In recent years, there has been an increase in the popularity of professional services automation software or PSA software. Much of this popularity can be attributed to the way it effectively helps deal with the unique challenges that the professional services industry faces.
After all, unlike in other industries, these organizations primarily rely on the specialized skills and knowledge of their people to render services to clients, often requiring their employees to hold specific professional certifications or licenses.
At the same time, these businesses are greatly affected by client expectations.
To run a successful professional services organization (PSO), it’s vital to manage not only these expectations but also the people that form the core of the business.
Traditionally, PSOs have had to depend on spreadsheets, paper documents, and manual processes for running their operations. However, the services industry has been beset with complex challenges which are further complicated by these traditional manual methods.
Clients are increasingly looking for specialized skills and knowledge with faster turnarounds at lower prices. At the same time, employees are looking to work remotely or on a hybrid basis, adding to the difficulty of delivering services.
As a result, while these organizations are looking at a need for their services, they’re unable to streamline operations and generate profitability today. They’ve realized that their traditional and manual processes can no longer support their business goals. For this, they need to reassess their approaches to managing their projects, resources, finances, clients etc.
And that’s where professional services automation solutions come into the picture.
These solutions are built keeping in mind the unique needs, challenges, and opportunities of the professional services space. Keep reading to find out what these tools are and why they’re more important than ever for modern services organizations.
What Is Professional Services Automation (PSA) Software?
Professional services automation software is a specialized tool designed to help services organizations manage projects, resources and finances for client projects while making it easier to track and improve key business metrics like resource utilization rates and billables.
A PSA solution can offer a wealth of capabilities designed to bridge business functions traditionally handled by different tools. This includes functions like time tracking, resource management, project management, collaboration, client billing and more.
Traditionally, organizations had to rely on separate tools for those functions, such as using an ERP for managing resources, a PM tool for managing projects, and a time tracking tool for tracking employee time. With a PSA, you can bring all of these functions under one system for easier management and decision-making.
What’s more, a PSA solution can automate the different processes associated with these functions to help your organization deliver more and better quality work on time and within budget.
It’s no wonder, therefore, that research shows the global PSA software market size is expected to grow by 11.9% (CAGR) from 2023 to 2030.
Who Needs PSA Software?
As the name suggests, PSA solutions were originally conceived and developed to help organizations in the professional services industry. These organizations generate revenue from delivering billable services to their clients.
While there’s no definitive list of the different types of professional services organizations, a few examples include the following:
- Marketing agencies
- Consulting services
- Legal services
- Accountancies
- Construction, architectural, and engineering services
- Information technology services
As these organizations primarily deliver services in the form of project deliveries, PSA solutions can be immensely beneficial to them. With PSA software, these organizations can easily track and manage key performance metrics, such as utilization, revenue, profit margins and more using a single solution for both short and long-term needs.
In fact, a PSA solution can very well become the core of the service business, given how it helps manage end-to-end service delivery.
Capabilities of PSA Software
As mentioned above, there are several functions involved in successfully delivering a services project. The services organization must not only assess client requirements but also determine their ability to deliver the project on time and within budget.
This requires not only project planning and project management capabilities but time tracking, resource allocation, skills management and more. Of course, the organization must also pay attention to the project’s financial aspects, such as its budgets, costs, and billing.
Therefore, a PSA solution needs to be extremely comprehensive in terms of the capabilities it offers.
Here are some of the most important ones:
Time Management
Time tracking is easily the backbone for professional services functions, playing a key role since all services organizations need to calculate their billables on an hourly basis. As such, having accurate time data is of utmost importance. In addition to timesheets, PSA systems may also offer time off and schedule management capabilities making it easier to manage resource allocation.
In a PSA solution, time tracking is used to determine the time spent on each project and charge the client accordingly. Project managers also need the time data to see if the project is progressing smoothly.
To meet project timelines and budgetary limits, managers require an accurate picture of the time spent by each resource attached to the project. This allows managers to make the right decisions.
For example, they may ask for more resources to finish a project within the estimated timeline.
Project Management
With projects being the bread and butter of services organizations, all PSA software must offer a comprehensive suite of project management capabilities. A good PSA solution will, in fact, offer a single place for the organization to manage a project from inception to completion. This includes the ability to plan, track, execute, and report on projects end to end.
This way project managers can easily create project schedules, allocate resources, monitor project progress, among other project management functions.
Many PSA solutions don’t have any limitations on the choice of project management methodology. In fact, most of these solutions offer a fair degree of support for all popular methodologies, such as agile, waterfall, and lean. Similarly, these solutions are typically flexible in the types of project budgets they support, including both fixed price, and time & material projects.
Resource Management
It’s no secret that people are at the heart of any professional services organization.
For them, accurate and effective resource management plays a decisive role in generating higher profit margins. That’s why, every PSA software offers some degree of resource management capabilities.
However, a good PSA solution will ensure that project managers can do more than just allocate resources and track availability. Features like capacity planning and resource forecasting are almost indispensable for the modern services organization. Organizations need the ability to predict resource availability and demand for incoming projects to proactively hire or retrain resources.
Additional utilization helps ensure a healthy workload, preventing issues, such as burnout or underperformance. Optimizing utilization levels may also help the organization reduce attrition while improving project productivity & profitability.
Financial Management
A PSA solution wouldn’t be complete without financial management capabilities. Organizations need to easily track and manage project financials, such as costs, expenses, revenue and profit margins to quickly invoice clients. In PSA software, financial management is closely tied to projects, resources, and even time.
It should be possible to start managing the financial aspects of the project even before the project is initiated. This includes establishing budgetary limitations for the project, determining the resource billing rates, and finalizing the profit margins. This allows the organization to understand how much the project will cost them and estimate the profit it can generate.
Additionally, the PSA software should make it easy to bill clients. This is typically done by automating a range of calculations such as resource costs, adding line costs and margins etc. By automating these processes, services organizations can send out invoices with greater accuracy and at the right time to maintain a strong cash flow.
Client Management
Unlike a customer relationship management (CRM) platform, PSA solutions have a broader purview. Nonetheless, it’s important for a PSA system to offer some degree of client management capabilities.
These capabilities typically include the ability to consolidate all engagements against the relevant clients. Managers can then quickly view and manage all project and financial metrics such as costs, billing and profitability to better understand the client relationship. It also brings transparency into project deliveries by providing visibility into details such as project status and financial data.
Managers can also share the data with the respective clients through configurable dashboards and reports.
Analytics
It’s easy to understand that a good PSA solution can provide a wealth of information about projects, resources, and finances. However, to successfully continue delivering projects, organizations need the ability to extract actionable insights from all of these pieces of data.
This is where analytics comes in.
Analytics allows leaders and executives to plan and forecast business metrics accurately based on historical and real-time data. By analyzing the data, it becomes easier to plan for the long run. Managers and leaders can leverage analytics to make better and more informed decisions than ever before.
Of course, to be truly effective, a PSA solution must also offer flexible reporting capabilities to quickly disseminate information among the relevant stakeholders and decision-makers.
Financial Modeling
While financial management is important for services organizations, it’s equally vital to have the ability to model and simulate the organization’s financial scenarios. Financial modeling allows organizations to create a simulated scenario to help optimize their project bids and prices to generate higher profit margins.
Project Governance
As services organizations begin to take on more and more projects, it can be difficult to ensure that every project progresses smoothly. That’s where project governance becomes essential. With it, organizations can standardize processes and workflows across the organization for managing projects, resources, and financials.
Practice and Program Management
With practice and program management capabilities, services organizations can group their projects together for easier and smoother execution. These capabilities help an organization’s leaders gain complete visibility into how each project contributes to the overall strategic goal of the organization. Based on this they can take informed steps to improve profits and performance of the practice or program as a whole.
Integrations
Despite all the advanced capabilities offered by PSA solutions, these are not the only software tools that a services organization needs. Some services organizations may require specialized tools and software for their business, while others may prefer using a different tool for specific functions.
For example, an organization might prefer using specialized business intelligence tools to visualize their business data. As a result, it’s crucial that the PSA software easily integrates with other business applications.
Benefits of Using PSA Software
There are considerable advantages to implementing a PSA solution in a services organization’s ecosystem. Here are some of them.
A Single Source of Truth
With a professional services automation solution, organizations can achieve a single source of truth for running their business. This is in contrast to the traditional methods, involving multiple spreadsheets and systems to track and manage the different activities and functions. By bringing together these functions or integrating different systems with PSA software, managers can ensure that they have only one system with accurate data.
This way everyone in the organization, be it a project user, a manager or a leader, will be viewing the same data, ensuring complete transparency across the business. Of course, this makes it easier for leaders when it comes to making decisions to improve the performance of the overall organization.
Improved Resource Utilization
One of the key benefits of using a PSA solution is resource management. A PSA solution gives managers complete visibility into their entire resource pool along with other key details such as schedules, time off, task assignments and more. These solutions typically come with powerful resource planning capabilities that allow managers greater flexibility in allocating resources to projects.
With all of these capabilities and features, it becomes easier for managers to develop the most effective strategy for allocating resources and improving utilization. At the same time, the PSA solution helps identify resources that are being underutilized or overutilized. Managers can quickly perform the necessary adjustments to ensure optimum resource utilization for project success.
Reduced Admin Overheads and Costs
Automation is a key feature of any PSA solution and it’s especially beneficial for a services organization. By automating administrative tasks, it’s possible to save considerable time that would have been otherwise spent on doing these manually. This includes processes like sending project updates, creating invoices etc.
Automation also eliminates the need for allocating people to perform these tasks which have no billability at all. Instead, managers can allocate them to other billable tasks to help speed up project progress and generate actual revenue. As a result, organizations not only experience significant cost savings but also improve project efficiency which helps them grow their bottom line.
Better Project Performance
It’s no secret that projects can go haywire at any time. However, with PSA software, organizations gain the ability to better predict how the project will perform. This helps managers proactively address any potential problems to keep the project on track.
This is possible because the PSA solution combines all the moving parts of the project and centralizes them. Additionally, it provides real-time visibility into the project and its data, improving the predictability of the project. This makes it easier to identify important milestones, delivery dates, resource requirements etc.
Therefore, managers are able to better understand where things can go wrong and make the right decisions.
Higher Project Profitability
Ultimately, the goal of any business is to generate profits. With a PSA solution, service businesses will find it easier to generate revenue and drive profitability. One of the reasons is the reduction in costs. PSA solutions help save valuable time and money by automating tasks, as mentioned earlier. At the same time, these help identify opportunities for cost savings at various stages of the project life cycle.
PSA solutions also provide organizations with increased visibility into their projects, resources, and budgets. Managers get a real-time picture of how money is spent, allowing them to proactively make changes to prevent the risk of cost overruns as the project progresses. With resources being a key driver of costs, managers can leverage the PSA solution to perform cost-optimized resource allocation for greater profitability.
Increased Client Satisfaction
Professional services organizations cannot afford to ignore the effect client satisfaction has on their business. Satisfied clients are more likely to return for repeat business and tend to provide invaluable testimonials to attract new clients. With a good PSA tool, organizations find it easier to maintain client satisfaction.
After all, the solution helps keep projects on track, deliver projects on time, and stick to budgetary limitations. Moreover, organizations can use the PSA solution to deliver real-time updates and reports to their clients for increased transparency. These solutions centralize all stakeholder feedback and communications, ensuring all team members, managers, and even clients have the latest information at their fingertips.
Ultimately all of these contribute to developing a stronger and more trusted relationship with clients, resulting in greater satisfaction levels.
Drawbacks of Using PSA Software
While the benefits of PSA software are considerable, it’s necessary to be aware of their potential drawbacks. Thankfully, PSA solutions don’t really have a lot of drawbacks for any services organizations.
The only important fact to note is that PSA solutions are investments. Organizations must understand that they’re spending not only money but also investing the time and effort of their people. After all, training is necessary when implementing any new solution and it takes time for employees to adjust to the new solution’s workflows. As such, organizations must carefully weigh their options and decide if the investment of time and money is worth it.
However, given how the advantages of a PSA solution far outweigh the drawbacks, services organizations should definitely consider adding one to their business application setup.
Did you know?
Although PSA software may seem similar to an ERP system, it offers more flexibility and scalability to deal with modern-day business challenges, especially for project-based businesses.
Read more about it in our guide:
When Do You Need a PSA Solution?
For any organization, leaders tend to carefully evaluate the current circumstances before investing in a new solution. However, for services organizations, a PSA solution can benefit them at any stage of their organizational journey.
In fact, some leaders believe that PSA software should be higher up in the list of applications to buy for PSOs. This should definitely be the case if the organization plans on growing its business rapidly.
A PSA solution is a key part of the technological infrastructure necessary to support any exponential growth initiatives. After all, the software not only helps optimize business processes and functions but also actively contributes to generating higher revenue and profit margins.
To understand your needs while choosing a PSA solution, ask yourself the following questions:
- Are your resources excessively burdened with administrative tasks that are affecting their output, productivity, and utilization levels?
- Do you have complete visibility and control over your project execution?
- Do you have a consolidated picture of your resource allocation and utilization levels?
- Is it difficult to get a complete picture of your projects and resources?
- Do you have the data and insights you need to improve project performance and delivery?
If you’re facing the above challenges, then it’s surely time to invest in PSA software for your organization.
Nonetheless, services organizations should take their time to evaluate their options before choosing a PSA solution.
Driving Harmony Across the Organization
Polaris PSA leverages powerful analytics to transform the data into actionable insights. It offers MissionControl to help managers make sense of all the information available. At the same time, it provides proactive alerts so that managers are always aware of potential issues before they occur.
Polaris PSA offers industry-leading capabilities to help services organizations fuel their growth. To see how these capabilities can benefit you, get in touch with us for a live demonstration tailored to your needs or you can use our live chat button to get started. Our solution experts are available 24×7 to help you.
ABOUT THE AUTHOR
Arpan Patra
Arpan Patra has been writing about technology for over a decade. Now, as a Senior Marketing Communications Specialist at Deltek | Replicon, he focuses on how technologies like AI/ML-powered professional services automation solutions can empower organizations to optimize and grow their business. When he’s not busy typing noisily, he enjoys sitting down with a book and a warm cup of coffee.
