IMGCAP(1)][IMGCAP(2)]You are a partner at a midsized audit services firm. As you speak with your current clients and prospects to project your bookings over the next two quarters, you realize that you will need to recruit additional consultants to deliver the projected business.
Moreover, you plan to add new service offerings in risk and compliance to round out your service portfolio, which will further add to your growth. You are pleased with your business forecast, but you are also worried. You have manual systems and spreadsheets in place across your firm, which to date have been adequate for running the business. But you are concerned that your services business has reached an inflection point where these manual systems will impede your growth. Why?
To understand this further, let’s look at key business drivers at your services firm and the impact of manual systems on them.
Resource Utilization
Optimizing the resource utilization rate is a key business driver for any professional services company. Every small increase in the utilization rate drops directly to the bottom line. In order to maximize your utilization rate, you must have complete visibility into supply (which consultant is available, when they are available and what skills they have) and demand (which new projects are starting, when are they starting and what skills are needed), so that your resource managers can optimize assignments to reduce a consultant’s bench time.
When your firm was small, it was possible to manage such resources using a spreadsheet or even a white board. As your firm hires more consultants with different skill sets and opens new office locations, such manual methods are no longer effective. Too many things can fall through the cracks, resulting in lower resource utilization. Accurate and current visibility into consultant skills/availability and requirements of all upcoming and current projects across your firm is the key to optimizing resource utilization.
Accurate and Timely Invoicing
Any professional services firm relies on cash flow for business viability. Hence you need to be able to submit accurate invoices in a timely manner to get paid on time. When your firm was small, it could create these invoices manually. However, as your firm grows, you will need to staff multiple projects with different consultants, with varying billing rates. Some of these consultants may work full-time on a project, while others may spend only a few hours a week on a given project. In addition, you may have associated expenses of varying kinds—some billable and others not.
Finally, some projects may be billable as time and material, and others may be billed differently. Such diversity in bill rates, time spent, billable/non-billable expenses and billing methods makes the invoicing process complex and can cause invoicing delays, if done manually, affecting cash flow. In addition, if your growing firm will still rely on spreadsheets, emails and phone calls to collect the information needed to invoice your clients, errors can often occur, further delaying payments. So as your firm grows, it will require a streamlined method to capture time and expense data and then use that information to create error-free invoices, which can be sent in a timely manner to your clients.
On-time and On-budget Project Delivery
The ability to deliver projects on time and on schedule is a critical success factor for any professional services firm. Your firm’s reputation and future revenue stream depend on it. As your firm grows and expands its service portfolio, it will be staffing projects with consultants who may be based in different locations. Some consultants may join a team for only a short time frame, or in the middle of a project due to a specific expertise they bring to the table. Your firm may also staff some projects that combine your consultants with external contractors or third-party consultants.
Spreadsheets or tools such as Microsoft Project that have been used to manage such projects may no longer work in such a distributed environment, affecting your firm’s ability to deliver projects on time and on budget. In order to compensate for such complexities, you may find your business development managers increasing the estimated cost and schedule when bidding for a new project (affecting your competitiveness), or eating the overages (affecting profitability), or surprising the client with additional costs and delays (affecting your firm’s reputation). None of these approaches is desirable. What your firm needs is a collaborative project management capability that allows team members to plan, execute and track the deliverables of their respective projects and report progress to all stakeholders, so that delivery management is tightened and surprises are eliminated.
Current Database of Consultant Skills
As your firm grows, you begin to work with several consultants (internal and partners) with varying skill sets. It becomes challenging for your resource managers to keep track of each consultant’s current skills (including recent skills acquired from a training class or a recent project) to ensure that the consultants are always assigned to the most relevant projects based on their expertise and knowledge. Using such information to optimize assignments not only ensures project success (and client satisfaction), but it also increases employee satisfaction and retention.
In addition, such information is needed for your resource managers (or partners) to easily and accurately match the current skills base against future needs to perform workforce planning. Manual methods such as using spreadsheets to track consultants’ skills are simply inadequate and a spreadsheet at a growing firm like yours can quickly become outdated and cannot be easily shared with other locations. Your firm must develop the capability to maintain a skills and talent database that the consultants can update themselves, so the information is always complete and current. In addition, your firm should be able to configure this database to allow resource managers at various offices to view such information, in order to most effectively staff their projects.
Effective Sales and Marketing Practices
Good sales and marketing execution is a key success factor for a growing services firm. As your firm grows and adds new partners and consultants to its roster, it must continue to excel in three activities: grow its pipeline to get an opportunity to participate in an increasing number of sales opportunities; win business to increase bookings and preserve (or even improve) resource utilization; and implement consistency in all interactions with future clients across all offices.
When your firm was small, a handful of partners or managers were perhaps responsible for all of the sales and marketing activities. As a result, you could easily manage your firm’s sales and marketing processes with manual methods for generating new business. However, as your firm expands and opens new offices, it must develop systematic processes to target the right customers, effectively marketing to them, and improve the effectiveness of the lead-to-close process. This ensures that your firm is maintaining its effectiveness in generating new business, as well as maintaining consistency in client interactions.
Visibility into Key Business and Operational Insights
Partners and executives at your firm must have ongoing visibility into key metrics such as project profitability, customer profitability, resource utilization, projects behind schedule, bookings forecast summary and resource gap projections, so that they can proactively react to potential issues, as well as plan and manage the business. When your firm was small, such information could be easily collected and tracked on spreadsheets.
However, as it grows, its operational complexity increases and key metrics, such as the actual cost of a project, can become difficult to track accurately using manual methods. A technology that enables integrated reporting and analytics, so that the stakeholders have an ability to create, measure and track key operational metrics, is an essential capability at a growing professional services firm like yours.
Enabling Technology that Does Not Consume Too Many Resources
In your growing services firm, your partners and managers are extremely focused on building and growing client relationships and managing deliverables to commitments. Additionally, they must maintain a razor sharp focus on cash flow because the right consultants need to be hired and trained in advance of starting a billable project. Anything that distracts them from these activities can hurt the business. As a result, your firm would prefer technologies that are quick to deploy and affordable.
Based on these business drivers and the related capabilities that a growing professional services firm such as yours must build to ensure ongoing growth, the time may be right to leave the manual processes behind and deploy a new business information system. Manual methods using spreadsheets and email will be inadequate and inefficient.
System Selection Options
There are various options a firm must consider when evaluating and selecting systems. Your services firm can certainly choose to deploy a traditional, on-premise enterprise system that is specifically designed for mid-sized services companies. While such a system would meet the requirements listed above, a Software as a Service-based enterprise system is an attractive alternative.
A SaaS-based delivery model removes all of the traditional investment barriers to acquiring enterprise-class software capabilities and enables services companies to acquire the same software infrastructure previously only available to their larger competitors, thereby leveling their technology advantages. A SaaS based system makes tremendous business sense if the services firm meets one or more of the following criteria:
• It is currently using a combination of manual processes, spreadsheets, and basic off-the-shelf applications, but has a limited budget to invest in systems to help transition from a small business to a midsized firm
• It participates in growing market segments and hence needs systems that are highly configurable to map to evolving business processes. Continuously customizing an on-premise system would be expensive and time consuming, slowing down the firm’s ability to respond to the market.
• It is growing quickly and hiring new consultants, business development executives and resource managers. Hence, it wants the flexibility to add users as and when it needs to, without the IT infrastructure becoming a bottleneck in its ability to scale rapidly
We also recommend against buying a collection of point SaaS solutions, such as a time and expense system, an invoicing system, a skills database, or a sales automation system. These point solutions require you to invest in expensive integration (and ongoing testing of the integration as each software is upgraded) if you plan to integrate these systems together.
Alternatively, they can introduce errors if you plan to operate these systems in a disconnected manner and have to manually copy data from one system to another. Either way, they end up costing you more.
As your professional services firm grows, it must move beyond manual processes, spreadsheets, or disconnected point solutions, in order to compete more effectively in the marketplace. Despite the growth, you need to keep your utilization rates up, invoice accurately, meet delivery timelines, and stay effective in your sales and marketing activities. A SaaS-based integrated enterprise solution will allow you to meet these objectives without the need to make upfront investments in hardware or software (and preserve cash flow), as well as implement them more quickly than a premise-based system.
David Sweetman is senior director of solutions marketing for
