Recommendations for achieving success

Working with industry analyst SPI Research, we’ve developed 20 key recommendations for PSOs looking to succeed
in the current climate.

They are based around 20 essential KPIs and categorized into five pillars of success:

1. Leadership

2. Client Relationships

3. Talent

4. Service Execution

5. Finance and Operations

You’ll find the key recommendations in the following five sections and a graphic of the 20 essential KPIs with a checklist at the end.

1. Leadership

Strategic decisions set the direction and tone for any professional services company. They affect all functions because strategy and vision from leadership determine everything from goals to objectives, the types of clients your firm will pursue, the types of services you offer, and even the types of employees who will thrive within the business.

Without optimization, poor leadership can hamstring cross-functional alignment. Leading to organizational alienation, the emergence of functional silos, and chaos in the form of infighting, workflow mismanagement that leads to a firefighting mentality, and ultimately staff burnout.

SPI Research recommendations:

Strategic clarity
Communication
Alignment
Employee confidence

Unit4 recommendations for your software:

Modern management tools such as ERP allow continuous planning, forecasting, and strategizing.
Up-to-the-minute reporting for real-time insights.
The ability to collaborate and align with tools that remove siloed work.
Real-time visibility and management control in a virtual office environment.
Talent Management that nurtures people, tracks skills, and promotes personal development.
Enables the creation of a people-centric culture.

2. Client Relationships

SPI found that the highest performers in the market focused on fewer clients and generated much greater revenue per client, indicating deeper and more valuable client relationships.

Cultivating new and repeat clients is the lifeblood of the service industry. PSOs are in business to provide knowledge, expertise, and guidance. Their sales and marketing organizations must define target markets and solutions by understanding key client challenges.

SPI Research recommendations:

Service packaging
Sales pipeline
Client mix
Reference clients

Unit4 recommendations for your software:

Allows your PSO to eliminate silos and unite departments across the business, creating a cohesive client experience.
Helps teams to be more efficient, resilient, and adaptable.
Automates low-value tasks so your people can focus on bringing more value to clients.
Integrates your key applications and data sources (e.g., with Unit4 Industry Mesh) which builds upon that value by providing customers with accurate data.

3. Talent

Organizations are embracing technology to help reinvent the workplace, with knowledge-sharing, team building, transparency, and collaboration at the core of their continuous learning cultures. Support for a virtual workforce includes using the best virtual technologies with an emphasis on knowledge sharing and collaboration.

Talent remains the central issue for PSOs, according to SPI. Leaders must support and celebrate working from home while adapting to new, more inclusive management styles and more targeted communication.

SPI’s KPI recommendations:

Ramp time
Employee satisfaction
Attrition
Billable utilization

Unit4 recommendations for your software:

Anonymous pulse surveys that are a safe space for people to share their thoughts and help leaders understand their people.
Human Capital Management (HCM) that tracks skills, identifies career development and succession planning opportunities, spots trends, and forecasts employee turnover.
Compensation planning that streamlines processes so managers can make better pay decisions and improve employee engagement and communications.

4. Service Execution

Successful service execution maximizes project margins (done correctly, it can make project margins of 60% or more possible) and creates the groundwork for continuous improvement. Poor service execution can easily lead to negative project profitability.

Successful service execution depends on the alignment of sales, service, and finance, the capturing and accurate analysis of all project data, and the implementation of effective resource and project management. Service execution experienced the most improvement over the years, as firms have realized resource specialization and visibility are now critical to all facets of project delivery. At the highest level of maturity, firms will have fully integrated operational management solutions (i.e., integrated PSA), continual checks and balances to assure good utilization and bill rates, and complete visibility into global project quality.

SPI’s recommendations:

Resource management
Knowledge management
Project management
Quality delivery

Unit4 recommendations for your software:

Effective resource and project management that allows visibility and management control.
Collaborative tools that ensure nothing is missed.
Professional Service Automation (PSA) software that tracks projects throughout, improves efficiency, tracks hours, links records, and ultimately reduces costs.
Integrated tools that provide a single source of data truth and reduce work siloes.
Automated workflows that improve flexibility and accuracy.

5. Finance and Operations

All the work done to plan, sell, hire and deliver services won’t count if the firm does not achieve its financial goals. SPI reported their best figures ever for the achievement of revenue targets at 96.2% and 92.1% achievement of margin targets. Planning and rebudgeting have improved, along with pent-up demand during the pandemic and cost savings from not having to operate facilities, host meetings, or pay for travel.

Several metrics show how well a PSO is operating, including annual revenue, EBITDA, DSO (Days Sales Outstanding), revenue leakage, and percentage of rejected invoices. The research shows that the PSOs who achieved their revenue targets had lower attrition rates, reflecting financial stability and an ability to both reward good performances and reinvest in their business. On the other hand, PSOs with higher levels of revenue leakage reported lower utilization, poorer on-time project delivery, more project overruns, and lower EBITDA than organizations that better manage contracts, capturing all hours and expenses and billing accurately.

SPI’s recommendations:

Revenue
Project Margin
Discretionary Spending
EBITDA

Unit4 recommendations for your software:

Bill with precision and accurately forecast.
Have real-time visibility so financial performance trends can be monitored.
Remove the admin burden from staff and boost productivity.
Integrate finance and HR.
Track income from billable hours.
Instantly trace all people-related costs so they can accurately plan and budget for programs and projects.
Have a single source of truth for instant and accurate reporting.

The 20 essential
KPIs for PSOs

The 20 KPIs you should focus on and
the targets you should aim for to help
you succeed, according to SPI.

Source: SPI Research, February 2022