New 2022 benchmark: How has online project execution impacted the professional services industry?
Consultants only spent 34 % of all billable time at their clients’ physical locations in 2021. While this is a record low, we can see the professional services companies adapting quickly and thriving on the new digital normal.
Two years into the Covid-19 pandemic, remote work is the name of the game more than ever.
And the professional services industry has adopted remote project execution at an impressive rate.
As only 34% of the project work took place at clients’ physical location in 2021, investments in digital infrastructure have sharply risen, new ways of organising work have been necessary, and company HR policies have had to be reviewed.
The 2022 SPI Professional Services Maturity Benchmark reveals three trends - two optimistic and one worrying – for what this means for the industry:
- Companies are investing heavily in digital
- Online project execution is performing remarkably well…
- …but also challenges the connection between company and employees
Let’s look at the main insights from this year’s benchmark.
[Sign up for the webinar] How is the consulting industry doing in 2022?
The industry’s leading international benchmark
For the 15th year in a row, Service Performance Institute (SPI Research) have reached out to consulting industry to create the industry’s leading benchmark for financial and operational KPIs.
This year 540 international professional services companies participated, representing 160,000 consultants.
As TimeLog has sponsored the benchmark, you can get it here for free.
An industry going for digital execution
I know many have feared that the new digital ways of working we have all had to embrace would negatively impact project profits and ability to deliver within deadline.
After all, new ways of working take some time to get used to and often come with a cost.
However, the benchmark reveals that this is not the case.
Projects are delivered online – and profitability is rising
Even though on-site delivery is down to 34% of all billable time – meaning that consultants are working remotely and delivery through online solutions have become the norm – projects’ profitability and project managers’ ability to deliver within deadline have been rising.
As such, project profitability has increased to 36.5% this year (up from 2020’s 35.6%), and on-time project delivery also went up to an average of 80.2% from last year’s 79.7%.
Also, the industry’s favourite KPI – billable utilisation % – have increased to a 15 year high at 73.2% (up from 71.4% in 2020).
Mature companies have taken the lead
The benchmark also reveals that the most mature companies have reduced on-site delivery while increasing profits.
SPI Research scores participating companies within five categories of organisational maturity in the benchmark. Level 1 is least mature/evolved, while level 5 is highly mature.
[Explainer] What does it mean to be a mature company?
While immature companies on levels 1 and 2 still spend 41% of billable time at their clients on average – with all the travel and expenses this involves – mature companies on levels 4 and 5 managed to get this number down to 22%.
Having well-established processes and IT solutions have helped mature companies transition to new ways of working quickly.
7 essential processes where PSA software helps you elevate your business
Mature companies show better project performance
At the same time, the mature companies delivered 87.6% of projects on time, while immature companies only managed to do this on 70,8% of projects.
Also, project profits benefit from high levels of maturity. Mature companies averaged 51.1% project margin, and level 1+2 companies only mustered 20.9%.
[Sign up for the webinar] How is the consulting industry doing in 2022?
This pattern repeats itself across all KPIs in the benchmark. From your sales team to HR to finance.
Growing your maturity level is simply good business.
The backside of the medal – your people are leaving
As a CEO, I can understand that maximising the profits from projects and employees’ billable utilisation % is reason to be thrilled.
However, one key figure should give every CEO reason for concern this year.
Employee turnover has always been an issue in the professional services industry, but 9.8% of employees quit their job this year - a 42% increase from last year.
Poking around research and talking to our customers, a picture of consultants feeling disconnected from their workplace emerges.
We all know the cost when our people leave – both in terms of profits and culture.
While the good times seem to be back in terms of opportunity and profitability, the benchmark shows us; we should all take special care to improve work conditions for our employees and create a more significant connection between the company and the individual.
Give your employees reason to stay
In the future, what will mark the best companies will be those that manage to merge our new way of working with a solid connection to their employees.
This includes making the office a place you don’t want to miss out on, embracing digital solutions that enable close connectivity between company and employees and taking a structured approach towards being close to your employees.
Whether this being planned informal coffee meetings or daily 1-1 checkups, this will be key to making your talent stick.
Get the 2022 SPI Benchmark
For the fifth year in a row, TimeLog has sponsored the SPI Benchmark.
You can download it for free (the normal purchase price is $1,999) from our website. We have supplemented the benchmark with an executive summary that gives you the main findings from the benchmark in a condensed and accessible format.
Or you can join our online session How is the consulting industry doing in 2022?
