There’s a point in the evolution of every professional services firm when the time comes to move from spreadsheet and manual-based processes to dedicated software that reduces bench time, improves reporting, margins and profits, and empowers front line workers with expense management tools. The trick is determining when. In my experience, services firms may not always know exactly when that time has come, but they sure know when it’s passed. They start to see the impacts on the business. Here are five signs that can help you determine if the time is right for your services firm to invest in Professional Services Automation (PSA) software.
You’re invoicing with Word and Excel. Yes, many services companies are sending out their invoices via Microsoft Office. That may be perfectly fine for a small business with 20 or 30 users, but once you get to 50, traceability and effectively managing resources just becomes untenable without a specific solution.
You’ve expanded to multiple offices and countries but still don’t have a handle on the skill sets in each. Once a services firm grows and expands, keeping track of who has what skills and where can be a monumental task without software designed specifically for that task. Those without it often find themselves relying on outside contractors to come in and fill in gaps, which increases costs while keeping revenue flat. For example, MRM/McCann, one of the largest digital agencies in the U.S., significantly increased its profitability by reducing its reliance on contractors. European firms, which are more likely to expand internationally, and faster, need to pay even closer attention.
You know you can get more out of your people but don’t know how. This is the fundamental benefit of professional services automation. To minimise bench time and get the right people on the right project, you need to be able to track them. That’s going to take software. Consider, if you have 50 consultants and get one more billable hour out of them every week for a year, you increase bottom line revenue by almost £175,000. Or, in three years, with 100 consultants you could add £1 million by improving utilisation by 2 percent, which is equal to less than one hour per week. As SPI Research has found, services firms running PSA solutions gain between 3 and 7 percent increase in utilisation.
You’re over-servicing clients. Ensuring client success is a worthwhile goal, but if you’re actually spending 200 hours on a 100-hour project to be sure it’s completed right and on time, that’s not only a huge cost overrun, it’s a huge lost opportunity cost for people that could be doing billable work. With PSA software, business can track not only how much a client is spending but how much work their putting into it and can identify their most profitable clients.
You’re over/under-staffed. For European companies, restrictive employment laws make letting go of unutilised staff a long process. That means you have to tightly track your forecasts to ensure you’ve got the right staffing levels. It may be possible in Excel, but companies have far more success when using resource management software.
Of course, pressures from growth don’t just impact management of resources. As firms grow their staff and revenue, their financial systems need to keep pace as well. Just as tracking projects and skills in Excel leads to cumbersome processes and inaccuracies with manual entry, the same problems haunt businesses that do the same with their financial data. Forward-thinking professional services firms are reaping huge rewards from having a single system that unites services, financials and CRM. It’s helped organisations automate and manage key aspects of their business across the complete bid-to-bill lifecycle, giving them what they need to stay competitive, gain efficiency, deliver quality services and delight their clients.
Choosing the right PSA system with an eye toward growth demands foresight and a clear understanding of the current needs of the business. What stage is your firm at?