Manufacturers have long been able to track costs and value using granular metrics at a systems level. This has enabled them to grow revenue and maintain profits in incredibly challenging circumstances.
Now, technology has evolved to enable small-to-medium professional services firms to do the same. Firms need to track and quantify costs and value for more abstract factors, such as knowledge and skills.
Two technology-driven capabilities now make this quantification possible: automation and visibility. Once you automate measuring different aspects of your business, details that you haven’t been able to easily see begin emerging, including hours billed, realized bill rates, and utilization statistics. Being able to quantify this kind of detail, from beginning to end, helps medium and midsized professional services firms find more ways for employees—and the business itself—to be as productive and as profitable as possible.
The payoffs include making proactive rather than reactive course adjustments to prevent full-on project or performance issues; increased employee and customer satisfaction; scalable processes and workflows; and more sales and profit.
Let’s see how automation and visibility contribute to each payoff.
With important processes automated, you can finally support real-time visibility into each client engagement. Seeing things happen in real time allows you to view potential problems as they develop and, in turn, take faster action to fix them.
If you see what’s happening in real time and identify potential complications early on, you can take corrective action mid-course and address issues before they derail a project and lose the firm any business.
Automation and visibility are valuable for both employees and customers.
When you create a picture of each knowledge worker’s contributions, you can use this concrete data to drive compensation changes. For example, while looking through your utilization rates, you may find that work isn’t as balanced as you may have thought; your superstars may be carrying the load. This data can then be the basis for moving workloads around, as well as changing compensation levels to motivate and improve the work of your low performers, as well as reward your superstars. By being able to balance the workload and reward people for the work they’re doing, you can reduce employee burnout and turnover.
Automation and visibility also offer big benefits for your customers. They want to know where they are in the process. Providing more complete status reports can drive successful projects and lay the groundwork for repeat business.
The key is having an accurate knowledge repository of all progress that’s been made on a project. You should be able to report on aspects of any project, such as how much money has been spent, how many hours have been billed, and how much money remains. To do this, you need precise, up-to-date data from tracking your resources, time and expenses, invoicing, change requests, non-disclosure agreements, and other actions.
This data is also critical for improving the language within your statement of work (SOW). You’ll be able to provide a more comprehensive and accurate picture of what will be done, the cost of the project, and the timeframe to level-set your customers’ expectations.
When you can successfully implement visibility and automation on an individual level, you then have the foundation where those same processes can be applied on team or business unit levels.
You should be able to see data at a team or a business unit level to see how they’re performing and what they’re contributing. You can identify opportunities to shift work between individuals or teams as needed, as well as opportunities where work can be stopped if it isn’t moving the project toward completion or improving the company’s bottom line. This should reduce burnout and turnover within the firm as workloads become more balanced.
In addition to improving work within your teams and business units, this data can also provide valuable information about which direction practice groups or business units should go. Having data on which projects, teams, and business units are the most profitable can be crucial information when you’re discussing future investments and budgets.
Automation and visibility can make it easier to identify opportunities to increase your revenues and profit.
For example, by having a complete engagement history with individual projects and customers, you can easily identify your profitable partners. You also can spot opportunities to improve engagements with customers who have been identified as being more profitable.
Being able to quantify actions within your professional services firm is no longer a pipe dream. Firms now have access to technology that allows them to leverage automation and gain visibility into how their employees, teams, and business units are contributing to the overall bottom line. Quantification, from beginning to end, will give you the data you need to take action to ensure your firm is as productive and as profitable as possible.