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With the rising complexities of automation and remote working, the term “project management” has certainly come to encompass a lot of things, making it harder to find the right definition. This is particularly true if you are operating in the professional services space. So why are we trying to define project management? The simple answer is, unless you know what project management means to you, you will not find the right tool for your project managers.
There are broadly three types of tools that fit under the project management umbrella: task management tools, project management (PM) tools, and professional services automation (PSA) software. While task management is easily understood, managers in the professional services industry find it harder to decide between PM and PSA tools.
To understand what you need, here are some of the areas of difference between the two types of tools.
Similarities Between Project Management Software and Professional Services Automation Software
As both types of solutions ultimately aim to make life easier for project managers, project management software and PSA tools do share a range of features. Here is a list of features that you can expect to find in both types of tools.
Project Management Capabilities
Any good project management or PSA tool should make it easier for you to manage project delivery with real-time tracking of project status and other metrics. You will have the ability to set up multi-level client projects and define milestones for easy management. It is also possible to push similar projects into programs or practices to gain full insight into performance and profitability across the board.
Resource Management Capabilities
Successful project management requires proper management of resources. With that in mind, both project management tools and PSA offer several features to simplify it. For example, you can get a dashboard to view billable hours by resource or a calendar to track time off across the team. Some tools offer the ability to quickly assign resources as per the role needed for a particular project or task.
Time Tracking Capabilities
Project management and PSA software can offer configurable time tracking capabilities to help capture time and easily associate it with projects and activities. You can even get the ability to track billable and non-billable hours and use the data to drive billing and invoicing. These tools will offer flexible timesheets to help you capture the exact kind of time data you need for your specific business needs.
Data Analytics Capabilities
Ultimately, a project management tool is meant to help you provide visibility into key information and metrics to ensure successful project execution. You can use these tools to generate reports and gain real-time visibility into projects, clients, resources, and billing. There can even be dashboards to help visualize all the data. You can use these reports and metrics to drive data-based decisions proactively.
Billing and Costing
Considering the importance of accurate client billing, it is certainly a good idea to invest in a tool to reinforce that accuracy. This can leverage time tracking to drive the billing process, ensuring that every minute of billable time is accounted for in the invoice. These tools will also have options to support flexible billing options. While some PM and PSA tools can offer an inbuilt option for invoicing, others can be integrated with a point solution for billing, as the need may be. They can also help in budgets vs. actuals tracking to manage performance and optimize costs. It is also possible to use historical data for better cost estimation.
How PSA Goes Beyond Project Management Software
Project management tools put emphasis on the projects and managing them. However, PSA tools go beyond by supporting revenue generation. PSA tools offer a solution to end-to-end service delivery by bringing together data from across the organization. You get better visibility across your service delivery pipeline, enabling you to make decisions on the fly for better revenue increases. Here are some of the ways that PSA tools go beyond project management software.
More Comprehensive Project Management
Professional services automation software does not just help with the management and delivery of projects. A critical part of PSA solutions is their ability to manage the profitability of your projects from their inception. To do that, the PSA tool will bring together data from various sources such as your resources to give a complete and comprehensive picture of all your projects. You can drill down into the granular level of any project to know exactly how it is performing, how profitable it is, and if there are any potential issues that can affect it. You will not get the same breadth and complexity in a PM tool.
Smarter Resource Management
PSA solutions provide comprehensive resource management capabilities. They allow managers to easily view allocation levels of all resources to maximize utilization, which they can track through dynamic charts. It is also possible to perform capacity planning by generating resource forecast reports to gain visibility into future needs and availability. This data can also be used to drive hiring decisions. Some PSA tools can also leverage artificial intelligence to power a resource recommendation engine. This ensures that you can find the best resource for any task across the entire organization in just a few clicks.
Intelligent Time Tracking
While project management tools capture time data, it can be difficult to generate actionable insights from it. This is where you may find a PSA solution to be a better option. A PSA tool can deliver a more in-depth view of time across the entire organization. For example, you can get a detailed time-off calendar view of your entire team so that you know exactly which resources are available to take on future projects.
Consistent Project Planning
As their name suggests, project management tools really shine once you need to manage the project but not so much for project planning. Unlike project management tools, PSA solutions are built to oversee the entire project lifecycle. This allows for greater flexibility and control over the project planning process. You can leverage historical information to understand potential timelines, resource needs, and costs for every project in the pipeline. Easily define key items needed while planning so that you can hit the ground running. With PSA tools, it becomes easier to govern all projects at a global level while supporting local execution needs. This leads to the consistent execution of projects while supporting profitability and business goals.
AI-powered Data Analysis
Professional services automation tools leverage AI to drive data analytics. AI-powered analytics gives you real-time actionable insights for a truly intelligent decision-making process. You gain a live holistic view of your entire organization across projects and clients, making it easier to develop forecasts for your business.
More Accurate Billing and Costing
For all the capabilities provided by PM tools, firms will still lack complete visibility into their financials. PSA tools can define and manage all financial metrics through comprehensive project accounting capabilities. They are powerful tools capable of giving managers full visibility into project health and cash flows. Some PSA tools can also offer options for complex financial modeling, helping you discover revenue opportunities and stimulate scenarios for future bids.
How Do I Choose Between Project Management Software and PSA?
The primary function of project management tools is to support project delivery. They are incapable of providing support throughout the project lifecycle. While these tools bring forward a lot of data, some key pieces such as contracts, scope, and forecasts are often missing. This can be an issue for professional services firms who need a well-rounded view of all projects from start to finish.
That is why many professional services firms are increasingly looking towards PSA solutions. PSA tools provide the ability to holistically manage all projects from inception to completion. Some even allow firms to start planning as soon as a potential project enters the pipeline, minimizing the effort needed once those projects are confirmed.
However, the biggest advantage of a PSA tool is its ability to connect and bring together data from multiple sources across the organization. This eliminates data silos and a lack of cohesion among departments during the project lifecycle. These tools do incorporate a range of capabilities, but their key functions include project management, resource management, and time management. This allows them to tackle three critical issues common to services firms.
- Departmental data silos that prevent smooth collaboration
- Inaccurate forecasts that complicate future planning and growth planning
- Time and labor-intensive billing processes that stifle cash flow and revenue generation
Through the various functions and options that PSA tools provide, they can deliver the following benefits:
- Offer a single unified view of the entire organization
- Manage and fulfill project milestones and schedules
- Optimize resource utilization
- Streamline accurate time tracking to drive billing
- Develop financial models for revenue improvement
- Better decision making
- Reduce administrative work
- Improve overall operational efficiency
While project management tools have their uses, any services organization that wants to put their service delivery at the forefront of their business must opt for professional services automation. With it, they can address many of their major concerns while driving operational efficiency and growth.
For even more help with managing your projects, our ebook will tell you how to gain operational efficiency in the professional services industry.