'Discount offers' no longer steal RackPeople's profit

”What does it mean that we can quote our projects correctly? It means that we make money. If we estimated 20 hours in an offer, the project actually takes 20 hours – maximum”, says Sarah Agerklint. She’s a Business Consultant and project manager at the IT consultancy RackPeople.

RackPeople works with a 360 degree perspective on IT projects and the changes they inevitably entail in their customers' organisations.

Three years ago, the company slammed the brakes and turned their attention to the challenges that always appear in any organically growing consultancy business.

Realistic quotes lead to a higher profit

The challenge was to get an overview of the project finances, the consultants’ time and to invoice customers for completed work.

This is why RackPeople chose to gather projects, invoicing and revenue recognition in TimeLog.

”This has given us completely new insight into our projects. Now, we are constantly aware if we are below or above target on our project finances. And we learn how much time different projects actually consume. This means that we know where we’re off target and where we should charge customers more”, Sarah Agerklint explains.

When RackPeople discovered how long time their customer projects really took, it became obvious that they had priced them significantly lower than they should.

Often, they spend twice the amount of hours on projects compared to the quotes sent to customers.

”Where a typical Skype for Business project used to be a 30 hours project, TimeLog lets us know that it actually takes 70 hours. With our hourly rate, it meant that we charged about 6-7000 € too little on a 10,000 €  project”, Sarah Agerklint says.

And the pricing wasn’t the only challenge that had to be overcome.

Today, RackPeople’s sales crew automatically create invoices on customer projects in TimeLog. This provides to organisation a real-time overview of the invoicing potential.

With TimeLog, the responsibility of the invoicing was moved from the bookkeeper to the sales representatives. At the same time, project managers increased their awareness of how much time they spent on projects, because they were put in charge of the revenue recognition.

”We create new orders as projects with a payment plan in TimeLog. Today we invoice 99.9% of our projects, I guarantee you”, Sarah Agerklint says.

”Three years ago, the consultant didn’t get their bonusses. We simply didn’t know, if they were reaching their targets. Or what their contribution to our bottom line were. And at the same time, we invoiced way too little. So there had to be something to gain", Sarah Agerklint says.

In the end, it wasn’t only a matter of bonusses. And the exercise would turn out to have significant impact on the way the the company went about business.

As is the case for most consultancies with lots of live projects, busy employees and a relaxed approach to the invoicing process, invoices were often lost in the heat of battle.

“In the past everybody had to remember to email the bookkeeper whenever something needed to be invoiced. And there wasn’t really any connection between systems and processes. Only in 70% of all cases, we actually invoiced customers”, explains Sarah Agerklint.

RackPeople remembers to invoice 99.9 % of the time

How RackPeople uses TimeLog

• Create all new projects in TimeLog with linked payment plans
• Invoices and credit notes are automatically created in TimeLog and sent directly to Navision ERP
• All consultants track time, expenses and mileage in TimeLog
• The project overview provides RackPeople with a constant progress overview, if the project is above or below target and if the consultant's’utilisation is as expected.
• Revenue recognition provides an overview of remaining value on projects