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From Laggard to Leader: How to Optimize your Professional Service Organization
5/15/2009 11:00:00 AM
The professional service industry is highly competitive; particularly these days as clients demand lower rates, more personalized service, and rapid delivery. When organizations look to compare themselves to their industry and competition in terms of the systems and processes they utilize, they can be classified into three categories; Laggards, Average and Leaders. As we look at the differences between these groupings, key philosophies and standards come to light.
The Laggards
Most Laggard organizations have little, if any, automated processes or systems in place, leading to islands of data, difficulty in reporting and an inefficient business model.
The Average
Average industries will have systems implemented to track data, though not necessarily integrated. They establish some automated processes, though it is debatable whether what has been automated is actually good or bad in support of the business. Reporting has improved, but data still needs to be “pulled” from its’ sources.
The Leaders
These successful organizations have a strong competitive advantage in the marketplace because they have optimized their business processes that support their overall strategy. They use workflow-enabled processes to improve workers’ efficiency and effectiveness. They “push” data, whether reports, alerts, workflows, or dashboards, to end users that enables quick and decisive actions to be taken.
The Leaders have broken down the processes which make up their business, Demand, Delivery and Financial Management, and optimized how information flows within and between them to deliver repeatable, productive and sustainable results that have elevated them into the best in their class.
The Demand Process
The business is buoyed by the demand for services. The generation of leads through marketing and sales efforts will typically drive future success. When managing demand, Laggards have silos of data, often with individuals tracking their own data on spreadsheets and PCs which provide minimal visbility to perform any valuable data and reporting. There is little in the way of defined processes in how marketing and sales work in conjunction which leads to poor communication of information between groups.
Average organizations will have systems in place to capture data, though not all are necessarily integrated across business or functional areas. Defined sales processes allow for better visibility of the pipeline, but forecasting is typically based on even spreads, not when the actual work and revenue is scheduled. Reporting is improved, but users have to go and get the data.
Leaders have a fully integrated system tying together all prospect and customer information. This provides better customer service and the ability to target specific industries or customer profiles to gain future customers more cost-effectively. Bids and proposals are no longer “one off” projects, but can be built from templates and best practices providing more accurate efforts and better margins. The templates are used as a foundation for building revenue forecasts that are based on projections of when the work will actually be performed. Dashboards, alerts, and reports are at user’s fingertips improving decision making and driving results. There is a seamless transition process from the Sales to Delivery teams so the client never needs to “re-educate” the Delivery team on what was previously detailed to Sales, leading to a smooth and enjoyable client experience for all parties.
The Delivery Process
Now the customer is in delivery’s hands, it’s time to execute on what was promised to the client during the sales process. The success of the project is often based on the tools and processes that support those involved in performing the work. Industry laggards have little in the way of structured tools or processes. Project management is done on spreadsheets and whiteboards, without much in terms of project management skills. This results in high level tracking of progress and no ability to provide a customer with an accurate update on status. Resource management is a product of the knowledge in someone’s head or spreadsheet, so finding and scheduling appropriate resources is a lengthy and ineffective practice.
Average organizations adopt more standards in terms of their systems. Information becomes centralized, but projects are still created on a “one-off” or manual basis. Knowledge of resource roles and skills are managed within a system and can be searched to find appropriate people for a job. Better reporting is available, but needs to be “pulled” from the system, and there isn’t much in the way of workflows to make sure information is being communicated in a timely and meaningful fashion.
The Leaders have deployed standards across their processes. Project plans are based on templates and best practices that also drive budgets and forecast modeling with calculated numbers. “Best-fit” resources are staffed on projects based on their skill and availability. Change Requests are evaluated for budget/resource impact and go through an approval process prior to altering a project. Information is “pushed” to the users via dashboards, alerts and reporting. All in all, the client enjoys a successful relationship with their service provider because expectations are set and met without the noise caused by a lack of communication.
The Financial Management Process
The Financial Management of the projects being executed will drive revenue and cash flow, which are two key indicators to business health. The Laggards often have manual or paper time & expense (T&E) reporting that may or may not go through an approval process. The Accounting team manually inputs an entry into the accounting system to start the billing process and revenue is recognized by how the system works, not the business. Additional manual entry is needed to get the data into the general ledger for the month-end close and financial reporting.
Average organizations have automated the collection and approval process and have these systems integrated to provide timely and accurate information. Better project financial reporting is available as is some sharing of data between the Demand, Delivery and Financial teams.
The Leaders have optimized processes with conditioned-based workflows for T&E, Billing, Change Requests and other processes. Full project financials, including commitments, are available to all who need it. Tight integration between Demand, Delivery and Financials provides the full picture and ensures happy and referenceable customers. Deploying a system to provide this magnitude of information allows organizations to be more effective in how they execute on strategy across the business, whether in marketing, sales, delivery or on the financial end. Data is readily available and communication is streamlined with dashboards, workflows, alerts and reporting which improves the productivity of the workforce, reducing costs and achieving higher levels of revenue.
Moving from being an Industry Laggard to a Leader takes executive sponsorship and commitment, but the result is an integrated enterprise that streamlines and optimizes the processes that makes an organization unique. This differentiation is where an organization can beat the competition and business is won.
About the Author
John Lucas, professional services industry manager for Green Beacon Solutions has spent over a decade working with organizations to improve process efficiency and effectiveness through the implementation of professional services automation tools. With the technical knowledge of a myriad of professional services automation applications, John has worked with a wide range of organizations through every step of their process including; opportunity and bid development, project execution and staffing management, time, expense and status tracking, and billing and revenue recognition. From smaller companies like CNC Professional Services and The Marketing Store with 50 to 100 users to global rollouts such as Lucent Technologies with over 10,000 users, John’s experience in understanding the requirements of these professional service organizations and how their requirements drive business process has led them to an improved bottom line through more structured and streamlined management.