Unforeseen market dynamics, the rise of disruptive technologies, new business models, and global competition are transforming the business landscape, especially large services organizations. As revenue growth slows down, professional services organizations see a growing trend for fixed-bid projects leading to price pressures. There is a higher risk/reward profile associated with fixed-bid projects as the customer is buying a specified set of services for a fixed price. Therefore, now more than ever, it has become critical for professional services firms to effectively manage and allocate resources, accurately bid and manage projects, and modernize their processes.
To help large professional services firms be ready, successful, and stay competitive, here are the five major challenges that professional services firms face and how they can overcome them:
1. Increased Competition:
According to the latest report by Aberdeen, “the top project management pressure that stands out for professional service firms is increased competition,” as confirmed by 36% of the firms surveyed in the report. It is not a hidden fact that digitization is driving changes in every single industry. Companies of all sizes are quickly transforming the way they do business, primarily to compete with the new players entering the marketplace. Additionally, rather than staying within their traditional markets, many enterprises are also foraying into new territories by revising their business strategies. As the market expands and enterprises increase the range of their offerings, customers’ expectations also see a rise.
There is continuous pressure to add new services due to the disruption caused by technological advancements and increasing client demands. Businesses need to become more flexible and have better client satisfaction strategies in place.
Solution# To achieve superiority, professional service firms need to have and implement a unified time tracking platform to support all the revenue-generating projects and track time spent across all of them. The platform should be accessible globally, a configurable comprehensive reporting engine that provides real-time visibility and control over critical metrics like WIP, utilization, margins, etc., as per an organization’s needs. Business leaders should be able to leverage these reports and deep dive into different categories like timesheets, projects, clients, time off, expenses, costs, billing, and more. The platform should also provide powerful and dynamic charts and dashboards to get the big picture.
2. Inefficient Use of Project Resources
Projects and resources are usually spread around the globe across different levels in professional services organizations. Companies put considerable effort into tracking and effectively managing such resources. However, more often than not, lack of visibility and inefficient resource management causes projects to underperform, with disastrous consequences. The impact may be well beyond delivery delays, execution quality issues, and client dissatisfaction and lead to loss of revenue and profitability.
For this reason, billable utilization forms one of the crucial KPIs for professional services firms to track employee productivity. According to Aberdeen, out of the professional services firms surveyed, 25% have confirmed that they need to manage their project resources more effectively.
Another challenge around utilization is the amount of time within which an employee can be transitioned from a new hire to a profitable and productive resource. Critical hiring decisions need to be made with accurate, up-to-date resource utilization and skills data. As such, reducing this timeframe is the key to boosting revenue and profitability.
Unfortunately, many professional services organizations still manage their resources using spreadsheets by manually selecting the available resources with the open projects. While the spreadsheet may seem like an easy solution for a ten-person professional services organization, it is ineffective when we are talking about large services organizations with over 10,000+ employees. In addition, with this approach, firms can lose substantial revenue opportunities due to a lack of real-time insights into their most important assets—their resources. It’s very important to have real-time reporting and analytics to allocate resources in the most effective and efficient manner.
Solution# Instead of operating in a fragmented ecosystem, professional services firms are implementing a digital ecosystem transformation and unifying all their time tracking into a single platform. With a project time tracking platform organizations can increase utilization rates, manage projects and make schedules more effective. They are also able to free up resources for working on high-value billable projects/tasks. It allows for automation and streamlining of tasks such as timesheets, invoicing, forecasting, and assigning resources. Instead of navigating various tools, spreadsheets, manual processes, and disparate IT systems, the time tracking solution will be a single source of truth for all the vital information.
A project time tracking software will also enable the employee and manager to systematize the processes and increase employee satisfaction and productivity by having easy-to-use systems and tools. With an advanced time tracking platform in place, employees will take a more active methodology to work on new projects/tasks more quickly, accessing relevant knowledge and information, and expanding their skillset. Managers can also set productivity targets for their employees and ensure that all resources are able to maximize their billable time across the projects.
A modern cloud-based solution will also ensure that leaders and employees have access to the same real-time data on resource availability and project priority, thus allowing them to make ideal decisions for business growth. Business leaders will gain visibility into demand and opportunities, work-in-progress, and backlog data to monitor the business by assigning resources and running projects on an obvious timeline.
3. Increased Variability of Costs Through the Life of a Project
Failing to accurately track time and expenses significantly impacts professional services business and leads to failures. Sound financial management of a project lifecycle, from project time tracking to project delivery and invoicing, is critical to keep track of how a project is performing compared to the original bid and the allocated budget. Professional service firms need to have a customized business model in place that delivers accurate billing of the work done for each client by project resources to generate contagious profitability. It is very important to do real-time tracking of employee time for every client. Even for businesses that offer an overall fixed fee for a particular project and do not use billable hours, having the knowledge of the amount of time taken for each client is very crucial for effective budgeting and decision-making.
Companies that work without a strategic business plan do not get insights into their revenues and costs. And because of this inconsistent and incomplete time and expense data scattered across various spreadsheets and systems, professional services firms are dealing with revenue leakage and reduced profits margins.
Whether you are an organization with 5000 employees (equating to 10,400,000 project hours) or 50,000 employees (equating to a massive 104,000,000 project hours) driving higher project profitability is key for making a positive impact on the business and winning new business.
Solution# Having a configurable project time tracking in place that will enable real-time visibility and control over project status, margins, and resource usage will help services organizations better manage their project invoicing, cash flows, pipeline requirements, and profitability. Project managers, resources, will gain complete real-time visibility into progress, utilization, and profitability metrics to make proactive decisions, and easily capture all billable and nonbillable time by project and clients from anywhere, anytime. A project time tracking platform that is customized and designed to integrate into the core business processes will give organizations a clear view of how and what impacts an organization’s ability to succeed and grow. AI-enabled timesheets will turn time tracking into a conversation with our AI-based chatbot and take project time tracking to the next level.
Automated project time tracking will also track time using artificial intelligence, making it simpler for employees and leaders to achieve the billable target and maximize billable time.
4. Difficulty Managing Changing Customer Expectations
A constant flux in the services economy, increasing agile business operations, and rapid digital innovations are causing a shift in customer expectations. With the rise in fixed bid projects, professional services firms need to ensure that they are delivering projects on time and on budget. Rapid technological innovations have led professional service firms to reevaluate how they track employee and project time. Many firms utilize multiple solutions across teams to track completed and pending tasks, making it difficult to get a clear and accurate picture of the work done for a client. Due to shifting customer expectations, companies are looking for a platform that can ensure that 100% of the project time is captured and maximize revenue and project margins.
In addition, they should be able to configure the solution according to the business needs. Allowing configuration of multiple use cases across the business, using different timesheet templates will ensure project time tracking needs are met for the entire large services organization. Business leaders can leverage cloud, mobile, and artificial intelligence technologies and gain real-time project visibility and a single source of truth for their project time.
Solution# The best way to maximize revenue and project margins is with a project time tracking platform. The platform will put everything that a services firm should know into a view that is easy to use, convenient to access, provide real-time insights, and everything else business leaders need to know to work efficiently.
The entire process of tracking time and project data must be integrated with a cloud-based agile platform powered by artificial intelligence and machine learning. Such a cloud-based platform should be quick to install, easy to use, and available anywhere and anytime, providing flexibility to all employees. It should also provide insights that will be useful to have a complete picture of the business.
5. Volatile Business Conditions
Having uncertainty and unpredictability in future goals is never good for the business. Without having real-time insights into the projects, business leaders can’t make effective decisions that can turn the tide in the favor of the business. Volatile business conditions can lead to several unprecedented events, including decreased profits, cost-cutting measures, mergers and acquisitions, alterations in leadership, and so on.
Manually tracking project progress and time data is not only error-prone, but it also causes significant time lag, which business leaders can’t afford while making critical business decisions. The companies that quickly act on these volatile conditions can develop an advantage over their competitors and transform their business by leveraging real-time data and automation in the decision-making process. All this is only possible if a business has a single source of truth for project time data that can be quickly implemented and scaled up.
Solution# Cloud adoption for time tracking has significantly enabled leaders to take advantage of services such as business intelligence and automation to reduce manual intervention. Thanks to cloud solutions, leaders can apply modern strategies and change how their businesses operate to rise to any unforeseen challenges.
In addition, a cloud-based solution can be implemented quickly in any new region without the upfront expenditure associated with a traditional setup. The cloud-based automated platform will also ensure effective utilization of resources across locations and projects and identify gaps that could lead to resource crunch or delays. Apart from increasing reliability, AI-empowered cloud and mobile technologies can provide better data-driven insights and predict outcomes based on future requirements.
Unleash Growth and Value With Modern Cloud Technologies
The professional services industry is different from other industries. Systems and strategies that work in traditional businesses often fail in the professional service industry. To overcome the challenges and stay at the top of the game, professional service firms need to invest in digital transformation and embrace innovative cloud technologies. It’s time to transition from the days of multiple systems, manual entry, and outdated processes to an integrated, automated, efficient, collaborative, and value-oriented business model.
Aberdeen also states that “The Best-in-Class perform significantly better than All Others in key business metrics, and cloud adoption is one of the technology differentiators that companies would be wise to follow to reach Best-in-Class levels of success.” The use of modern tools will give business leaders control over the project, help maintain a competitive edge, reduce risks, and gain real-time visibility into project metrics.
Leverage the technology and market intelligence to get visibility and deeper insights across the entire project lifecycle to optimize business processes. The implementation of the right technologies will fix the disconnect systems and give your business a powerful ecosystem.
Do you want to understand more about how you can confront the challenges and drive higher project profitability for your organization? Download the latest Aberdeen report and learn how other large services organizations are gaining a competitive advantage with a project time tracking platform.