[IMGCAP(1)]Accounting firms that want consistently profitable results need a clear view of job status and the anticipated results, and the information needs to be easily accessible for all levels of the organization.
Visibility that’s both wide and deep gives managers at all levels the ability to evaluate the current status, measure the likelihood of profitable outcomes and identify necessary adjustments needed along the way.
Improving visibility across work, resources, clients and financial performance can bring your firm better client outcomes and higher profitability. The kind of visibility you need comes in three ways: a deeper look into past work, a wider view of work-in-progress and better predictability of future engagements.
What Has Happened—A Look to Past Work
Planning a profitable engagement means looking at successful historical work and using the approaches of past engagements to guide the scope, budget and resources of a future engagement. But history is often overlooked, typically because the information that planners might use isn’t easily accessible.
Information about the scope of work, budget, tasks involved or resources selected is usually stored in different places. Pulling this information together gives your firm the discipline of knowing what has worked well and why it was successful. In short, having the right information in place can lead to similarly profitable future outcomes.
What is Happening Now—Current Project Performance
Since all plans are subject to change, firms need to understand how inevitable changes in scope, resources or duration can impact expected results. However, work-in-progress data is often detached from financial data, which means the anticipated profit margin stays hidden, and forces engagement managers to make uninformed or late decisions.
Work-in-progress must be visible and current so managers can see the status at any time. First, as work is delivered, busy staff members must still record time promptly and accurately so stakeholders at all levels can see the current progress or identify a billing event. In addition, by setting and exposing key performance indicators, the firm can see how the engagement’s anticipated results are tracking against expectations.
With an early warning of potential budget overages, “scope creep” or non-billable time, managers can make the necessary adjustments to keep the margin within expectations. Of course, expectations must be realistic and achievable in order for work to be profitable. According to a Villanova University study, when expectations such as deadlines or resource limits are set outside of reality, 61 percent of projects miss their deadlines, go over budget and fail to achieve their deliverables.
To ensure work is profitable, infuse current, constantly-updated KPIs into work-in-progress, and make those visible to all levels involved—resources, managers and senior leadership. The most advanced firms can trigger alerts when work starts to miss expectations. Finally, seek to streamline administrative tasks like time capture and approval to free resources from cumbersome non-billable work.
What Will Happen—Forecasting for the Future
Planned activities significantly affect capacity—the firm’s ability to undertake and profitably deliver new business. Firms often find themselves in a reactionary mode as new business is captured; a “win” for the firm can sometimes result in a scramble to identify and assign resources. One way to avoid this is to make the pipeline visible across the organization so resource managers can see the capacity and skill needed for upcoming work.
The savviest approaches can actually place future work on the resource plan, and even reserve the necessary capacity based on the likelihood of winning the work. Firms can also identify opportunities for growth and new business with a more complete view of their client relationships that includes everything they’ve done or could be doing for a client. A deeper view comes by having an easy way to identify similar clients or common deliverables and expose the likelihood that the work delivered for one is perhaps a good fit for another. Imagine the impact on your business development team by having this kind of insight.
Visibility: Past, Present and Future
In today’s competitive environment, arming your project managers with an integrated, real-time view into firm-wide, project-specific performance gives them the tools needed to deliver profitable business. This kind of easily accessible, deep visibility into past, present and future engagements will not only improve your financial performance but will ensure client satisfaction as well.
Claus Thorsgaard is Deltek’s EVP and general manager—professional services. He is responsible for managing sales and marketing for Deltek Vision, Deltek Maconomy and Deltek People Planner, enterprise software solutions that power the businesses of accounting firms and other professional services firms around the world.