Professional services engagements are often lengthy and multifaceted projects, requiring different skill sets, with multiple milestones, performance goals, geographic locations, and complex billing. Without a way to analyze and manage all of these details, a professional services firm can find itself struggling to maintain profitability.
Up until recently, most services companies tried to manage their projects with a collection of different software tools—billing and accounting, project management, HR, CRM—none of which could easily share information with the others. Project managers had to shift between different applications and spreadsheets. This usually resulted in wasted time spent re-entering data from one application to another, lost opportunities, unpaid work in progress, and underused resources.
It is common for professional services companies to be plagued with a "quagmire" of disparate solutions, explained George Lawrie, vice president and principal analyst at Forrester Research. Lawrie spoke at a recent webcast: Supercharging Services Profitability, where he discussed the need for professional services automation.
Lawrie listed a number of business headaches that can result from having separate enterprise applications and project management systems. They include:
- More manual administration
- Lack of a single view of project data
- Inaccurate, outdated or duplicated data
- Inability to adjust resources and capacity to market conditions
- Risk of non-compliance in revenue recognition
John Hossack, senior partner at Phoenix Ariz.-based consulting company Cardinal Path, struggled with how to standardize the disparate applications used by Cardinal Path's project managers. The company had been formed by the merger of three smaller firms, resulting in a large collection of accounting, CRM, ERP and project management programs, including Autotask, Basecamp, Microsoft Dynamics GP (Great Plains), Project Insight, Salesforce.com, and QuickBooks. Employees often had to re-enter the same data into multiple applications. Cardinal Path has contractors as well as staff consultants who travel around the globe on projects and need access to corporate applications and data.
Cardinal Path decided to migrate to NetSuite's cloud-based Services Resource Planning (SRP) and NetSuite OpenAir Professional Services Automation (PSA). The move has provided the company with a single view of project-related data and makes it possible for employees to access their applications from any location—an important advantage as the company operates out of four offices in Phoenix, Chicago, Vancouver and Ottawa.
According to research by Forrester's Lawrie, companies that have moved to professional services automation software have seen benefits ranging from improved visibility of data (52%) and reduced administration (28%) to increased customer satisfaction (12%) and more accurate forecasting (12%). Other benefits include:
- 23% increase in annual revenue per employee
- 24% increase in average revenue per project
- 18% increase in bid-to-win ratios
- 130% increase in EBITDA (earnings before income tax, depreciation, amortization)
For Cardinal Path, the chief benefit has been a nearly 100% annual increase in growth, according to Hossack. Much of that comes from the ability to track resources, utilization, and project needs. Matching up skill sets—such as languages—to potential opportunities has also fueled growth.
“For instance, we decided to take an engagement in Tokyo based on the finding that we had someone who could do it," Hossack said. “The need for a PSA system isn't based on the size of the company, but on complexity. We have multiple tax issues, currencies, languages, partners, and client businesses around the world. You can be small but still have to deal with that complexity.”
- Ed Marshall, General Manager for Services, NetSuite
Posted on Tue, December 3, 2013
by NetSuite filed under