Posted by Terry Melnik, PSA Product Director, NetSuite
Each year, Service Performance Insight (SPI) Research, an independent research firm focused on technology services, releases a comprehensive study of the industry that’s a valuable tool for services businesses.
Based on a survey of 549 professional services firms representing more than 350,000 consultants, it provides statistically important benchmarking data. Included in this research, SPI also identifies firms that are the “Best of the Best,” significantly outperforming their peers based on superlative performance across five dimensions—leadership, client relationships, human capital alignment, service execution and finance and operations. Among the findings, the research revealed that the top 20 firms produce on average 23 percent net profit while the bottom 300 firms produced just two percent net profit.
“In nine years, we haven’t seen such a bifurcated scenario where the rich are getting richer and the poor are getting poorer,” said Jeanne Urich, SPI Research Managing Director. “That trend is likely to continue as leading indicators for services firms show that 2016 could be a turbulent year.”
This year, according to Urich, it was the bigger organizations that thrived. That’s a big turnaround from the years coming out of the recession, when it was the smaller firms who outperformed. Based on the research numbers, however, it’s going to be a tough year for services firms. The leading indicators for growth – the size of the sales pipeline, win-to-bid ratios and project backlog all came in lower this year.
“There’s such a difference between the best and worst,” Urich said. “The best have invested in automation and have real-time visibility into the business so they can react to market changes in real time and start selling in other areas. Integrated ERP and PSA is key to enabling that. There are a lot of companies that have not invested in these critical pieces that are going to have a tough time this year.”
Increasingly, when it comes time for that investment, companies are turning to NetSuite. Every year a significant number of the “Best of the Best” run NetSuite for their professional services automation software, ERP and services resource planning. This year was no exception with Best of the Best organizations like South Riding, Virginia-based Top Step Consulting, Brookfield, Wisconsin-based Fiserv, and Imperva, a Redwood Shores, California-based cybersecurity services firm, all running on NetSuite products. Top Step Consulting, a seven-time Best of the Best winner and Fiserv run NetSuite OpenAir and Imperva runs NetSuite SRP.
There’s a good reason that NetSuite customers continue to be named to the Best of the Best. According to the report, companies running NetSuite outperformed the industry average across the following metrics:
- Increased backlog as a percentage of revenue target was 5.7 percent higher.
- Annual revenue per employee was $17,400 higher.
- Annual revenue per billable consultant was $21,000 higher.
- Billable utilization was 4.3 percent higher.
- Employee attrition rates were 1.1 percent lower.
The rest of the market is beginning to understand the importance of a best-in-class PSA solution as well. According to the survey, more respondents cited NetSuite SRP and NetSuite OpenAir as the solutions they prefer compared to any other software for ERP and PSA respectively.
That’s clear evidence of how well an investment in cloud-based PSA and ERP can pay off.
Learn why NetSuite prevailed as the dominant applications provider to services organizations in this year's 2016 Professional Services Maturity Benchmark study by SPI Research. Download here.
Get more information on NetSuite SRP.
Get more information on NetSuite OpenAir.