Professional services firms are up against a lot.
While their core value will always come from human-driven insights, service-based firms can’t hack it in this digital era without the right tech.
Firms need to evolve ASAP — both to help their clients respond to disruptive forces and remain competitive amid rapidly changing conditions themselves. Most business leaders know that something needs to change, yet struggle to define what needs to happen, much less how to put plans into action.
Below, we’ll look at some of the key capabilities firms should look for to cope with the challenges of their new reality – while at the same time, staying true to their brand, customers, and the big-picture plan.
Modernizing Service-Based Work: 11 Critical Focus Areas
While the specifics will vary wildly between firms, there are some core competencies all service-based organizations need to master if they want to stick around for the long-haul.
We’ve outlined 11 of them here – all linking to separate posts that dig deeper and examine real-world use cases from a diverse group of firms, with an equally diverse range of strategies and solutions.
- Culture. Without a solid internal culture, digital transformation, innovation, or even your ability to keep up with competitors can’t happen. At least not long-term. While you’re probably aware that culture lays the foundation for tech investments and the big changes they bring to the org chart, the tech-culture connection works in the other direction, too. In a recent article, we looked at some of the specific ways technology helps firms build a stronger culture.
- Accounting. Accurate project accounting is a matter of life and death for project-driven firms, as profitability hinges on their ability to track all costs and benefits associated with every stage of the project lifecycle. Project accounting promotes more effective project management, streamlined workflows, and better resource management. But it also demands specialized tools that go beyond the capabilities offered by most traditional accounting platforms.Perhaps more crucially, project accounting needs to integrate with the general ledger and other core financials, as well as the rest of the business. While this should be obvious, many project accounting solutions exist in a silo – away from other departments like sales, accounting, and the C-suite.
All of those groups are directly involved in matters concerning the bottom line – budgeting, forecasting, identifying opportunities to reduce costs, selling project-based services, and so on. Check out this short blog post to learn more about integrated project accounting and the opportunities it creates for project-based firms in every industry.
- Resource planning. Resource planning involves identifying, forecasting, and allocating resources to the right project, at the right time, and for the right price. Done right resource planning ensures that firms maintain a steady flow of work – avoiding the wide swings where resources are either maxed out or sitting idle. Learn more about how firms are coping with resource planning challenges and unlocking new opportunities .
- Time tracking. For professional services firms, inaccurate time tracking processes make it impossible to stay on top of capacity planning and resource management. When people don’t log their billable hours on time or accurately, big decisions are made without knowing the whole story. This impacts everything from scheduling and forecasting to your ability to deliver projects on time – and reliably turn a profit. Ultimately, orgs need a reliable way to keep track of billable hours – without adding more friction to employees’ day-to-day work. Learn more about time tracking and its role in helping project-based organizations gain control over the bottom line and drive bigger profits here.
- Collaboration. Project-based work is collaborative by nature. Though, historically, collaboration was something that happened in-person. Among colleagues, teamwork happened in the office, while collaboration with external clients largely took place during in-person meetings – and collaboration apps were mostly used to coordinate meetings and share things like contracts or supplemental resources. Naturally, the COVID lockdowns forced firms to confront the shortcomings of their current solutions and seek out new ways to support their teams and deliver valuable experiences to clients. In this article, we discuss some of the ways firms are implementing solutions more thoughtfully to drive specific outcomes.
- Business productivity. Business productivity is about using technology to refine processes, eliminate steps, and enable your teams to do their best work. There’s certainly some overlap with collaboration and culture but business productivity goes beyond this idea of enabling effective team work or nurturing relationships both in and out of the workplace. Here, it’s about identifying ways to eliminate waste, refine processes, and opportunities to improve business performance. We look at some of the ways – both analog and digital – firms are enabling productivity gains and hitting critical milestones in this recent post.
- Capacity planning. Capacity planning remains one of the biggest challenges of project-based work. There are so many variables that directly impact future capacity and when something goes wrong with one of those variables, there’s a good chance that it will set off a domino effect across the entire portfolio. For example, inconsistency in the sales pipeline makes it difficult to forecast resources – which means employees end up in a feast or famine cycle where they’re either completely maxed-out or sitting around waiting. When there aren’t enough resources, projects get delayed, quality drops, and clients get upset. While unpredictability comes with the territory, real-time insights, supported by the right AI/ML solutions can help them establish some predictability.
Check out our recent blog post to find out how.
- Resource utilization. It’s not just about resource planning – today’s proserv firms need to be able to optimize resource utilization rates otherwise, they miss out on opportunities to take on more business, and in turn, maximize profits and drive growth. With the right tools, orgs can match the right people to the right projects, using data-driven insights, skills matching, and automated governance and controls. Overall, firms have the chance to boost project profitability and ensure every project is a success. Read more about how resource utilization in professional services.
- Scheduling. Scheduling is crucial to portfolio optimization and long-term profitability — and like many entries on this list, it’s incredibly difficult to provide accurate timelines because of all the variables that come into play. Intelligent scheduling solutions can help firms get ahead of these challenges and automatically assign jobs based on factors like skills or location, while built-in reporting tools can surface insights that allow project managers to adapt to changing conditions or prioritize high-value clients. Check out our blog post to learn more about intelligent scheduling in action.
- Revenue forecasting. Revenue forecasting enables firms to embrace a forward-looking, proactive strategy. Because they know what’s coming in and what’s going out, business leaders are in a better position to plan ahead — and still meet short-term goals. It also helps them take immediate action on game-changing opportunities such as strategic acquisitions that allow them to scale, enter new markets, or diversify service offerings. Revenue forecasting is also hard to pull off because again, projects are inherently unpredictable. Solutions like AI analytics, predictive modeling, and real-time prescriptive insights can’t predict the future, but they do help firms plan for the most likely outcome — and quickly pivot when things take an unexpected turn. Read the full article to find out how real firms are tackling the revenue forecasting challenge.
- Automation. Automation isn’t here to replace good old fashioned expertise. Rather, it automates repetitive, low-value tasks and helps professionals deliver high value service to more clients – without sacrificing quality. At a higher level, firms are finding ways to leverage AI/ML-powered automation to actively generate new business models, enhance their existing knowledge, and engage clients in new ways. Click here to find out how real firms are using automation to better support their clients.
- Project profit margins. Project profit margins can tell you a lot about how things are going for your professional services organization. Is the business growing at a sustainable rate? Are services priced correctly? Do projects reliably make money? As you can imagine, tracking profit margins is crucial to effectively managing resources, reducing waste, and proactively generating long-term business value. Read our recent blog post to find out how firms can maximize project profit margins across the entire portfolio.
- Real-time project visibility. Real-time visibility into all projects is vitally important for any firm that performs project-based work. End-to-end visibility is a mandatory first step toward improving your firm’s performance at all levels — resource management, finance, project accounting, etc. And — real-time project data plays a key role in driving the kinds of proactive, profitable decisions that lead to lasting success and sustained growth. Check out the full post to learn more about the impact real-time project data has on the entire business.
The bottom line here is that in order for professional services firms to succeed in 2022 – and beyond – they need to master the capabilities we’ve outlined above – and ensure they work together as one unified solution.
That said, it’s important to understand that transformation initiatives are less about specific tools than it is about what the tools in your stack can help you achieve – whether that’s enabling your sales force, gaining deep visibility into your financial performance, or refining your project management and billing practices.
Velosio knows what kinds of challenges professional services firms are up against. Our industry-specific solutions tackle project accounting challenges, data silos, and bring more control to project-based businesses.
Get in touch with an expert to learn more about our process, services and how we can help your firm set the stage for long-term success.