An ROI-Based Approach to Digital Transformation

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[Transcript]


Joe Thomas: Hello and welcome to our continuing series around digital transformation. This is going to focus very tightly on ROI, or return on investment, that you can see from your digital transformation.

I'm Joe Thomas. I’m the Analytics Evangelist at FinancialForce, and I’ve got a great cast of characters with me for this one. We’re going to have Larry Goldberg, who will introduce himself next. You know Larry. Larry runs our Value Realization team.

But I’m really pleased to have Jimmy Storrier. Jimmy is going to talk about the ROI that he has seen at his company (Aquient) around their digital transformation. We’ll get to Jimmy after a quick overview.

The way the agenda’s going to go, we’re going to do a quick overview of what we did at the last session, with an emphasis on the services value chain, Larry will talk a little about some of the ROI pieces as we go, and then we’ll go right into an interview and discussion with Jimmy. Then, we’ll end up with Larry going through the value realization process, giving you the opportunity to understand what we can do for you at FinancialForce, and even have you potentially sign up to have you go through the same process. Great.

With that, I’m going to turn it over to Larry. Larry, introduce yourself and take us through a little overview of what we’ve done in previous sessions.

Larry Goldberg: Okay. Well, thanks, Joe. Hi, everyone. Larry Goldberg. I’m the VP of Customer Transformation here at FinancialForce. My goal is pretty simple: to help you figure out how you can run your business better by looking at opportunities for improvement across the whole value chain. Sounds simple, anyway.

So, that could mean updating or standardizing your business processes. It could mean changing some roles and responsibilities. Of course - at least we hope - it could mean implementing new technology to support these changes.

I should mention, it’s crucial that you’re aligning with your strategic objectives. Are you looking to grow, and how do you scale without compromising the bottom line? Are you looking to increase margin, and how do you do that without sacrificing customer and employee satisfaction?

Now, the services chain is very straightforward. You sell work, you staff that work, you manage that work, you deliver the work, you bill for that work, and you recognize the revenue that’s associated with that work. So, not rocket science. For each of those processes, we look at the owners, the participants, the activities, the inputs, the outputs, and the metrics that allow us to understand if the process is running well. So, understanding the magnitude of that change and how to manage it, and how to quantify the benefit of it is what we’re going to talk about today.

So, Jimmy, we're going to chat with you about your transformation experience, about some of the metrics that you look at (time savings, cost savings, revenue leakage). Joe, I can see you’re chomping at the bit there to jump right in and ask some questions. So, take it away.

Joe Thomas: Great. Well, let’s first start with Jimmy introducing himself and his company, and what you’re using from FinancialForce.

Jimmy Storrier: Okay. Jimmy Storrier. I’m the CEO of Aquient. So, Aquient is a Salesforce Gold consulting partner, and we’re primarily focused on Salesforce Digital 360 Stack, but a traditional consulting firm in every sense of the word (professional services).

We’re using FinancialForce PSA and Business Analytics at the moment.

Joe Thomas: Great. Jimmy, I know we’re going to focus on ROI, but let’s start with the before picture. What was Aquient like - I don’t know, what, two years ago - before FinancialForce?

Jimmy Storrier: Pre-FinancialForce: the dark ages, as we call it. So, there was a lot of… I guess the way we ran the business is like you would in any typical startup. I guess a “garage-type” startup. Right? We ran things based on gut feel, intuition, spreadsheets, a little bit of Microsoft Projects at the time. Really, what it was, was a bunch of people that were very passionate about starting up a business, but that didn’t have yet the tools in place to actually systematize the business.

So, you can imagine all of the problems that come with that sort of way of running a business. We didn’t really have a complete picture of what was going on, and how we’d run things and work with clients in those early days was always based on, “I feel like we’re at this point in the project,” and, “I feel like things are going well,” and, “I feel like things are tracking.” We were in a little bit of an area of problem at this point.

So, that’s what it looked like. You can imagine it’s frustrating and it’s hard and sometimes you just really want to tear your hair out with not having access and not being able to look at things in a more thorough and complete way.

That was Aquient before FinancialForce.

Joe Thomas: Wow. You talk about not having the picture. I mean, you obviously had some tools in place, right? But were they just disconnected, the process flow wasn’t there, a lot of it was just manual effort?

Jimmy Storrier: Yeah. I mean, I’d imagine people listening to this are going, “Wow, it sounds like a basket case.” But, imagine, we were a startup. We were just getting things going, and you don’t have a lot of ability to go and put tools in place. You just want to get running, and everyone on the team just wants to run at things.

So, in terms of disconnected systems, the way we used to run projects was we’d have project managers that would lead a delivery project. So, the successful failure of a project came down to, generally, the skill and experience of the project manager. We found that if someone was a good project manager with a lot of experience, the projects tended to go well when we got to the end of it and we assessed it.

Someone who is maybe newer with less experience, they run a project, and the project may not have gone as well. So, my thinking around this was we’ve got to be able to get out of making this based on people and start making it about process. As Larry mentioned, it’s not rocket science, but sometimes when you’re starting up a services firm, you can make it into rocket science - funnily enough - and you don’t need to. That’s the whole thing that we’ve found as we went through this journey of implementing PSA.

Joe Thomas: I remember the startup life, where you just fixed everything by working harder and working longer. Just everyone running to the ball. Right? Little kids’ soccer, as we would call it here in the US. Little kid football, maybe out there in other regions. That doesn’t sound fun. I remember those days, Jimmy, but how is it different now?

Jimmy Storrier: Well, it’s a whole different game. I think everyone in the business will point to this. What we have now is a real-time view of everything that we’re doing in the business as we’re going - and not just that. It’s not just “real time” as in what’s happened historically and what’s happening right now, but what’s going to happen in the future. I think that’s one of the most important things about what we’ve done here, is that we can predict, and we could never do that before.

So, predictions for us before were all based on gut feel. A lot of the time, good project managers can predict well because they’ve got so much experience and have a feel for it. But now we can actually say - and we do this in meetings all the time now at Aquient - is when somebody comes out and says, “I feel like something’s going well,” or something’s not going well. It’s, “Show me the data, baby,” because we’ve got it. It’s all there in the platform. So, everything is becoming data-driven inside Aquient now, and we always challenge people to say, “If you have an opinion, that’s great. We want to hear about that, but we also want to hear about what the data says as well, and the interpretation of the data.

Joe Thomas: That’s great. Well, we’ve promised this audience ROI. So, let’s get right into the topic. I know I’ve seen numbers from you that are pretty amazing. Can you talk about the return on investment that you’ve seen from your digital transformation using FinancialForce?

Jimmy Storrier: Yeah. So, we made in our first 12 months of implementing PSA, we made back our entire three-year investment in the first year.

Joe Thomas: Wow.

Jimmy Storrier: That’s in license cost, and that’s actually not even based on the intangible ROI elements that you talked about earlier on - things like revenue leakage prevention. We don’t have a really great way of measuring that, but we know that it’s had a huge impact in terms of flow-on business from customers. But, just straight from a bottom line, and our financial controller did this a few months ago again for last year, from a straight line of where we were before and how much time we were spending managing projects to how much time we’re spending now. Our project management margins come down from something like 25% to 15% on projects.

So, then, in terms of just overall project management as well in the time that we’ve spent in internal meetings has been captured as non-billable work has decreased as well. All of that’s added up. You can put a number next to this thing, and I think this is one of the things that people don’t understand when we’re doing an implementation like this. Traditionally, ROI can be measured in e-commerce because you can see the optimization in e-commerce checkout funnel. It’s easy to measure the results. You can do the same thing in a professional services company.

You can put a dollar - and our financial controller has done this. You can put a dollar against that. If you’ve been tracking as you should have in even an Excel spreadsheet, the time that you’re spending managing your project, you track it again post-implementation, the numbers just hit you in the face. It was unbelievable for me when I saw it for the first time. I said, “Really? Have we really done this?” The financial controller was absolutely very confident in terms of what we’ve done.

But that, then, doesn’t play into other things. I think revenue leakage is the big one. We used to run projects and get to the end of a project and say, “That project’s been unprofitable.” I would have loved to know that three weeks into a 12-week project, for example. We just couldn’t see that. I hated getting to the end of a project and going, “Did we win or lose?” Now we can actually look at it and say in week three, “You’re on track to lose here. What do we need to do to bring this back onto the rails?”

Larry Goldberg: Oh, sorry, Joe. I was just going to ask what was the breakpoint for you where you said, “Hey, we need a system.” So, you know, customers I work with - even companies that I’ve started - it’s been the point at which you stop knowing the names of the people that are working for you, or you get to the point where you can’t track all of the projects that you’re doing because you’re so successful. But you now have so many customers, you don’t really have a feel for where you are in any given project. Is that where you were? Spreadsheets just fell apart, or a number of people were too many? What was it for you?

Jimmy Storrier: I think, honestly, it was sitting in project management review meetings and project deep-dives and having project managers looking at you and just going, “Why are we doing this again?” You get that feeling in your gut just going, “There’s got to be a better way.” It just almost hit all of us at once. In fact, the whole time I was in a deep dive for a project, and we were starting to assess what was happening in the project, and everyone was just… It was almost like we had this magical moment where everyone sat there and went, “We’ve got to be doing this better. This can’t be the way we have to be doing it.”

I think, after we got to the end of two projects where I said there was no way of measuring profitability until the end of the project, I said, “That’s enough. Let’s just go and do this and make this investment.”

To be fair, it was a significant investment for us at the time. We were a small services company growing really quickly, but there was absolutely no doubt in my mind that we couldn’t keep doing what we were doing. We had to go on and make an investment.

The thing that really triggered it, in the end, was here we were, a professional services company, telling other companies to invest in tools and systems and processes, and we weren’t eating our own dog food. So, that, again, was another point for me where I went, “Hang on. If I’m going to tell customers to do this, I should be doing it, too.”

Larry Goldberg: So, Jimmy, you mentioned the keyword there: processes. So, we know that business transformation isn’t all about the technology. We want to talk about whether you had to update your processes or change roles and responsibilities. Business transformation isn’t the same thing as digital transformation. Digital transformation itself isn’t just about the technology. So, where did you look to improve outside of implementing FinancialForce?

Jimmy Storrier: It’s the triangle, isn’t it? It’s technology, process, people. Those three things were really important to us as well. So, I think one of the things that was really apparent to us when we implemented FinancialForce was we go to our customers and we say it’s not always all about the tool, it’s about how you use the tool. So, what FinancialForce gave us was this really great framework to say, “We’ve done this before. There’s a lot of people in our business that come from Deloitte and Ernst & Young and big consulting firms. But what FinancialForce gave us was this framework to say, “It’s almost plug-and-play professional services, in a way.” We used some of the consulting services that FinancialForce has as well to help us, and my brief to the team who are based in Australia - who we work with - was we want you to also guide us and inform us, in terms of what you’re seeing from a best practice perspective in using your product and your tool.

I was very foolish on this in terms of making sure we used some services to get set up and running, because that’s what we do. If we’re going to sell our services to customers, we should expect to buy some in return. The investment on that paid for itself, because the amount of time it took us to get up and running and have everything running in the business… Not just things we weren’t doing before, but things that we were doing, and things that we weren’t doing - like revenue forecasting. So, forget about revenue forecasting in the dark ages. That was just not happening. Now, we revenue forecast every week, and it’s accurate to the point that it’s as good as the data that you put into the platform.

So, I think, to your point, is if you don’t have people adding data in and doing it in a systematic and thorough way, then it’s garbage in, garbage out. But, so as you transform the business with the tool, you’re transforming the process, you’re educating and training the people and going through change management internally. It’s the whole thing. I think sometimes we do get stuck in the magic of software. In terms of capability, it does everything, but you need to be able to use and drive the software as well.

Larry Goldberg: Yeah. So, you just mentioned another great point. I feel like I should be paying you because you’re giving me all these great segues. Maybe I am paying you - I’m not sure.

So, you talked about change management. Change management is so crucial. We get asked about that all the time. Okay, we implement the software, you helped us update our processes - that’s fantastic. How do I get people to change? What you’re talking about: your consultants, your project managers, your resource managers. Resource managers generally live in their multi-colored, multi-dimensional spreadsheets, and that’s awesome. Your project managers are using offline project management tools. Your consultants are emailing you about how much time they spent on a given project. No one likes to give up what they’ve been doing. They feel like it’s been working for them; that’s good enough.

So, how did you address that change management, other than through training? Did you have champions? Did you have documentation? Did you sit down with people one-on-one? How did you explain the value that was going to accrue to that person if they changed?

Jimmy Storrier: I’m not going to pretend it’s easy. I think change management, in any organization, is hard. It was difficult for us, too. It’s one of the most overlooked things that we see when we work with our customers: the change management process. We’re really clear to escalate that up front and say, “Change management starts as soon as you start a project, not at the end of it.”

So, we went through that process internally. We had our entire team that worked in the platform at the start - that was program managers, project managers, resource managers, and some consultants - go through the training with FinancialForce, just to set the very basic setup training we did with FinancialForce to say, “This is coming. It’s happening now. Let’s just get familiar with it.” It was a three-day intensive program of work, and it was a big investment on our side to have seven or eight people at the time actually go through that, but it was worth it. We factored all that into our ROI, by the way. All those costs. The time costs, the cost of the license, the cost of the training - all factored into the ROI.

So, what this would have come down to then was training’s great, and the short, intensive training is fantastic as an overview, but obviously people go back into their day job and they start doing things the way they were doing them before. So, it was a process of probably about six months, to be really honest with you, of getting people you understand the reason we’re doing this. Remember that pain that we were having over there, that you’re hating so much, and you’re talking to me about how we’ve got to change the way we do it? Guess what? We are changing now. Yes, that’s also a little bit painful, but we’ll go through that pain. It’s like having a tooth extraction, right? You get it out and all of a sudden you don’t know it’s there anymore.

So, I think that’s what happened. Now, we’ve gotten to a point where we onboard new project managers with what we call the Aquient PSA Fast STart. So, we actually have our own training program internally, which involves using some of the resources in the Help Center for FinancialForce, some things we’ve created ourselves, and then we have an internal champion who actually sits down with the team to talk them through how the platform works and how it makes their life easier. That’s all the way from consultants to project managers.

Larry Goldberg: That’s awesome. It’s certainly one of the most difficult things to go through: the change management process. It’s something that not a lot of people think of as they’re going into one of these projects - a business transformation or just simply implementing software. But it’s so crucial to success, and starting that communication process early. Again, super crucial.

Joe, I know I’ve cut you off about six times already. So, I’ll let you get to your questions.

Joe Thomas: No worries. I think you can just see - and hopefully everyone can hear - the excitement in our voices. This is an amazing story, Jimmy. We’ve talked about change management, and a lot of times I see people doing change management when things are dire. For you, it seems to be the exact opposite. Right? I really have to tip my hat to you. Can you share a little about what your growth pattern has been while you’ve been doing this change management? In a lot of ways, to me, it’s like you’re changing the tires while you’re racing.

Jimmy Storrier:Yeah. It’s one of those things. I made it a pillar of our business: operational excellence. Because I knew running a services business that you’ve got thin margins in this game. Let’s be honest. Right? It’s not like a software company. You’ve got to run your projects well to make money in services.

So, for us, it wasn’t even an option not to do it. But, in terms of payoff for us, we’ve doubled our revenue every year since we’ve started the business. I’ve got to say, I don’t think that would have been possible running manual processes, Excel spreadsheets. The fact that what we’ve done is really live this dream of professional services automation. We’ve automated probably 80% of our business, which doesn’t mean we’ve lost people, and it doesn’t mean we haven’t hired people. We’ve deployed people to be creative. Even our project managers now are creatives. So, they’re using their brain to do things that automation can’t do, rather than plugging through spreadsheets, allocating resources on different cells in a spreadsheet, which really is work that you don’t need to do anymore. FinancialForce will do that for you. So, now my project managers are freed up to actually go out and spend time with customers, lo and behold, which is one of the best things they can do. Right? And have that conversation. Not just that. Take data from the platform, present it to the customer. We have a full transparency ethos inside Aquient. That’s another thing that’s actually a really good point is if you don’t have a platform or a system or the data in place, you can’t be transparent with your customer. It’s all about feelings and opinions. So, we can now go and take that data to a customer, present it to them. Go and have a coffee with a customer and say, “Hey, here’s what we’ve got in terms of data. This is where we’re going. This is where we’re making these decisions in terms of steering things back that are off track.” It all really helps in terms of how we’ve grown the business. I don’t think we could have done it without having all of that backend automated. There’s just no way.

Joe Thomas: I think you’ve been too modest, Jimmy. Anyone can double their revenues once, maybe twice is hard. How many years have you doubled it now in a row?

Jimmy Storrier: This is our third year now, and it’s about to go again. So, we’ve been very lucky. Very fortunate.

Joe Thomas: Wow. That is exponential growth, I think. Once you start doing that those different times… I really have to tip my hat to you.

You’ve made a great point about customer behavior. Can you tell us what’s changed in terms of your interaction with customers and your ability to provide data to them? Do you have any examples of how you’ve been able to course correct with a customer with that kind of data?

Jimmy Storrier: Yeah. So, we’ve shared… One of the great things that we use - and I can’t recommend it enough, actually - is the Business Analytics component of FinancialForce. So, there’s a lot of predictive visualization inside that. I think one of the things that really… I mean, everyone’s like this. If you’re a visual person and a lot of customers like to see things visually, that tool has been almost critical, and we share those reports with our customers. So, project burn-ups, for example. Predictive project burn-ups is one of the most… In fact, for some reason inside our organization, for about half a day, we made a change to one of the reports, and it went down for half a day, and every project manager came to me going, “The burn-ups are gone [inaudible 00:22:21]!” I didn’t realize they were using it. Right? I realized then that was one of the most important things that we had. They said, “No, we use it all the time, because it’s actually one of the most important things we do to see what the effect of what we did yesterday is on two weeks’ time.”

So, we have, like you said, a full-transparency ethos with our customers, and it’s all about sharing everything from task end to budget to billings to future forecasting and scheduling and who’s being resourced one what. We just couldn’t do that before, and now it’s all there.

In fact, the guys can go and take their laptops out to the customers’ site and bring the system up. We have no secrets. I’m so confident in what the platform is doing that I’ve said to the team, “Do it,” and the customers love it.

In fact, one of the things that we’ve had - which I’ve never had in previous companies before - is we’ve had, three times now, we’ve been fed back to customers saying, “We do a lot of technical work, a lot of technical consulting. As we all know, sometimes software doesn’t work the way it should, and things happen, and things change.” One of the customers came back to us and said, “I’ve got to say, I’ve never worked with a company that’s been so rigorous around project management.” I’ve never experienced that before in the agency I was in before.” I’ve got to say, one of the things we attribute that to is the PSA system, because it tells us what we need to be doing.

I wouldn’t say, in particular, we have the very best process. We don’t have the most senior and experienced people, either. We have a great team. But what happens is they’re supported by a great tool. So, they can then be themselves and live their individual personalities with a customer by using - and being confident - the tool in the background that’s actually doing all the heavy lifting for them.

Joe Thomas: Great. I mean, this has been amazing. I’d love to drill a little more into some of the details. In one of our discussions, you talked about one of the changes around time savings, around the Monday morning meeting. Can you dive into that a little bit?

Jimmy Storrier: Our Monday morning meeting was like a Monday meeting. It tended to drag on for the whole day. Because I had this philosophy at the time is we can’t finish this meeting until we get through all the project load, and we’ve actually resolved the issues that we have for the week. That was another big trigger point for us. When we’re getting to six o’clock on a Monday afternoon and we’re still going with a few breaks in between - let’s go and get our headspace back together - that was a realization for us. That Monday meeting now takes 45 minutes, and it literally is pulling up a couple of reports - the custom reports that we’ve built - to be able to say are we on track or off track.

What it’s forced us to do is really focus on what’s important. So, we’ve defined a set of key metrics and KPIs that we track ongoing that are leading indicators for success or failure of a project. So, we just track those and focus on those. Actually, what it’s done is also reduce a lot of noise, because there was a lot of noise before. Now we know just focusing on these probably six, or seven key things, we can run our whole business on those.

Joe Thomas: Wow. I mean, I think that’s some easy math. Right? You just got one out of five days back in terms of utilization and potential billable hours.

Jimmy Storrier: We’re still small - we’re 40 people - but you times that one day by seven people who were in that meeting every time, that’s a lot of billable hours that are gone. Right?

Joe Thomas: Yeah. That’s significant. There’s some ROI right there.

Jimmy Storrier: Definitely. Yeah.

Joe Thomas: What did I want to ask?

You mentioned your… I know in previous discussions, you mentioned piloting and how you’re piloting differently. Can you talk a little about that?

Larry Goldberg: [inaudible 00:25:54] data, I think you called it.

Jimmy Storrier: It was. Yeah. I’m lucky enough to be one of those crazy people that has a private pilot’s license. One of the things that I sort of drew a parallel to in terms of flying an aircraft and running a business is that flying an aircraft is highly systematized. In fact, everything in the cockpit is checklisted, but you need to have an element of awareness - self-awareness - in terms of what’s going on. But, aviation, as you know, is one of the safest industries in the world for that reason: everything is regimented and checklisted. But, also, inside a cockpit, you’ve got a bunch of instruments that tell you where you’re going and what you’re doing.

So, what we’ve got here in terms of running a business is a blend of that instrumentation - which is great - and you know in a cockpit there are probably three key things you need to look at, really, to fly an airplane. The rest of it is almost noise that helps, but there are three key things.

It’s the same thing running a business. That’s what I was talking about, in terms of reducing collateral noise, because we’ve nailed it down to what those key three things - for us it’s six things - but what those key things are.

Then, also, we can also run projects through checklisting. It’s not we’re taking all the creativity out of running a project, but the things that can be checklisted, we checklist. So, it’s almost like the team’s going through their pre-flight checklist as they go through it to run a project. Again, you can’t do that without data, and you can’t do that without a system in place that is actually tracking that for you. Otherwise, it all comes down to intuition.

Like we said at the start, intuition can be great if someone’s got great intuition, but you don’t want to trust it.

Joe Thomas: It’s great until it isn't. Right? It works great when every one of your guesses is right, and until it isn’t, and then it’s not. I love that transition from intuition to sort of intellectual rigor. Have you seen it result in project success? Can you point to any differences in terms of your project delivery post-FinancialForce versus pre?

Jimmy Storrier: Yeah. I can tell you, I think we have a very, I guess… In terms of definition of project failure, the definition of that is very open. We say “failure.” It’s a dirty word, obviously, but it’s if a project wasn’t delivered on time, on budget, or - in the worst case - the customer finishes the project because it wasn’t working out. Haven’t had any of those in the latter case ever, but certainly before FinancialForce we were having projects that ran over budget and not on time. There’s a whole bunch of reasons for that. Sometimes you can’t pinpoint what it is.

Since we’ve had FinancialForce in place, though, we’ve never been taken by surprise. That’s the biggest thing for me is that we can’t promise customers that everything’s going to be on time all the time. There’s too many variables that we don’t know about, and we’re really honest with customers about that up front now as well. We just say, “You know what, we’ve been doing this a little while. Something’s going to go wrong. But the thing is, we’re going to be here to help you through it.” The best thing about it is we’re going to be able to identify when that thing is going wrong much earlier than we could before. So, that’s been the key thing in terms of taking it out of this and how we engage with customers.

But I think the biggest thing, Joe, as well, is that we’re getting more repeat business than we ever had before we did this. They always say a happy customer is a repeat customer. I think if you can point to anything that’s gone wrong and you communicated well with a customer, you’ve been transparent on sharing data, it’s going to naturally lead to repeat business because they’re going to want to work with you again. It was a good experience. Okay, everything didn’t go perfectly, but, hey, this partner was there and they told us before things were going to break. We want to know that. I want to be able to go and tell the board that something is going wrong well before it goes wrong, not after it goes wrong.

So, I think that’s built a lot of kudos and trust for us as a company, as well, with our customers.

Larry Goldberg: Yeah. Interestingly, the repeat business bit there is a great part of the ROI story. It’s hard to measure. What does it actually mean to get repeat business? You know, customer satisfaction is higher. What does that mean? How does that relate to top line or bottom line? You know, to me, just reducing the friction in the process. So, you know, sales cycles can be long; a lot of people involved in sales cycles. Customer acquisition costs are high in practically any industry. But the better relationships you have with your customers, the better you’re able to deliver for them, the better you’re able to add value to their business, the shorter those cycles are and the less cost there is in the sales cycle. Customer lifetime value goes up. Those are all metrics that we look at. Those are metrics that I’ve looked at in businesses in the past. Certainly, I don’t know if that was built into your model, but it’s a good thing to look at.

Jimmy Storrier: Well, Larry, we’ve actually got an incentive. CSAT is one you mentioned there, and it’s a critical one for us, because as a Salesforce consulting partner, we’re measured on CSAT. So, our tiering in terms of being a Gold Consulting Partner depends on us having a certain CSAT score. So, there’s absolutely tangible benefit there.

But I think you’re right. What’s the impact of the marketing component or the brand component of that by being a Gold Consulting Partner that’s related to CSAT, which is then tied back to our ability to deliver? This is all linked and intertwined.

Sometimes I go down these rabbit holes with the financial controller going, “Can you go and put a dollar value on that for the board for me?” She’s like, “Where do I start on that?” Sometimes you don’t need to. Right? It actually speaks for itself. But I’m trying to measure everything as we can and put dollar values next to it, because my investors want to see that.

Joe Thomas: Yeah. Well, Jimmy, an easy calculation would just be estimating, say, 20% of your business is repeat. So, you have an average CAC or Customer Acquisition Cost, and you take 20% of that, and that’s dollars saved right there. So.

Jimmy Storrier: Got it. Got it. That’s interesting. As you know, as well, the customer acquisition cost in services is high. I mean, those big initial deals, we can be doing pre-sales for six to nine months on some of them. That’s a big investment, right? You don’t want to be going and doing that all the time. If you can get a customer that you can just repeat work with, that saves all that investment.

Joe Thomas: And…

Larry Goldberg: You know, I think, you can do that math, I think I need to hire you into the value realization team. We’ll talk about that, I suppose, after the…

Joe Thomas: That will be the Joe Calculation.

I do apologize, Jimmy, that our business analytics could not predict a global pandemic: the abandoned offices and such. But things like that, I’m sure, slowed down projects. I would say your success during this kind of time - during a global pandemic - is a real testament to the work that you have done.

We very much appreciate the time. Larry, do you have any more questions for Jimmy?

Larry Goldberg: No, I think this was amazing. I love hearing customer success stories. I learn a lot from them. Certainly, it sounds like, Jimmy, you and I need to catch up on other metrics that you can use to pass along to your board. It could be that your payback on your investment in FinancialForce was less than a year. I’d love to hear that as follow-up.

So, Jimmy, thank you so much for telling us that story. That’s amazing.

Jimmy Storrier: Larry and Joe, thanks so much. It’s been great to talk to you.

Joe Thomas: It has been great hearing. We love hearing successful customers, particularly ones that are as innovative and agile as you, Jimmy. So, thank you very much.

Larry, that’s something… I hope everyone can hear the excitement in our voice. We’re pretty excited about people actually using our stuff and getting tangible benefit from it.

Larry, can you talk to our audience a little about the value realization process and maybe give even some more examples of customers that have gone through it and the value they’ve seen?

Larry Goldberg: Yeah, absolutely. You know, Jimmy stole practically all of my thunder, I think. Value realization process that we work through with our customers is super straightforward. So, the process is very collaborative. We’re not sitting in a dimly lit room churning through spreadsheets - although we do love spreadsheets; not for professional services automation, just for running the value process. But we don’t assume that every company is the same. We don’t assume that everyone can derive the same magnitude of benefit from the exact same places.

We help uncover how you’re performing now with regards to key metrics. When I say “now,” it could be now before you start the project, or now that you’ve been a customer of ours for a year, or now that you’ve been a customer of ours for five years. Where are you now? Then, we look at all sorts of different metrics. We look at things like sell rate or billable utilization or overhead costs or project margin, delivery overage, DSO. Right? So many great metrics to look at in all parts of the value chain.

Then we look at where our top performing customers are, or even where our average customer is, and where they’re operating with respect to these metrics. That’s where we start doing the math. Right? What does it mean to get from where you are now to where you could be? So it bears repeating that aligning with your strategic objectives is crucial. Right? So, are you looking to grow like Jimmy? Obviously everybody’s looking to double their revenue every year. But how do you do that without… How do you scale like that without compromising the bottom line? That’s incredibly difficult if you’re not using a standard set of processes and a system that can help you. You don’t want to double your revenue and have to double your admin staff just to accomplish that.

Similarly, are you looking to increase margin? Right? That could have to do with where you are, how you’re positioned as a company. So, are you public or looking to go public? Are you venture-backed? Are you private equity-backed? How do you increase margin without sacrificing customer satisfaction? We talked about how important that is to the business, whether it’s reducing friction or whether it’s your status as a Salesforce partner.

But employee satisfaction as well. Right? You can increase margin and employee satisfaction can decline pretty rapidly, and you can see increased attrition, and attrition is horrible - in any business, of course, but certainly in a professional services business.

So, let me just give you some quick examples. I think Jimmy gave them all, but I’ll just give you some examples from some of our other customers - names withheld to protect the innocent, of course.

So, we have a customer that’s about 400 people, a professional services organization. They were able to cust project overage from 10% down to 0%. That was all by aligning resource managers, project managers, consultants, sharing information in a single system. That drops - going from 10% to 0% - that dropped about $12 million straight to the bottom line; an unbelievable amount of money.

A 1000-person delivery organization, able to improve their billable utilization by 4%, and that was primarily from being able to look into the pipeline as well as backlog to see what was coming soon. Right? Either 75% or 90% certainty that the deal was going to close. How do we look at staffing differently than we did when we only knew what we had already sold?

So, the earlier they could see the deals the earlier they could staff, the better resources they could align with that project, the sooner people could start working. So, a 4% utilization increase across a 1000-person delivery organization is about $16 million in additional revenue. Amazing numbers.

Even looking at the increased productivity of project managers. So, Jimmy, you mentioned that. You’re looking at seven project managers. Imagine a business looking at 100 project managers, freeing up eight hours on a Monday, or freeing up seven hours and 15 minutes of it, at the very least. So, that’s not just for staffing. That’s for reviewing projects, that’s for approving timesheets, that’s for updating project plans, that’s for interacting with the customer. That can easily buy you a couple hundred thousand dollars across a hundred project managers.

So, really good places to look at where that value can be derived. So, we worked through these numbers with our customers, and of course we paired that with investment. You’re not doing this for free; you’re spending money on licenses, you’re spending money on implementation, you’re spending on advisory services with us. So, we’re building the real costs in there. This isn’t free.

So, then we look at that, at a timeline that makes sense for your business. So, instead of a three-year investment timeline, is it a five-year investment timeline? Your board may dictate that, your CFO may dictate that. But, when we’re putting those models together, it’s super important to know what’s important to you and your business.

So, those are just a few customer examples. You know, different ones, different sized companies, different industries, but all the same stories, Jimmy, that you told. Right? Looking at exactly the same metrics. Can we improve? How much can we improve? What does that mean to our bottom line?

Joe Thomas: Great. Thanks, Larry.

We’re going to transition to the Q&A part of this discussion. Before we open it up to the audience, hopefully you’ve seen my asking you in the chat for questions. Put them right in that question tab off to your right. We appreciate the questions you’ve already asked.

I have one for you, Larry. How many of these value realization assessments do we do in a year, and how does someone sign up for it?

Larry Goldberg: Yeah. So, we do hundreds of them. Right? So, we’re obviously operating in the sales process as well, of people looking to make an initial investment in FinancialForce. What can they expect, and how can they measure? You know, going and collecting that data is incredibly important and eye-opening, very often, for people looking to make the investment - even if they know they’re at the breakpoint, like we talked about earlier.

I don’t know everybody’s name. I don’t know all the projects they’re working on. I opened a new office, I moved into a new country. I know I need a system. But when you start digging into the data, people get really surprised. So, we’re operating in the sales process and obviously we’re a global company. So, there are dozens - if not hundreds - of those going on simultaneously.

But then we do that with our customers all the time, as well. Hopefully we’re enabling our customers to do that themselves. But just as part of our customer success process, if you’re working with your customer success manager, you want to know that you’re making progress. We said in the sales process, “Here’s what you should expect.” How do we know that we’re actually realizing that benefit? You can work with us to do that.

So, engaging with us is super easy. You don’t even have to initiate. Right? We’re there, we’re proactive. We’re doing it in the sales process. We’re doing it with our existing customers on a regular basis. But, if you’re walking into a board meeting and you need better numbers, it’s very easy to contact our team. You can go through your Customer Success Manager, you can email or call me, you can Slack me, you can text me, you can use smoke signals, carrier pigeons. We use every possible communication mechanism here on the value realization team. So, super easy to engage, Joe.

Joe Thomas: Great. Thanks, Larry.

Then, Jimmy, I know you’re coming up on, I think, year two now of FinancialForce. Most of the people in the audience are significantly behind you in terms of timing - earlier in the cycle with us. Is there anything that you wish you would have known or thought of at the beginning of the process that you know now, that would have helped you? I’m trying to help the audience here for things that they should be thinking about at the front end of this process that you’ve learned more on the back-end.

Jimmy Storrier: Yeah. I think two things, really. One is don’t be afraid of making the investment. I think that’s the biggest thing, is we tend to hold off, in professional services companies, in investing in our own business. So invest in your business. It’s absolutely worth it.

The second thing, I think, is don’t underestimate the power of small changes, because you stack multiple small changes together, they become a big change. So, I think, Larry, you mentioned it there, just the shift to actually resourcing based on 75% or 90% probability to close. When we did that, it was a fundamental change in our business. Everyone looked at that and thought, “That’s such a trivial thing.” Right? But it really wasn’t. So, I think that’s the one piece of advice going into it. If I could do it again, it’s to say sometimes we shelve those things because we think they’re too easy. Actually, they’re the things that you go for first.

Joe Thomas: That’s great. That is great advice. I want to thank you, Jimmy, again. I know it’s approaching 11 PM, I think, in Singapore. So, thanks for sticking it out with us. Thank you, Larry, for all your wisdom here. We will be sending you an email to all the attendees with our previous session that we recorded, the recording of this one, and introductions as to how to contact Larry directly to engage with the value realization team.

With that, I’m going to turn it over to Q&A. Please put your questions into that question tab, and we’ll see how many we can get to as we go forward.

Thank you, again, for your interaction. Thank you, Jimmy and Larry, for your participation. Let’s go to Q&A!

Larry Goldberg: Thanks a lot, Jimmy.

Jimmy Storrier: Thanks, Larry.

Joe Thomas: Well, let me get my webcam on. Let me get a question slide up. We do appreciate all the questions that you had asked.

Larry, there’s a bunch that I’m just going to kind of group together. Basically, I’m summarizing this way. Can you take us through the math? How are you calculating things like metrics and ROI?

Larry Storrier: It is a good summarization: take us through the math. So, great question. I kind of ran as fast as I could through those numbers at a very high level, but let me dig into at least one of them to start, because it’s a rich one.

So, that project manager productivity number. Jimmy talked about not just about the half day that the project managers spend in the room trying to figure out who goes where, but in a lot of companies, it is a half day. But there are those other bits, whether it’s looking at the time approving timesheets, looking at how much time has been spent on each task versus the plan. So, you want to make sure you’re approving that time, making it easy to see that. Then, you need to update the project plan. You need to make sure that the project plan assignments are similar to what the resource managers have given you in terms of allocation of resources. If the project is going to go longer, you need to make sure those resources are available.

So, there’s a lot of time spent there. So, we talked a little bit about ways that you can save that time, but let’s just talk about the numbers. So, first of all, the project manager has a cost, where we pay the project manager - at least, hopefully, for anyone on the call here today who is a project manager; I hope you’re getting paid. I know these numbers because I deal with them all the time. If you look at, at least in the US, you look at Glassdoor, you look at Salary.com, you look at LinkedIn, the average salary for project managers is $120,000, $125,000, $118,000, $112,000. Let’s just call it $120,000 for ease of use here, load factor to get fully loaded cost of an employee. Again, lots of ranges. SBA says 1.4X larger companies see 1.8X to 2.2X. I like to take it in the middle there and just call it 1.7X. That gets you to about $200K fully loaded costs for a project manager. If you think about, you know, a work here, at least in the US, about 2,000 hours, you’re looking at a fully loaded cost per hour for a project manager of $100. Glad it worked out so easily.

So, in the example that I gave with 100 project managers - I think it was closer to 97, but let’s call it 100 again for ease of use. You save the seven hours out of the eight hours of the meeting on Monday - or across all those different categories of time savings. Seven hours times 100 project managers is obviously 700 hours. You’re looking at the loaded cost per hour of $100 per hour: $70,000 a week. Right? So, super easy number to get across a year, about $3.5 million. Right? Not insignificant.

There’s another way to look at that in addition to productivity savings. So, if you flip that around and say, “Look, we charge, for our project managers, that they’re a billable resource.” Now, as someone who’s spent a career running services organizations, I can tell you that expectations for project manager billability is more like 50% or 60% if you’ve got your target for consultants at 75% or 80%. Project managers are lower. Why is that? Because they’re spending their time doing these other things.

So, if you are looking, instead of productivity, cost savings at $3.5 million because of the $100 an hour cost rate, if you think about that as a $200 an hour bill rate, I’m now looking at an increase in revenue of twice that: of $7 million, instead of a cost savings of $3.5 million. You want to make sure that you’re not double accounting; you don’t get both. You want to make sure in that second version you’re actually talking about an increase in billable utilization. So, if we’re looking at that as a metric, also, let’s make sure we’re only looking at it one time. Right?

Billable utilization, another great metric. If you get a 1% uptake in billable utilization, a work year is 2,000 hours. 1%, 20 hours. If I can find an additional 20 hours on a consultant’s calendar to make billable at $200 an hour, there’s $4,000 per consultant. So, multiply that by 100, by 1,000, by 10,000, however big your company is, those numbers get large very quickly.

So, revenue leakage - another one I mentioned is the total number of hours sold or dollars sold. How much of that can I capture? Hopefully it’s 100% or more, but very often you’ll sell a project for 1,000 hours, and you end up doing the work in 1,200 hours. Customer says, “Hey, additional 200 hours. I’m not paying you. That wasn’t on me. You did the work poorly and you had to go re-do it,” or, “You stashed someone more junior on the project than you should have, it took more hours to complete. That’s not my problem. I’m only paying you for the 1,000 hours. Even though our contract says ‘time and materials,’ I’m only paying you for the 1,000 hours.”

So, right there, either you can look at that as I’ve lost the ability to bill for 200 hours on this project, or you look at it as opportunity cost. So, I could have taken those 200 hours and billed those people out to some other project, either at the same rate or possibly a higher rate. So, revenue leakage there.

Margin erosion, the flip side of that coin. So, if you have fixed fee engagements, you can look at them either in the same light that I just described (time and materials projects), but in the case where you are selling at a fixed margin. So, 40% margin, but you can’t staff. Right? Now we have a staffing issue. I can’t find the senior consultant that I put in my staffing plan, so I have to go with a more junior person. It takes that person longer to complete the work. They’re more junior or they have to do the work over again. Again, your customer’s not paying you any more, but now you’re increasing the cost. Maybe not. Maybe a junior resource is so cheap that even doubling the amount of time is still less than a senior consultant. Right? It depends on your business.

So, from a metric standpoint, the math is very straightforward. From an ROI standpoint, you’re really packaging up all those things together. We’re going to make sure they’re equivalent. You’re looking at top line, you’re looking at bottom line impact. But in an ROI study, there can be a dozen or more lines, a dozen or more metrics that we’re looking at, at the same time. Some of that benefit comes very quickly. Some of that benefit comes later in the process. So, you need to make sure in a multi-year model that you’re putting those numbers where they belong.

There is an investment component to this. So, you’re investing in licenses, and that’s a subscription that repeats every year. The implementation happens just at the beginning. So, there’s a cost implementation, but also you’re not seeing the benefit during the time of that implementation.

So, if you run all of the math, what you see over a three-year or a five-year time horizon is a jaker. Right? You’re spending money at the beginning, you’re not getting any of the benefit, you cross back over the line of zero (of break even) when you start to see that benefit, and then the line continues to go up. You’re seeing that benefit -e tiger the savings or the bottom line improvement, you get to see that annually. So, the math, again, very straightforward, looking at that graph with the line going up and up always makes everyone happy.

Joe Thomas: Yes, it does.

Olivia has a great question here. There’s a lot of confusion in the industry between utilization rate and billable rate. All billable hours are utilized hours, but not all utilized hours are billable hours. Does our software and value realization process make that distinction?

Larry Goldberg: It does. All of these terms are used differently by different people. Not just the terms themselves, but just the math behind them, Joe. The denominator for billable utilization, you can make it super easy and just say every year is 2,080 hours. You can say subtract out company holidays from that, or you can say subtract company holiday and vacation from that. You can say my target utilization rate for consultants is 70%, or I really want to show as 100% if they’re busy, given taking out all of vacation, all of PTO, all of internal training. You take all that out, I should be at 100%. That’s my target.

So, just the math definitions there can change.

So, the question was about can the product show all of those things, or any of those things? The answer to that is yes. It’s interesting to look at them all simultaneously. But I would go back to the bit about what’s the definition? What are the key metrics/ What’s important to you? Is billable/utilization hours that are eventually billed to the customer? That’s one metric. Hours that are used to pay consultants, which could be different. It could be hours that are billable plus, hours that are credited for things like customer-facing work that’s non-billable, or internal work that’s important that we want people to get credit for. That can be productive utilization or total utilization. So, lots of different metrics there. You can see them all simultaneously. You can use them as a predictor of the health of the business. You can also use them for compensation purposes. All sorts of good things to use them for.

So, hopefully, Olivia, that answered your question.

Joe Thomas: Yeah. I think it’s important that one of the key differentiators between FinancialForce, our service automation, is that level of flexibility you laid out, Larry. The fact that we can have that utilization and calculation at a regional level, at a practice level, at even a group within a practice. You may have a practice that does work in regulated industry, and maybe part of utilization for them is going to be certification. It’s not going to be billable, but it’s going to be utilization. Your French division might have a very different work week than your North American division. FinancialForce, we can model all of that.

I think I’m going to take one last question here, and that’s from Greg. Greg asked, “Based on number of employees, what’s too small for PSA or for automation?”

Larry Goldberg: Yeah. Nothing is too small for PSA. Of course that’s the answer. But, really, I think we talked about it a little bit earlier, which is if you’ve got a handful of employees, I think PSA may be a little overkill. Right? Easy to remember who’s on staff, who’s running projects, how the projects themselves are doing. If the projects are long and complex, generally you’re using a project management tool. It’s still useful to tie together all the different bits: sales, staffing, delivery, billing, and revenue recognition. I never get enough of that. But there is an investment to be made. I think if you’re not at that breaking point yet where I’ve just lost track of where we are on so many projects, or there are just too many people, or now I have multiple offices, or I'm operating in multiple companies. There’s no individual breakpoint. I’ve seen, over my career, that you’re usually passed 50 people, sometimes it’s passed 80 people in a standalone consulting organization, or even an embedded consulting organization. But there’s a lot of benefit to be had by implementing early and anticipating growth. But if you haven't gotten past that breakpoint, it's harder to make the case.

Joe Thomas: I think that’s the key piece you said there was growth. I mean, Jimmy has 40 billable consultants and he’s got huge benefits from this now. He’s also planning on doubling again. Right? So, there you go. Putting the right infrastructure down at the right time. So, it actually enables growth rather than hindering the growth. I think that’s the piece.

Another thing might be to look at your ratio between billable consultants and operational staff supporting those people. Once that ratio starts getting more out of whack, I think that’s another opportunity for digital transformation and automation.

Larry, I think we’re coming up to the top of the hour here. So, I want to thank you. I want to thank Jimmy for hanging in with us. It’s pretty late in Singapore. Thank you for all your questions. I think we got to all of them. Sorry that I aggregated some of them there in the beginning, the first one to Larry. But hopefully you got that. If not, please respond to the email we’ll send you, and Larry or Jimmy or I will get right back to your questions.

With that, I just want to thank you, thank everyone, and thank you for your time.

Larry Goldberg: Thanks, everybody.