thumb2They may range from the very basics of tracking and invoicing for time and expenses to estimating revenue based on backlog to balancing the supply and demand for resources. To address these challenges, we built Projector, a Professional Services Automation (PSA) solution, and what’s fun about my job is watching organizations take Projector to solve those problems. What’s even more fun is when an organization starts to push the boundaries of what we originally designed Projector for and we discover together that the system can handle that need and more.

I happened to be talking with one such organization about how they could solve the problem of understanding how variability affected their revenue projections. They were already using a disciplined approach of using scheduled hours, bill rates, and resources in Projector to project utilization, revenue, and profitability, but wanted to take things to the next level. They knew that their projections for next month typically were more accurate than projections for six months into the future and that they were likely to win additional work that tended to drive projections that were further out higher rather than lower. They also wanted to understand whether they were getting better or worse at projecting revenue as their processes matured and their team gained experience. Turns out that Projector has all the information needed to provide this perspective as well as the ability to visualize the data concisely enough to make it understandable…as long as you think about things right. Continue reading »

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Moneyball and PSA Software: The Art of Winning the Professional Services Game

Moneyball-PSA-SoftwareIn 2004, Michael Lewis published Moneyball: The Art of Winning an Unfair Game, a story that chronicled the Oakland A’s quest to turn themselves into one of Major League Baseball’s most successful franchises—despite having the second lowest payroll in the game. They competed successfully against teams who spent three times as much on superstars as the A’s by finding players who were undervalued by the market. The A’s defied convention by taking a very quantitative, numbers-driven approach called sabermetrics to evaluate a player’s performance. Rather than relying on the generally accepted wisdom of baseball insiders of what contributed to the success of a team, they crunched the numbers to identify the metrics that actually mattered. And, they figured out that winning in baseball was more a matter of the cumulative effect of many small actions than of singular sweeping gestures. It is a game won by walks and singles rather than towering home runs.

As I read this year’s Professional Services Benchmark, I was struck by the parallels between what the team at SPI are doing in the professional services industry with what the early sabermetricians did for America’s national pastime. Continue reading »

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