Performance insights can help professional services firms move from “What’s happening today?” to “How can we affect tomorrow’s performance?”
To find the answers, you need to apply business analytics in areas such as resources, operations, and client engagement.
Resource utilization. Best-performing firms strive for a resource utilization rate of 80% or more. In other words, the time a consultant or specialist bills to a customer should be at least 80% of what the firm pays for that resource. Talent is your firm’s largest expense, and low utilization rates can reduce profits. If you can’t quickly analyze billable versus chargeable time, service lines, roles, and individual resources, you’ll find it difficult to make good staffing decisions.
Enter the resource utilization dashboard – your key to understanding historical, current, and future utilization for individual resources and for the firm as a whole. Armed with its data, you can identify and adjust underperforming resources and lines of business, then modify staffing accordingly.
What-if scenarios. What-if analytic tools help you test assumptions, evaluate outcomes, and identify the best scenarios for increasing resource utilization – netting additional margin. Powerful what-if tools can aggregate sales, project, and personnel data from multiple sources; you can review the resulting data by skill, individual, or geography to identify talent shortages and surpluses. Then use fact-based planning to adjust hiring, contracting, and retention with confidence.
Staffing efficiency. Lack of transparent staffing processes creates inefficiency and eats into profits. Staffing efficiency analysis monitors staffing from incoming request validation through resource proposal to final booking. It works to improve three interrelated processes: time to staff, time to proposal, and time to validate. With it, you can identify issues by region, skill level, solution, or analyst – and fill resource requests faster while boosting revenues and reaching staffing milestones on time.
Financial reporting and profitability. Streamlined reporting minimizes manual intervention, error reconciliation, variance analysis, and data processing. Add ready-to-run profitability reporting, flexible ad hoc reporting, and daily balance sheet as well as profit and loss statements to inform confident decisions that increase revenues and cut expenses.
WIP and AR. The best-performing professional services firms consistently collect on delivered work in fewer than 40 days (measured as days sales outstanding, or DSO); in contrast, some of the worst performers in this area easily pass 100 days. For increased collection performance, you need a quick, accurate assessment of total outstanding for each engagement – a combination of outstanding accounts receivable (AR) and work in progress (WIP). Business analytics lets you see, simulate, and analyze vital WIP and AR KPIs. Even the smallest improvements in collection efficiency can have a significant impact on cash and profit.
Project performance. Keeping close tabs on project performance – including schedule, budget, and staffing – reduces risk and boosts client satisfaction. Business analytics can keep you up to date on how projects are progressing, and even flag underperformance. Armed with such information, you can make adjustments that keep projects on track and client satisfaction high.
Service performance. To show customers the value of optimal delivery of services such as IT and business process outsourcing, you need clear and transparent service reporting. Improved analytics – for example, reviewing service performance by region, customer, and delivery team or looking at incident, problem, and change tracking by customer and time period – can close the gap between what IT reports and the interests of the business: improving client satisfaction and retention.
Sales and pipeline. Your mobile sales force needs client contact information, opportunity and order management, and pricing and brochures. Salespeople need immediate, up-to-date pipeline information – for example, a 360-degree overview of each account, analysis across accounts, and information on current and upcoming opportunities. And you need business analytics that make salespeople as effective as they can be, without the limited back-end integration that characterizes most sales automation applications. The result? More selling time and accelerated sales cycles.
Client profitability. A superior client experience delivers value to the client at each and every point of contact, while generating the greatest return on the client relationship. To offer such experiences, you must provide the right level of service to each client at a reasonable cost to your firm. Two clients could bring in a similar amount of revenue, but one may be both satisfied and profitable while the other is neither. You’ll need to analyze data – on client satisfaction, industries served, size of client, buying behavior, and services purchased – to make conscious investments in those relationships that maximize your profitability.
How can analytics help you become a best-run professional services firm?