5 steps for improving disconnected processes in professional services organizations

Whether you are struggling to gain control over your projects, accurately invoice your customers or deliver more with less, now is the time to start reviewing strategic goals and figuring out what people, processes and systems need to be in place to achieve those goals. Here are five ways to get started:

1. Project management and accounting

Not being able to match project management with project accounting data is a common scenario. Using disparate tools to operate your organization is costly and will directly affect your bottom line — which is why a standard, integrated solution needs to be in place so project managers can truly understand project costs and project status.

Overcome the challenges

The first and most important step is to foundationally understand the project life cycle and how it is actually being managed. What are your assumptions of the project? Do they match with the actual cost of the project? Even more important: get connected. The delivery and finance teams need to communicate and understand the factors driving costs. Sharing information is important, but really understanding the impact each team has on the other is critical. Common sense tells you that upfront project planning is a good idea, but in reality it often gets pushed aside when more pressing tasks arise. For PSOs, where knowledge is the product, maintaining healthy profit margins takes reliable processes and systems to ensure that your service teams are running at maximum efficiency. But without some sort of vision and structure in place, service organizations will always fall back to old ways of managing a project.

The power to excel

Balancing all elements of a complex project — time, money, scope and resources — is the project manager’s responsibility. Making sure these managers have the right tools in place to succeed is essential to dealing with the unexpected challenges that come with every project. Organizations that have implemented a professional services automation (PSA) solution to run their business have an early competitive advantage. Streamlined communication from the initial sale through delivery eliminates the time and costs associated with sales to delivery transitions, facilitating quicker payments. 

An integrated solution aligns all business functions — sales, service, project management and accounting/billing — to provide a 360-degree view of how projects move through your entire organization. If you provide easy-to-follow processes and give your project managers the power to actually manage using the right tools, they will excel, and projects will be run more efficiently with greater profitability. Every project the organization completes will become a baseline for the next project.

PSA solutions automate vital project management and project accounting processes so you can deliver predictable services and profitable results. These benefits include the ability to:

• Capture every hour worked and every dollar spent
• Track profitability on multiple project types, including fixed, cost-plus and time and material
• Keep accurate real-time data on every project
• Identify when a project might be going off track (before it actually does)
• Know when you are behind schedule versus under budget

With a PSA solution, project managers will have a better picture of the overall project, enabling them to address the profitability of each customer and ultimately become more selective when prioritizing resources. The reliable and real-time data puts the power in your hands to determine whether you want to continue with an existing customer or possibly look at newer opportunities, or both. Organizations that have adopted a fully automated, integrated solution significantly increase communication across departments and have better real-time visibility into operational performance, driving growth and profitability. Executives at those firms are able to use that visibility to establish a more accurate performance baseline and develop a clearer picture of where they want to be next month or next year, ensuring that each project’s success translates into organizational growth for years to come. Now that you have been introduced to the benefits of managing a project using professional services software and seen how back office automation increases visibility into many aspects of a project’s life cycle, let’s look at how you can improve your organization’s revenue with better forecasting tools.

2. Forecasting revenue

People are at the core of an organization. You already know they are busy today, but will they be busy in 6 months? Being able to forecast your services and resource availability and exactly how billable those resources will be over time is a critical component to your project’s success. Do you have enough resources in place? Are they the right ones, and will you need to deploy additional resources? These are common questions you might have when managing a project. When any organization starts out, it’s smaller, with less of a critical need to manage people and processes. Forecasting sales and service revenue is easily done in an Excel spreadsheet and shared among project team members. But as the organization grows and you take on larger deals, it becomes more difficult and more important to manage costs and have visibility — into both financials and delivery.

The value of information

Imagine knowing ahead of time that you will be short-staffed in a particular skill base, or you will need more resources for a certain phase of a project. Imagine knowing what your real-time costs are on all projects at any given time. Armed with this knowledge, you can take advantage of downtime to train staff on needed skills, or rework your schedule to plan for the extra resources needed for busier times during your project. Or, if you are growing, you would be able to hire more people to keep projects on track — all while keeping your project on time and on budget. The addition of a PSA solution will provide you with the ability to forecast utilization levels and staffing requirements. Revenue forecasts in real time will not only let you manage hours already spent but will also provide you with the ability to track the dollars expended. Services automation tools enable organizations to check on expected performance and estimated revenue by employee. PSA forecasting tools provide critical functionality to your project life cycle, enabling the delivery of predictable services and profitable results. These benefits include the ability to:

• Identify key information that enables team members to make more informed decisions
• Gain visibility on utilization and expected revenue in both time and money
• Create custom dashboards and reports that provide valuable insight on the go
• See the finances of projects at every stage: opportunities, in process, and completed

Because a PSA solution offers resource management capabilities, you can also now forecast your resource requirements related to the services pipeline to more tightly control and influence your margin potential and maximize resource utilization.

3. Management of resources

The way a PSO manages and deploys its resources has a significant impact on the business and its bottom line. Who is the right person to staff — more senior or more junior? What about costs? The challenge is collaboration — how do you keep your organization busy and profitable at the same time?

PSOs are often made up of smaller operational departments that don’t always communicate effectively, making resource management more difficult. The initial focus is on landing the next project, and then later in the process, project managers find themselves asking about resource availability. To manage utilization effectively, project managers need to be able to express their staffing needs early and up front. Resource managers need the tools to efficiently match those project needs to the availability of appropriate resources. Even the smallest improvements in this staffing and resource management process could yield huge rewards in terms of utilization. Giving a project manager the ability to express the need for a new team member, or explaining how flexible that team member can be in terms of a start date, can mean the difference between being able to work with current staff or needing to hire someone new. Arming a resource manager with the ability to gauge staff availability at a glance could mean the difference between winning new business and losing it.

Utilization is one of the key measures organizations use to gauge the efficiency of their business. Trading out a less costly resource where possible or substituting in a more experienced team member when a schedule is tight can have a large effect on a project’s success, and ultimately, its profitability — not to mention the benefits of keeping the customer happy. Figuring out how to optimize both utilization and profitability is the key to running a successful organization.

Leverage real-time visibility

To fully leverage your organization’s service workforce and the effect it has on your bottom line, you need to have a complete understanding of the entire project portfolio, as well as visibility into your resource pool. A PSA solution provides managers with high-level visibility into resource skills, availability and costs to be able to match the right person with the right project at the right time. Real-time data from a PSA tool allows you to analyze utilization more effectively, taking the guesswork out of resourcing a project and giving you a better understanding of any fluctuations in your resource pool. Visibility into historical project data allows the sales team to produce more competitive proposals and helps them to win more projects. Additionally, the sales team is able to ensure availability of key project resources up front and build accurate project estimates from templates, giving the project team a better chance at success once the project starts.

PSA solutions provide automated utilization reports, giving you the ability to keep projects on time and on budget. These benefits include the ability to:

• Start projects faster
• Automate scheduling
• Manage your staffing needs with more confidence
• Increase resource utilization by matching skill sets with project demands
• Build accurate project budgets • Increase employee morale and avoid overutilizing or underutilizing certain work groups
• Gain visibility into future hiring needs or training opportunities

There are many factors that play into a PSO’s profitability. No firm will be able to control all of those factors, but with reliable processes and systems in place, your organization will be able to keep a handle on healthy profit margins.

4. Time and expense entry

Increasing profitability is a primary goal for a PSO, but without the tools and processes in place to efficiently deliver work, any gains in revenue will be lost somewhere along the way. How do you go about capturing every revenue opportunity? To start, make sure each hour and every expense gets billed. How many hours and resources has your organization spent on sifting through multiple spreadsheets, making updates and merging data? How confident are you in the final report? Using spreadsheets or multiple in-house tools to track time and expense leads to inefficiencies, including inaccurate project status and costs/revenue visibility. You don’t want to spend a lot of time on these administrative tasks — but it has to be done.

Time and expense entry is a critical element of the project — it’s how you are gathering budget information, as well as tracking your actuals. And no matter how well you track your project deliverables, if your time and expense capture is inaccurate, your project costs and service profitability will be inaccurate as well. Even more challenging to track are time and materials (T&M) projects, where that time actually drives your billing. Without an integrated time sheet management and expense reporting solution, your project-based business will not be able to effectively account for project costs, track budget versus actual, and analyze real-time accurate project time and cost information. Knowing your true project and service margins is critical to managing your organization’s overall profitability.

Valuable insight into utilization and project cost information

When it comes to time sheet and expense management, you need to make it simple and easy for the employees to enter hours and expenses. The more manageable the process, the more likely time sheets and expenses will be accurate and entered on time. A PSA solution is business process oriented, rather than modular, allowing you to leverage the embedded workflow engine to generate event-driven alerts, facilitate collaboration, and manage timelines and major project milestones. At the most basic level, your information workers will be able to quickly and conveniently enter time and expenses to expedite billing cycles and the period close process.

PSA solutions automate the key underlying operational processes, enabling you to capture time and expenses. These benefits include the ability to:

• Manage and submit time sheets for approval based on your organization’s processes
• Track hours worked and allocate directly to projects or tasks
• Submit time sheets and expenses on-the-go from any mobile device
• Improve visibility, accuracy and control

Integrating a PSA solution into your organization provides flexible, fully integrated control over your professional services resources. With a system that enables you to track time and expenses more completely, deploy resources and manage projects more effectively, project managers will have a clear and accurate project snapshot updated with the most current information available. This gives you the power to focus on what’s important: gaining the visibility and control you need to grow and manage your professional services organization and capture every revenue opportunity.

5. Invoicing and financial system integration

Delivering a successful project takes a combination of the right talent and the proper tools. Sales teams need to have enough visibility into past projects to build reliable and competitive proposals, project managers need a complete understanding of a project’s health throughout the delivery process to make informed decisions, and financial managers need to be able to create, review and issue invoices, as well as compare project performance to budgets and other metrics. But if you are still relying on error-prone, manual processes to create invoices, your organization could be risking the overall success of the project right at the end.

Bill with confidence

A professional services automation solution works in conjunction with your existing accounting system — the granular financial and billing detail related to service engagements captured in a PSA solution can be directly integrated into the invoicing process, allowing critical information to freely flow back and forth between applications. Detailed data captured in a PSA solution can provide your organization with a complete audit trail — resulting in greater accuracy in invoicing and financial reporting, fewer credits and a reduction in customer disputes. Professional services software can automate every aspect of creating the invoice, including project hours entered by each team member, hourly billable rates calculated, additional expenses incurred while on the project, and it can also flag any discrepancies. The ability to provide greater detail and reliability ensures adherence to contract terms and conditions as well as financial reporting requirements. The ability of your PSA solution to integrate with your invoicing process is critical and can result in significant benefits. These benefits include the ability to:

• Bill for every hour worked and dollar spent
• More frequent invoicing — get paid faster for your work
• Track profitability on fixed price projects as easily as on T&M projects
• Manage payments received

Complete integration means that your back-office operations, such as time and expense entry data, are accurate and always current. Project times and expense amounts are viewed in real time, and the system will automatically calculate your invoices based on your defined billing needs, such as a fixed-price project, a T&M project, a cost-plus or a milestone billing. In the end, it’s about cash flow and getting accurate invoices to customers so they have no questions and pay quickly.

The way forward

Multiple nonintegrated applications can quickly take on a life of their own, building walls between departments that fragment the organization. Aligning your systems into a single user interface is the glue that holds together the communication and analysis of your customers’ projects — from their perspective as well as your own. With greater accuracy and controls in place, professional service managers can chart future projects for both current and prospective customers with a higher degree of confidence than ever before, and they can forecast delivery capacity requirements and costs, bringing greater predictability to the overall process.

Putting the necessary framework in place ensures that each successful project will translate into organizational growth for a viable and successful future. PSA brings critical business functions together into one solution, driving long-term growth and profitability.

With foresight, as well as integrated and flexible systems, professional service executives can optimize people and processes, streamline operations and fulfill profitable growth objectives.

Microsoft Dynamics for Project Service Automation

DXC Eclipse offers professional services organizations such as management and business consultants, architectural and engineering firms and IT services and systems integrators, an innovative cloud solution to empower teams, increase productivity and drive growth. Microsoft Dynamics 365 for Project Service Automation seamlessly combines customer relationship management (CRM) and professional services automation (PSA) with enterprise resource planning (ERP) connectivity into an integrated cloud-based application that works on any web-enabled device. Dynamics 365 for Project Service Automation enables project-based organizations to deliver every customer engagement on time and within budget through an end-to-end solution for sales, planning, resourcing, delivery and billing.

Why DXC Eclipse?

DXC Eclipse, a practice within DXC Technology, helps enterprise and mid-market companies accelerate digital transformation, solve business challenges and deliver intelligent solutions that make a difference for customers, employees and partners. We believe in delivering expertise, project transparency and excellent customer service in every engagement. With team members in North America, EMEA, Asia and Australia-New Zealand, we are uniquely positioned to deliver Microsoft Dynamics 365, ERP, CRM, business process, analytics and collaboration solutions to customers across the globe. The largest independent Microsoft Dynamics partner in the world, DXC Eclipse serves more than 4,000 customers across multiple industries. Our practice delivers services and solutions that positively impact our world today and into the future.