Build a predictable and profitable services business with PSA
As companies are increasingly demanding that their professional services organizations become more profitable and predictable, Professional Services Automation (PSA) solutions are no longer a nice to have. Too often companies implement a CRM, accounting system and HCM without investing in the mortar that ties the business together, PSA. Not only does PSA tie together the various solutions, it’s the missing piece to a holistic view of your business. A PSA solution provides optics into historic performance, what’s happening now and most importantly: the future.
How to be financially predictable and do more with less
At the end of the day everyone is striving to perfect or in many cases become financially predictable. A CRM will forecast what bookings will happen when, but can’t tell you when services will be delivered. Often, forecasting Professional Services consists of looking at what happened in the past and assuming that will happen again with some kind of growth factor. Not only is this practice often inaccurate, it can be down right dangerous.
With PSA, forecasts are driven from the project up.
- PSA empowers PMs by allowing them to plan what will be delivered (and when) for each project
- Forecasting from the PM provides greater accountability, accuracy and less overhead
- A bi-product of having the PMs generate their own forecasts is a smaller ratio of non-billable to billable personal
- Not needing the extra layer between the PM and management to build a forecast is a tremendous savings
Achieve higher utilization and Realized Rate Per Hour (RRPH)
Besides the obvious gains in accuracy and predictability migrating from a homegrown time tracking system to a professional PSA solution, the results include higher utilization and Realized Rate Per Hour (RRPH). Service Performance Insight (SPI) is the industry-benchmarking standard for Professional Services. In 2014 they surveyed over 200 PS organizations and found that organizations leveraging a PSA saw on average 4.3% higher utilization rates and 5.6% higher RRPH versus those that don’t. These results will more than cover the cost of a PSA solution. Remember, these numbers are a result of just leveraging PSA – there’s still room to improve.
Think about resource planning
Going from nothing to a PSA system will open many doors and shed light on areas of opportunity that previously didn’t exist. Think about resource planning.
- Having optics into resource planning, managers can now see who is overworked and who has capacity
- Eliminate the ebbs and flows in resource workloads resulting in higher/more predictable utilization and lower turnover
- You’ll know what your future resource cost will be
- Dovetailing the future resource need with your recruiting pipeline will help further build predictability and give HR the information they need to actively recruit where needed
Coupling PSA with HCM is your crystal ball into the resource planning future. In addition to a better performing business, PSA will also speed things up on the operational side.
Close the quarter and deliver quickly
PSA eliminates a majority of manual tasks you have right now. Take the quarter close for example. How many people are chasing down invoices, timecards and milestones? Having all that automated in a system now allows you to monitor it throughout the quarter. These activities will most likely self govern if you have the correct rules and workflow set up. In addition to closing the period, projects are often kicked off quicker, resulting in licenses and hardware being delivered sooner, again bringing revenue forward.
The results are proven. Organizations leveraging PSA will better understand their business and outperform those without. The benefits range from:
- Quicker closes
- Optimizing utilization
- Lowering your DSO
Knowing that the tool will pay for itself and then some in 12 months or less makes this one of the easiest investment decisions you will have to make. Be willing to take the leap, make the changes, and reap the benefits. If you don’t, know that your competition will.
To learn more about choosing the right PSA solution for your company, download the 2016 Cloud PSA evaluation guide from research firm Vital Analysis.