What does a successful professional services engagement look like? Firstly, of course, it is one where the customer is satisfied with what was provided. But it is also one where the engagement has been delivered at or above the margin at which it was sold.
Achieving the first part of the equation – a satisfied customer – is only half the battle. Sometimes businesses manage to do this on most of their engagements but end up repeatedly suffering unexpected margin dilution. A business which does not actively manage risks across the organization will struggle to expand, no matter how talented the team of experts it can field.
On the other hand, businesses which excel in identifying and managing risk significantly better than others in the field reap a competitive advantage. They have a stronger basis for deciding what level of risk is acceptable. For instance, offering a low price on a particular project for commercial reasons may be acceptable when the managers have clarity about the financial implications, and know that robust risk mitigation is in place.
In many organizations, senior staff, who have built up knowledge and experience of their sector over many years, are the only ones who can assess risk effectively. Professional services automation, however, offers a way to share that knowledge across the business. Drawing patterns from the data gathered from previous projects enables likely issues to be predicted. It can also spot dangerous trends – for instance, margins slipping in a particular area.
Risk cannot be eliminated. But managing it in a best practice way reduces unnecessary exposure and builds resilience. The range of strategies already set out in this series of Best Practice Guides are key to this process: having a forward-looking culture, accurate forecasts, resourcing proactively and so on all help to make the business more predictable. Building on that, below are five steps for actively surfacing and managing risk.