A few years ago, Sweden was in the headlines for experimenting with a six-hour workday.
In a post-pandemic world, service businesses need newer, simpler ways to improve profit and revenue inefficiencies. They know that they are losing money through gaps and inefficiencies. If you find your organization is failing to plug revenue leakage, struggling to leverage the benefits of data analytics, not managing resources to the full potential, and leaving legacy software in silos, you are not alone. There are solutions that can help. The solution is professional services automation (PSA) software that can help uncover these issues and provide a path to increased profits and revenues.
Here are four common inefficiencies that professional services organizations often face, and how a PSA solution can help.
Inefficiency #1: Not Managing Revenue Leakage
Every year services businesses lose millions of dollars in revenue leakages across some or all of their revenue streams. Often termed as the silent killer of profitability, revenue leakage refers to unbilled or underbilled service hours. A project delay, inefficient time tracking, priority change in scope, expectation mismatches, and delivery complexities all add up to a leaky bucket. Additionally, due to a lack of SLA, poor visibility around warranties and entitlements, operational conflicts, and overstaffing, that leaky bucket often reaches the tipping revenue point. There could be multiple out-of-contract circumstances that lead to missed revenue opportunities.
In an international survey of more than 2,000 business leaders by Boston Consulting Group, 45 percent said revenue leakage is a systemic problem facing their companies and 64 percent do not have standardized revenue optimization tools as part of their enterprise data systems. Plugging the revenue leaks requires you to decrease time spent on repetitive administrative tasks, maximize billable time, reduce delays, and produce itemized invoicing for increased transparency.
The best way to deal with revenue leakage for a services business is to leverage a professional services automation solution to manage service delivery, reduce administrative overheads, and streamline billing and invoicing.
Due to the integration of systems, different information across different systems is a thing of the past now. You can account for every piece of work done and invoice accurately — no oversight on invoicing, data mismatch, or underreporting. With accurate data and financial consolidation, you can identify sources of revenue leakages and prevent any rework that may come from errors. You’ll be able to manage cash flows with a clear view of WIP, billed, available-to-bill, and outstanding amounts. And you can make sure contract terms get modeled into rates and bill plans.
Inefficiency #2: Not Leveraging Real-time Data for Proactive Decisions
Real-time data helps companies know what’s going on at a glance. But loose spreadsheets and disconnected systems can’t help companies manage their live inventories. When insights are hidden in mountainous raw data, you are exhausting the data and missing out on opportunities. How can your data then (and the intelligence that comes with it) accelerate your growth and profits? The need of the hour is to move from a siloed and retrospective approach to an insightful, unified decision-making approach. An approach that comes with a real-time holistic business view based on 100 percent accurate data.
Infused with advanced analytics and AI, our self-driving PSA, Polaris, can help professional services organizations reap major rewards by tapping into their data. It has the ability to forecast to understand trends and predict resources, hours, and margins. Chances are, every practice and process is holding loads of mystery data — from transactions, time and expense, accounting, resources, and more. With a dashboard, built-in templates, and visualization, PSAs for enterprises present metrics the way your business needs to help you make decisions in-the-now.
Inefficiency #3: Not Managing Resource Utilization
The winning moves at professional services organizations come from the optimized utilization of resources. Optimization of resource utilization and profitability are two sides of the same coin. While reduced billable hours directly affect immediate profitability, overworked employees without skilling, investment, and proper allocation lead to burnout and attrition, which leads to long-term issues with revenues and growth. The sweet spot at the heart of utilization is between time, resources, projects, and profits.
Software like Polaris helps you get that right balance with competing priorities. Are you on top of billable utilization? Do you know how to measure productivity and identify revenue inefficiencies? With Polaris, you get the accurate project and task “beats” that capture billable hours and give real-time estimates vs. actuals. You’ll be able to understand skills and manage resource allocations with confidence due to intelligent recommendations. Get instant updates on billable hours to know if billable targets are being met and help with improving the overall resource utilization. Analyze and plan future resource needs with full visibility into project pipeline, resource, and skill needs by leveraging historical information.
Inefficiency #4: Not Optimizing Pricing and Resource Rates
Imagine the helplessness among resource and project managers when they wrestle with a mess of independent, non-integrated resources that don’t “speak” to each other. Far too often resources are assigned based on an unrealistic or tight deadline. Often, workers are stationed in low-value projects instead of high-value strategic ones with more ROI.
Resource rates are measured on the economic value of contribution provided by a resource. A key part of project planning and forecasting involves optimizing them to fit in the right projects. But often, resource capacity planning is poor and their utilization is badly documented. This results in a massive mismatch between the right job and the right resource. It also spills over into eroding profit and unhappy customers.
An intelligent project and resource management tool like Polaris helps services businesses model revenue based on 100 percent of all costs associated with the project – direct or indirect, and even business costs. It also takes into account other variables that directly impact revenues, like utilization, margins, etc., and helps determine intelligent rates for all project resources that can be leveraged to set up bids that ensure profitability right from the start.
If there were ever a time to knock out inefficiencies, it is now! Download our datasheet to deep dive into the world’s first self-driving PSA.