"Managing the Professional Services Firm"
By DaveLevy on Jul 28, 2004
After Professional Services
You may know that Sun is merging its pre-sales and post-sales technology consulting groups into a single organisation, to be known as "Client Services Organisation"1. This means merging divisions and groups variously known as "Technology Solutions Organisation", "Solutions Technology Group", "Technical Account Management" & "Professional Services".
The one essential read for anyone seeking to manage revenue, people or strategy in the new "Client Services Organisanation" is,
- "Managing the Professional Services
- David H. Maister - 1997 - Free Press Paperback, Simon & Schuster, available at Amazon
A Guru's thoughts!
The book structure groups the chapters into sections called "Basic Matters", "Client Matters", "People Matters", "Management Matters", "Partnership Matters", "Multisite Matters" & "Final Thoughts". In the book, one of the first things he does is define a generic mission statement for the professional services organisation,
To deliver outstanding client service; to provide fulfilling careers and professional satisfaction for our people; and to achieve financial success so that we can reward ourselves and grow.
which he summarises these as "service, satisfaction and success". At Sun we are of course a joint stick company so the definition of 'us' in the context of reward, includes our stock holders. Interestingly, the axiomatic location of the professional services firm as an arbitraguer of a skilled labour market and customer requirements is a dominant theme throughout the book. To Maister, supply side matters.
The book is a collection of articles and papers that he's published previously and while a number relate to 'Partnership' structured entities and how to govern and recognise partners, even these chapters provide useful insight into managing a people based service delivery firm. The history of the writing means that the book is easy to pick up and put down, and the stand alone nature of each chapter allows the book to act as a reference.
The first chapter is called "A Question of Balance", it explores the nature of professional service projects depending on "Brains, Grey Hair & Procedure", which borrowing from his terms in chapter 2, "The Professional Firm Life Cycle" can be better articulated as "Expertise, Experience or Efficiency". These types of projects require different quantities of senior to junior relationships (referred to as leverage), and management need to recognise that recruiting, motivating and retaining these differing types of people takes different social cultures and infrastructual investments. He also examines the nature of re-use in transforming knowledge from expertise, through experience to efficiency. This is common to all professional services firms but we need to recognise that Sun also has the option of transitioning our knowledge into product via "Customer Ready Systems" or our global R&D programme (sic). Actually Maister argues that professional services firms will have difficulty managing people to offer all of the 3Es, just as traditional industrial age firms have difficulty optimising for "operational efficiency" & "product excellence".
Adapting at Sun
While the essential value a project possesses may be a blend of the 3 E's, a customer will know that his project can be supplied by the market as only one. While the firm has three offers, customers will only buy one and that determines their price. Expertise is worth (and costs) more than experience, which itself is worth (and costs) more than efficiency. If a customer requires market experience, nothing (except their own stupidity, which we should not take advantage of 2) will make them pay the expertise premium. Sun has the advantage of strong inter-company partnerships, which allows us to leverage partner cultures and human investments. However should Sun's project service bid teams and management mismatch our offerings with the customer value requirement, our customers will go to a supplier offering the solution at a market price. Bid teams and management must evaluate the customer's buying value requirement in terms of expertise, experience and efficiency and match it. In the UK3, we can match the three E's against a form of offering and historically how Sun met these customer value requirements.
|Expertise||Consultancy||EITAs, Solutions Architects Group & SEs|
|Efficiency||Packages||Professional Services & Sun PRO partners4|
Obviously, today, only one organisational entity will meet the customer requirements, but that unit will need to meet the requirement to supply expertise, experience and efficiency, and offer consultancy, projects or packages. While decisions in bid teams may be more difficult, at least we should no longer have bid interests competing with each other any more. In order to succeed, management must create the ability to recruit, retain and motivate both expertise and experience and create the partner alliances and knowledge management systems to deliver efficiency offerings.
Maister's makes the point that professional services firm strategy is about choosing the nature & mix of the projects undertaken and so it actually has some say in the ratio of the 3E's required and hence the ratio of seniors to juniors required. This and the current financial targets gives the CSO some time to rebalance its project portfolio, but the two year head count freeze, means that our consultants have not been able to refresh themselves by bringing in (or promoting) new talent and that this is exacerbated by the growth of our original junior people to the point that they want, need and deserve promotion to senior positions themselves.
This schelrosis is counterpointed by Maister when he states that
"People do not join professional firms for jobs, but for careers.
The head count freeze, project services revenue flat lineing and the junior staff's capability growth have caused a problem. Sun's renewal strategy offers a way out as consulting and projects are used to penetrate our customers value horizons, prove the value of our products through offering customers project based solutions. Our key resource are our project architects, be they project managers, solutions architects, TDAs or technologists.
There is a way forward, but it'll take good management. Reading this book will help managers (and individual contributors) play their part. The pressures mean that we at Sun need to sort ourselves out quickly before our people solve the problem in other ways.
My Key Lessons
The key short term lesson for Sun is to recognise the customer's value requirements. Do they require expertise, experience or efficiency and to match the customer requirement with a suitable offering. The key long term lesson is that a successful project/consulting services business is based on service, satisfaction and success and mangers need to plan for all three. We mustn't forget, that for consulting services, "Supply side matters", and its probably impossible to optimise CSO for expertise, experience and efficiency.
The one lesson the book won't help, is teaching many of our account representatives the courage and technique to ask for money for labour.
I expect to return to this book in a later blog posting. I think we should explore what Maister has to say about utilisation and long term profitability and how practice leaders add value.