The Fundamental Business Case for PSA Investment: Revenue Growth

During the early stages of a professional services organization, project and resource tracking and reporting are usually handled with an expertly-crafted spreadsheet in the hands of a few key stakeholders. As time goes on, a successful and growing professional services organization realizes spreadsheets could be hindering its growth.

In a spreadsheet-oriented organization, data is stale as soon as it is updated, reporting is cumbersome, and access is limited. These organizations face the challenge of providing up-to-date information necessary to foster revenue growth.

A professional services automation (PSA) solution is the right next step for making revenue growth happen more efficiently. A PSA will:

• Help you take down work effectively
• Increase customer satisfaction while capturing new work
• Increase revenue from planned and in-flight projects

If you are a PS leader, you may believe a PSA solution will help you step up to the next level. But as you put together your business case, it feels lopsided. It may be too focused on cost reduction, and that’s not as likely to provide a compelling enough business case to persuade interested stakeholders.

Fortunately, cost reduction is only one item on the list of PSA benefits. And it isn’t even the most important one. Investing in a PSA can spur revenue growth while stemming the tide of revenue leakage. When it comes to making the case to invest in a new solution, adding this element will substantially strengthen the business case.

The Big Three: Where PSA Solutions Promote the Most Revenue Growth

A PSA can help you gain visibility into your projects, the accuracy of your estimates, and improve revenue capture by improving time tracking. The revenue growth associated with a PSA is focused on three areas: pipeline management, project management, and resource management.

Pipeline Management

One way to view pipeline management is having visibility into upcoming projects and work.  In that context, PSA becomes a facilitator to improved capacity planning. That leads to starting projects sooner and capturing revenue faster and more efficiently. In addition, when work can begin sooner, customers are happier.

Such visibility provides a viewport into the resources needed and informs decision making about hiring. Given the current backlog and upcoming work, will additional hiring be the correct decision, or will adding a few contractors bridge the gap? Combined with a proper skills matrix – one that tracks both broad skills and more specific capabilities – a PSA ensures you have the right resources on projects and aren’t unnecessarily bringing on more consultants than your pipeline can support.

With better visibility into your upcoming projects, revenue forecasting becomes more effective. When the revenue target goals are more accurate and more visible, a powerful tool now exists for conversations with the sales team. Effective guidance can be provided to accelerate closure of projects with new and existing clients when revenue projections are slow, and instruct them to work closely with leadership when resource availability is tight.

Project Management

Project management is of utmost importance in a professional services company. More effective project management can ensure customer expectations are correctly managed, budgets are adhered to, and resource management happens at the appropriate time.

Time tracking in a PSA is one of the most critical features in terms of revenue growth and proper project management. Because time entry is simplified in a PSA, hours are more accurate and timelier. That accuracy also allows project managers to align projected hours and budgets with real spend rates instead of guessing or spending time chasing down timesheets.

With up-to-date hours, billing is accelerated, turning work into revenue more quickly. And invoice workflow can easily include a review by project management without slowing the process through the use of automated workflow processes.

Importantly invoices reviewed by the project management team have a much lower dispute rate, which translates into faster-realized revenue and improvement of Days Sales Outstanding (DSO).

Resource Management

Since the availability of skilled or qualified resources is necessary for project delivery, resource management is the key to revenue management. Utilization management is usually considered to be the most important metric for professional service organizations.

Real-time visibility into resource utilization allows an organization to more effectively manage and thereby maximize resource billability, which maximizes profitability.

A PSA allows utilization to be viewed in two directions. Backward, so historical utilization and actual hours used can be viewed, which makes estimates on future work more accurate. And forward, which provides accurate utilization forecasts thanks to readily available views of the backlog and pipeline.

A compelling benefit of accurate resource management is avoiding over-hiring. Timely and flexible reporting uncovers where resources are underutilized. Identifying and eliminating time wasters or underutilization and recovering even a small portion of unbilled time can mean the difference between adding additional staff or using current resources more effectively and adding to the bottom line.

PSA Solutions Help Increase Revenue

A modern PSA solution helps reduce costs. But the opportunities it provides for revenue gain is what makes it a more attractive investment and completes a compelling business case. If you have questions on how implementing a PSA, like OpenAir, can help your professional services organization, let us know. We have deep expertise in helping companies transition from their spreadsheets to a more scalable and effective management tool.