There was once a time when managing a project at work was fairly straightforward.
The professional services space is a different world than it was just a few years ago, in part due to a dramatic increase in customer expectations. Now more than ever, customers require more visibility into projects, ask for faster quoting and scheduling, and expect billing statements to include a detailed analysis of what they’re paying for. This coupled with a shift in preference to fixed-bid pricing for projects means that professional services firms need to reevaluate the way they do business, and ensure that their workflow is optimized with these new expectations in mind.
In a joint webinar with TSIA’s VP of Research, Technology, and Social John Ragsdale, and Replicon’s VP of Product Marketing Vinita Venkatesh, we discuss five areas to optimize your professional services workflow to ensure profitability in accordance with emerging drivers for change for the professional services industry. Below, we outline these five areas and isolate specific questions your firm should be able to answer to both exceed customer expectations and ensure maximum profitability:
Want more detail? Download the entire 5 Areas to Optimize Your PS Workflow to Ensure Profitability webinar for a more in-depth look into PS workflow.
1. Do you understand your profitability at a granular level?
Any competent executive has a basic understanding of their firm’s profitability in terms of their financial bottom line, but this focus on high-level understanding often comes at the expense of crucial granular detail. Consider — does your organization understand:
- Profitability by client and project?
- Specific projects your teams are good at?
- Who your best and worst clients are?
- Who you should approach next for projects?
- What the right price is for your services?
This critical granular information should be easily accessible across teams, and at the forefront of your business decisions. You do this by:
- Ensuring you have metrics for every step of every activity, and are fully able to measure and capture information at every level.
- Ensuring that data captured in disparate systems doesn’t remain siloed.
- Using this information to analyze your workflow and adjust accordingly
- Capturing historical data to help you plan for the future
2. Do you effectively navigate the transitions between sales, delivery, and finance teams?
Your sales, delivery, and finance teams all have interdependent functions, and yet far too often these units seem to be working in silos, and failing to communicate effectively and proactively. Different teams approach the same data with different needs and perspectives, so your firm needs to make sure that the transition of data and expectations from start to finish is managed effectively. Myriad different issues can crop up — things can change at a moment’s notice, data can be misinterpreted, and so on — which makes it paramount that your firm carefully trace all information during these periods of transition.
Not only should proposal development follow a clear and consistent structure, but management should be incredibly disciplined when it comes to documenting the entire workflow. You should be able to clearly see where and when elements of a project got escalated, and — critically — why.
3. Are your consultants empowered?
Ensuring that no resource is overworked or underutilized (both potential causes of attrition) might have more of an effect on your financial bottom line than you think. SPI’s Professional Services Benchmark for 2017 found that those firms that reported little to no annual employee attrition (25 percent or under) experienced anywhere from 9 to 10 percent annual revenue growth, while those that reported over 25 percent employee attrition experienced only 0.2 percent revenue growth. Consequently, proper resource utilization seems key to maximizing your firm’s profitability. Ask yourself:
- Do you track specific skills by individual and manage resources accordingly?
- Do you prioritize critical resources on high-value projects?
- Is your information unified to the point where teams can look at and interpret client and project data in the same way?
In the professional services space, your consultants are by far your greatest asset, so making their productivity a priority reaps major benefits for your firm’s profitability as a whole.
Struggling with project overrun? Download our Don’t Let Scope Creep Derail Your Projects infographic to learn more.
4. Are your billing contracts delayed?
Also identified by SPI’s benchmark was a likely correlation between on-time project delivery, and the amount of billable work that gets written off. While firms with 85 percent on-time project delivery reported no written-off billable work, those with only 55 percent on-time project delivery reportedly wrote off over 10 percent of all billable. Financially, this is no insignificant number — it’s clear that delayed project delivery and billing contracts affects bottom-line profitability as well as your budgets-to-actuals.
5. How stable is your cash flow?
Ask yourself — Is your cash flow predictable? How often do you see surprises on projects that were fine just a day ago? When we lack that end-to-end granular detail into our projects and workflow, it can be difficult to pinpoint exactly where, when, and why we encounter cash flow issues. By capturing information at the ground-level, you allow yourself the ability to tweak and optimize your cash flow exactly where you need it — a process that requires both granular data, and real-time visibility into this data. Not only should you arm yourself with the specific information you need, you should be able to act on it in real time.