The Fundamental Business Case for Professional Services Automation Investment: Justifying the Investment

The journey to acquiring and implementing a Professional Services Automation (PSA) solution can be challenging. At the start of the journey, organizations face challenges like requirements gathering, vendor and system selection. During the implementation and roll-out phases, a company must overcome obstacles like process change and staff adoption. However, a phase of the journey that is rarely discussed happens right at the start: the rationalization of acquiring a PSA.

The rationalization sometimes referred to as the justification for investing in a PSA, requires the person sponsoring the initiative to answer very real and involved questions. Is this the right time in the organization’s lifecycle to make a PSA investment? What will the impacts be – financially, with the teams, and with the customers? How will the company realize the benefits of the investment?

Typically, this conversation occurs between the VP or Director of Professional Services and the CFO, CEO, or even the Board of Directors. If you are the sponsor or the one promoting the PSA solution acquisition, you likely have a list of areas that will be positively impacted by its implementation. These might include:

• The desire for better resource utilization
• The ability to provision the right people on the right projects at the right time
• A need to better manage projects, teams, and processes
• A tool to help increase customer satisfaction

The C-suite will have additional details that they will want to explore, such as:

• The solution’s impact on profitability
• The ease and quality of internal reporting or compliance
• The solution’s ability to manage complex requirements, like customers with both fixed fee and time and materials projects
• How the solution will integrate into existing and future financial and accounting systems.

These are the kinds of justification conversations you can expect to happen during the acquisition phase, regardless of the industry. The metrics and some details may shift, but the underlying need to manage risk and make smart decisions remains the same.

Understanding the kinds of questions that are likely to be asked will help those presenting the business case for a PSA prepare to address the C-suites desire for information and their concerns. What follows are some of the questions you should be prepared for and their responses.

The 6 Top PSA Justification Questions

Is now the right time for this investment?

When asked this question, leaders need to be prepared to demonstrate the professional services organization’s planned and potential growth. A growing organization will rapidly exhaust a spreadsheet-based system’s capabilities and will run the risk of increased human error and project volume increases.

The inability to generate forward projections regarding revenue or resource needs may itself be an appropriate answer. However, even if an existing system can produce those projections, the information’s quality and accuracy may be questionable.

If the organization is expecting growth, now is the right time to invest in a PSA solution.

Will the PSA solutions help us increase revenue?

When faced with this question, leaders should explain how a PSA solution helps an organization increase revenue. Revenue growth is supported in these three areas:

• Pipeline Management: it provides better visibility into upcoming project work
• Project Management: It will facilitate projects being delivered on time and within budget
• Resource Management: a PSA maximizes the billability of resources

A PSA solution provides opportunities for revenue gain, helping to support a compelling business case.

Will a PSA reduce our costs to deliver?

When questions about a PSA’s ability to reduce costs are asked, leaders need to elaborate on the significant areas of cost reduction: project and resources.

A PSA solution will help to reduce project costs by allowing for greater control and increased quality in multiple areas, including improved quality of project estimations, easing management and administration tasks, automating processes, and providing real-time insight into planned versus actual project costs.

The ability to decrease the cost of resources is also part of the answer to this question. A PSA provides superior resource planning and skills development compared to a spreadsheet-based system or other HR-related solution. Also, a PSA can help the organization reach its utilization goals.

Will a PSA help with forecasting and planning?

Leaders sponsoring the investment in a PSA must be prepared to address questions about the solution’s ability to improve both forecasting and planning activities. The answer is a resounding yes for both of these.

A PSA helps the organization deliver work consistently and be responsive to customer timelines and project kickoffs. Planning also puts the company in front of the curve to hire and train new resources, ensuring new consultants are ready when projects need them. The PSA’s ability to show real-time metrics for resource demand by type and the company’s current capacity allows the organization to identify – and solve – resource constraints before they become client satisfaction issues.

Forecasting also benefits from the use of a PSA, increasing both accuracy and confidence. Forecasting revenue from current and high-probability projects provides visibility into the health of an organization’s services. A bottom-up approach for each project and basing forecasts on real resource plans promote more accurate forecasting and greater confidence in the numbers.

Will a PSA help us to be profitable?

When asked this question, leaders should be ready to discuss the PSA’s ability to help the organization manage and hit profitability goals through one of the most important profitability metrics – resource utilization. A PSA solution allows companies to proactively manage, monitor, report, and optimize their resource utilization across the board.

The right solution will also store all costs related to the delivery of projects, as well as invoice and revenue recognition data. This information is the foundation for accurate project margin reporting, which service organizations can use to learn and improve how they price and scope project work, thus increasing margins where appropriate.

Will a PSA give us a return on the investment?

The starting point in realizing positive ROI from your PSA is understanding the impact the solution will have on the problems you are trying to solve. That includes the desire for increases in utilization, reduced cost leakage, increased cumulative project profitability achieved, fewer project disruptions, and increased repeat business thanks to high customer satisfaction levels.

These must be weighed against the cost side of the ROI equation. Selecting a cost-effective PSA, including both the licensing and implementation, sets that side of the equation.

Conceptually, a PSA will yield a positive ROI as the company will be getting more in return than what was invested. However, to make a concrete case, leaders should provide specifics based on the firm’s revenue, profit, utilization, and the required PSA investment to get a quantified answer to ROI questions.

Are You Making the Case?

How you answer these questions will impact your success in your PSA acquisition phase. There will still be questions around implementation, although those typically arise after you have selected your vendor and system. Implementation challenges and costs are, clearly, a different set of questions that will need to be addressed as you continue along the journey toward institutionalizing a PSA solution within the organization.

However, preparing for the eventual justification discussions by anticipating the questions and preparing the answers will put you on the right track to acquisition approval. It will show that a PSA solution aligns with the organization’s goals and objectives and will frame the acquisition discussion in a way that the C-suite will care about.

If you need further assistance in making the case for a PSA within your organization, Top Step can help. Contact us for additional information and assistance in developing the answers you need to make a strong case for acquiring a professional services automation solution.