When did you last consider what fundamentally constitutes your company?
During a networking event recently, I made an experiment, where I asked that exact question to company owners and CFOs.
Most answers were trivial: Employees, buildings, the product, a fax machine (in 2019!) and so on.
We needed a CFO with the hands deep down in the machinery before processes were mentioned.
A company, especially if it is a consultancy, consists of people doing something. They sell, invoice, give advice, make decisions and do the cleaning.
Whether your processes are good or not is decided based on how well you run your business.
Professional Services Automation opens up for a tangled digital process landscape
This means that the IT budgets in the companies go up exponentially with the number of digital solutions. And often the solutions are not integrated, but isolated around the specific process.
Does it sound familiar?
Then it is because this is the reality for many companies, maybe even yours.
And this is where Professional Services Automation software enters the picture
PSA software is about making the business run as smooth as possible
The core in all good PSA software is to support and help you optimise the business processes which keep your business afloat.
It provides links between processes, and you do not need to buy a separate system for each process.
And because PSA systems are build specifically to match consultancies, you do not need to force your company into a huge system, which is mainly build for manufacturing companies (you may have heard about ERP).
In other words, the system is adjusted to support and optimise the work processes in your company, not more, not less.
Here you can read about the 7 essential business processes where a PSA system can optimise your business.
1) Time registration: The core in the business – and in PSA software
The biggest immediate change your company and all employees experience with PSA is when the time registration starts to work.
If you sell counselling and consultancy services, time registration is a cornerstone in your company.
Both the leadership team, bookkeeper, consultants and project managers feel it in their daily work.
Therefore, time registration forms the basis for PSA software. It feeds the hours into the invoicing, builds your reporting and makes the company’s project management work.
A really good PSA system has easy to use time registration, which does not take away time from the consultants or cause inconvenience during their work day.
Time tracking by hand or Excel
Many (established) companies use hand-written timesheets or complex Excel sheets.
It has 3 consequences:
- Billable hours are lost, because the consultants forget to track time when it is cumbersome
- Timesheets are handed in too late to the CFO, because consultants postpone their time tracking
- Revenue is lost and the reporting is off track, because errors occur when hours are moved between several Excel sheets or separate systems
2) Invoicing: Faster and with less errors
In many companies, invoicing is often disconnected from the daily operations.
"We must remember to do the invoicing” is probably one of the most said sentences in project oriented companies.
Because it takes place in the end, across departments and based on loosely collected time registrations, the invoicing is insufficient in many companies.
They simply do not invoice enough.
Good PSA systems link their invoicing to time registrations and project management to make sure all hours and projects are invoiced.
The project managers can quickly create invoices directly based on registrations in the projects and transfer the completed invoice drafts to the finance system.
It gives a better profit margin on projects, because invoicing is not forgotten, and hours are not lost due to insufficient time registration or when handed over to the bookkeeper.
3) Financial project management: Automatic and complete overview for the project manager
If you are project manager, a large part of your work is to gather information from many different sources. It may be the project workers’ time consumption and progress, budgets and project plans.
Because you have many sources, the project management takes time, is troublesome and it may be difficult to get a full financial overview.
Is my project on track or have I lost my profit?
Professional Services Automation provides the project manager with a project management tool, which automatically gathers relevant information and provides an overview of progress and finances.
If you notice your project finances are off track, you have the option to change the project group or re-negotiate the price with the customer.
The project manager is thereby better equipped to ensure profit on the projects, than if the project finances are the CFO’s responsibility, which is the case in many companies.
The best PSA systems support all settlement types
Invoicing becomes a headache, if you have made different settlement agreements with the customer.
If you have e.g. agreed a fixed price on a project, but continuously agree on add-on services and maybe a service contract with a fixed monthly fee, you may quickly lose the overview of your invoicing.
Therefore, a good PSA system must handle different settlement models with the customer within the same project.
Then you can easily do your invoicing, and you get a total financial overview of the project’s profitability.
4) Project management: Easier with PSA resource planning and project plan
PSA systems have in-build project management, which helps the project manager plan and execute your companies’ projects.
If you are a project manager, it is important that you can break down your project into a project plan, plan milestones, follow progress down to each individual task and employee, and at the same time make sure you spend your resources in the optimal way.
A PSA system supports all the project manager’s processes in planning and executing projects.
Especially resource planning may be a headache for most project managers, if the company does not have a good tool for resource management.
PSA integrates resource management with the project management, and the project manager always has an overview of available resources.
At the same time, it enables the CFO to see if there are employees who are not added correctly and thereby lower the invoicing percentage.
5) Reporting: The CFO can collect key figures for the leadership team in real time
Even though we are in year 2019, the reality for many CFOs (and leaders) is that they often have key figures, which are outdated.
If you are in charge of the company’s financial statement, you are probably familiar with collecting key figures from different sources, systems or Excel sheets and pieces of paper.
With PSA systems, this process is automated, and the key figures are always available in real time.
The benefit of PSA systems is that the necessary data to build your company’s key figures is always available in one simple system.
This means that you can always follow the value creation, invoicing percentage, the projects’ profitability etc., because the value of the employees’ registered hours are automatically linked to customers, projects and tasks.
You can thereby always present the latest key figures to the rest of the leadership team, and you are well-informed about the projects’ progress.
6) Salary management: The bookkeeper avoids manual and time consuming work
In the same way as invoicing, salary management in consultancy companies may be frustrating Excel work.
Often timesheets are not handed in in time, or they include errors which need to be compensated.
In many companies, the bookkeeper must chase and remind the colleagues about handing in their timesheets.
Professional Services Automation has build-in time registration.
This means that you as a bookkeeper can transfer the registered hours, flex and absence directly from the PSA system to the salary system.
7) Customer management: PSA software integrates your pipeline, documentation and project status
Every company needs to have good dialogues with the customers and keep track of the sales pipeline.
The waterproof documentation which resides in PSA systems’ project management and time registration helps the project manager communicate the projects’ status and progress in a simple and precise manner.
Instead of collecting status updates from the entire project group, all information is already available in the system through the time registration.
This is especially important to customers demanding a lot of project documentation.
At the same time, good PSA systems include pipeline management integrated into the customer base for your sales consultants to work with.
This means that the transition between sales, project execution, invoicing and follow up take place in one system, and the history is always included.
In this way, PSA systems break down silos between the company’s departments and create larger visibility all the way through sales, the project group, bookkeeper and leadership team.
[Benchmark] Professional Services Automation pays off on the bottom line
Even though you are not a larger company with +50 employees, it makes good sense to take a closer look at a PSA system, if you also have a fragmented process and system landscape.
All consultancies experience challenges with these processes, and it always pays off to elevate them and professionalise the business.
Research shows the same.
American SPI Research each year does a big benchmark for the consultancies’ key figures. This year, 622 companies participated.
The 2019 benchmark demonstrates that companies using a PSA solution have an 8% higher invoicing percentage, a 9% higher average project margin and they grow the revenue by 81% yearly compared to companies not using a total PSA solution.