”Quality is never an accident. It is always the result of intelligent effort.”
John Ruskin, one of the Victorianism's leading intellectuals, said this about making an effort.
If the old artist-poet had been a business owner, he might just as well have added: ”And quality pays off – also on the bottom line.”
When we talk about the quality of your internal business processes, Ruskin’s conclusion is the same as in SPI Research’ large maturity report for the consultancy industry.
Here substantial data shows that the quality (or maturity) is well worth your while.
Now, when you say maturity…?
Before I take you to the results in the SPI report, we need to be in alignment regarding quality and maturity in your business processes.
What is maturity in this context?
You can compare a less mature company with the local amateur football team, while mature companies compete in the Premier League.
For the amateur team, strategy and tactics are (at best) optional and success often depend on the performance and motivation of your central midfielder on that specific day. For the team to win, he is required to both score the goals and keep a clean defence.
For the Premier League team, it is the exact opposite. Here, success is carried by strategy, tactics and a highly skilled team with a finely tuned cooperation.
Transfer the football analogy to your company and a few areas where your company is more or less mature will probably quickly spring to mind.
Well, no shit Sherlock!
You may say that it is evident that the professional team outperforms the amateur league enthusiasts.
Naturally, you can ask why you need a report to tell you this.
The answer is easy; It requires an investment to work towards a higher maturity level in your organisation. And it requires commitment.
If you can name a company where they do not want to be better at what they do, I will buy you dinner, all expenses paid.
You need data to build your business case
But it gets tough when you need to move resources away from customer meetings, development and project teams, even if it is only temporary, and put power into working with the quality of your work processes. It is an expense, and it is difficult to give an ROI estimate on the business case.
Because of this, maturity much too often gets a permanent spot way down the priority list.
This is why you need this report to add numbers to your business case.
You get them here.
The heavy artillery – how is the bottom line (EBITDA)?
For your business case, you need to know if an investment in higher maturity pays off.
A quick spoiler – it does!
If you look at the difference between the companies at SPI Research’ maturity level 1 (30% of all companies) and the ones developed to level 5 (5% of all companies), the difference in the profit is 21.2 percentage points.
Or put differently – almost five times higher EBITDA.
SPI Research’ report also shows that the profit is not only found in the top of the maturity scale.
We can see that there is a profit gain for each step your company moves up the maturity scale.
If you look at it statistically, there is a good probability that your company is in level 1 or 2. 56% of all companies are.
So, if you think of last years’ result:
What would it mean to you, if you moved from level 1 to level two and increased the result with %?
Or with the average 36%, if you move from level 2 to level 3?
Fair! But please show me the connection
The bottom line as a key figure is in the nature of things always the icing on the cake.
In an ROI calculation, there is a lot of invisible intermediate results, when I show you a rough connection between maturity and profit.
Therefore, it is interesting when the SPI report shows the connection between maturity and performance based on 160 key figures which together form the foundation for your annual result.
The report e.g. shows us key figures for:
- Management skill
- Invoicing percentage
- Revenue growth
- Contribution margin on projects
- Sales processes
- Payment models
All in all 160 KPIs.
Get all the key figures here
I will not dive into the key figures here but instead, encourage you to download the report.
In TimeLog, we chose to sponsor the report, and therefore we can offer it to you free of charge via the link below (normal price € 1,800).
We have also taken the report’s most important key figures and boiled them down to an easy to read 28 pages Executive Summary.
You can download both documents here.