Technology Services KPIs

KPI Performance Key

Your business may just be beginning to track this metric, perform this business function or identified this as a problem. Improved execution in this area should be a high priority.

Your business is competitive in this area, but there’s still room for advancement. Consider investments to improve related operations to achieve better results.

Your performance in this area is considered best in class and is superior to the average company in your sector. You’ve laid a solid foundation in this business function, and the next step is optimization.

You’re achieving the optimal results for this metric. Your business processes in this area are highly efficient and stand out against competitors. Keep investing in this area to maintain these results.

Top Performers

Annual Revenue Per Billable Consultant

Annual revenue per billable consultant is a rough indicator of how much revenue your billable resources generate each year and the productivity of your technology services team. This number should be higher than the average fully-loaded cost of your consultants, meaning your consultants are generating more revenue than it costs to employ them. A good rule of thumb for this metric: one to two times the average consultant’s fully-loaded cost.

< $190,000
Foundational
$191,000
Competitive
$228,000
Best in class
$265,000
Transformative

Subscription & Managed Services

Subscription Managed

40.6%

SaaS PS Contracts were for Subscription or Managed Services

To learn more, check out this article.

Source: NetSuite, SPI

Left Quote
Subscription and managed services represented a combined 17% of service work performed.”

To learn more, check out this article.

Source: NetSuite, SPI

Gross Margin

The only constant in the technology services industry is change. Organizations must frequently innovate to take advantage of cutting-edge technology like big data, cloud and deep analytics. With the introduction of this new technology comes the entry of new competitors, forcing companies to adapt and provide the most innovative services for clients to stay relevant. It’s important to have a view of the margins of every service you offer so that when you introduce new services, you can benchmark its impact on your business over time.

22.4%
Foundational
37.8%
Competitive
50.7%
Best in class
63.5%
Transformative

Days Sales Outstanding

Days sales outstanding represents the average time it takes a technology services organization to receive payment from its clients. Because technology service firms deal in contracts and very rarely receive payment upfront, days sales outstanding is critical in keeping constant cashflow, enabling your business to make more investments in the company. Negotiating client payment terms up front and having them outlined in the contract, identifying creditworthiness and electronic invoicing are all strategies of maintaining a lower DSO. Organizations that monitor their days sales outstanding and alert customers of overdue payments automatically typically receive more timely client payments.

103 days
Foundational
71 days
Competitive
60 days
Best in class
48 days
Transformative
Foundational
Competitive
Best in class
Transformative

Gross Margin

22.4%

37.8%

50.7%

63.5%

Gross Margin

Percentage of revenue after cost of goods sold. For a services company, gross profit is typically revenue minus professional services staffing costs. This metric signifies how efficiently your company uses its labor to deliver services profitably. The higher the percentage, the better.

Days Sales Outstanding

103 days

71 days

60 days

48 days

Days Sales Outstanding

How many days, on average, it takes your customers to pay invoices. Also called DSO or Days Receivable, it is a financial ratio that illustrates how your receivables are being managed. The lower this number is, the better.

Spend Under Contract

Decentralized buying

40-60%

60-85%

> 85%

Spend Under Contract

The percentage of procurement spend managed by a contract. Purchasing goods and services using pre-negotiated contracts typically allows for better price negotiation. The higher this percentage, the more likely that your company is saving money on goods and services.

Fill Rate

< 97%

97%

98%

99%

Fill Rate

Percentage of customer or consumption orders satisfied from stock at hand. It’s a measure of an inventory’s ability to meet demand. A higher fill rate indicates a better ability to meet sales requests, influencing higher customer satisfaction.

Annual Revenue per Billable Consultant

< $190,000

$191,000

$228,000

$265,000

Annual Revenue per Billable Consultant

This metric represents the average amount of revenue generated by a consultant. The higher the annual revenue per consultant, the better.

Customer Referenceability

< 50%

50-70%

70-90%

> 90%

Customer Referenceability

Percentage of total customer base willing to provide positive stories about a successful delivery of your products or services. This is used to create demand.

Finance FTEs per $100M Rev

> 7 FTE

6.9 FTE

5.3 FTE

3.6 FTE

Finance FTEs per $100M Rev

A calculation of how many FTE (Full Time Equivalent) Finance department resources are required for each $100M in revenue earned.

Source(s): SPI, Finlistics

Other Categories
Percentage of revenue after cost of goods sold. For a services company, gross profit is typically revenue minus professional services staffing costs. This metric signifies how efficiently your company uses its labor to deliver services profitably. The higher the percentage, the better.
How many days, on average, it takes your customers to pay invoices. Also called DSO or Days Receivable, it is a financial ratio that illustrates how your accounts receivable are being managed. The lower this number is, the better.
The amount of procurement spend managed by a contract. Purchasing goods and services using pre-negotiated contracts covering a year or more typically allows for better price negotiation. The higher this percentage is, the more likely that your company is saving money on goods and services.
Percentage of customer or consumption orders satisfied from stock at hand. It’s a measure of an inventory’s ability to meet demand. A higher fill rate indicates a better ability to meet sales requests, therefore maintaining higher customer satisfaction.
This metric represents the average amount of revenue generated by a consultant. The higher the annual revenue per consultant, the better.
This metric represents the average time it takes to respond to customer questions, issues, or concerns. A lower response time drives more efficiency, freeing labor time for more valuable tasks and can reduce the need to hire additional staff.
A calculation of how many FTE (Full Time Equivalent) resources managing the Finance department are required for each $100M in revenue earned. The fewer the FTE, the more efficient your finance team is.
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