- How PSA is Changing the Operation of Services Businesses – by Mark Robinson
The Transformation of PSA
By Mark Robinson, CMO and Co-founder of Kimble
Mark’s thoughts below on how PSA is changing the operation of consulting businesses appeared in an article in digital publication Consultancy UK.
The Professional Services Automation (PSA) market has transformed in the last few years and we now see analysts tipping it as one of the hottest technology sectors in 2019 and beyond. The potential of AI and automation mean that it is becoming an increasingly powerful tool for managing services businesses.
The first versions of PSA back in the late 1990s were rather simpler. They arose among fast-growing consultancies looking for ways to improve the efficiency of their billing processes based on learning from previous experience. Before that, the standard practice was to use a variety of spreadsheets, populated manually.
There were a variety of ways in which people tried to use technology to do this in a systematic way. Some businesses built their own solutions, others bought products and customized them. Accounting software vendors like SAP recognized that by adding a few verticalized features they could differentiate their horizontal accounting solution against other vendors who were basically selling a one-size fits all solution. They started to tailor their offerings to specific markets.
Consulting organizations face specific challenges – they rely more heavily on understanding the profitability of individual projects, rather than the overall department or company performance. In those early days, vendors like SAP and Oracle recognized that they could add project accounting functionality to address this market and vendors in the small-to-mid-market, like Netsuite and Changepoint, followed suit.
The Move Towards Forward-looking Analysis
Later, independent vendors started to spring up who built project accounting solutions which were not tied to overarching accounting solutions – rather, they were for managing project costs and resourcing. Seeing this development, some of the accounting vendors acquired and ‘bolted’ on these solutions’ and sold them as a single vendor suite..
Retrospective analysis of project performance is all well and good but it is based on data about past periods. That leads to reactive rather than proactive management of a consultancy – an endless cycle of firefighting. The key development in PSA technology through the current decade, as with most applications, has been a move towards real-time data and more forward-looking analysis. A key part of that movement has been the close interconnection between CRM and PSA systems.
For most services organizations, establishing a close link between pipeline (CRM) and resource and delivery (PSA) offers the possibility of transforming how the business operates. It creates a shared system that can grow and scale with the business. This is because the main way that services organizations grow is to hire more people, and in order to hire more of the right people at the right time you need to understand the nature of forthcoming demand.
Now, PSA is used to help companies create accurate forecasts,. the sales pipeline and live opportunities, and therefore to manage resourcing and delivery. The ability to diagnose trends, to identify issues at an early stage and to see what is ahead, enables business leaders to make better decisions more quickly. It is difficult and time-consuming to do this effectively using spreadsheets, or home-grown systems, particularly for firms with more than 100 consultants.
Homegrown software presents specific challenges around linking with other systems – this starts to involve significant cost and effort. A strong PSA is designed to integrate easily with other applications. An example of this would be the top CRM in the world, Salesforce, where many applications available on the Salesforce AppExchange are designed to link with others out of the box. That means the preferred PSA can be selected separately and integrated with the most appropriate accounting package – which may change as the company grows.
A New Kind of Automation
Going into the next decade, consulting companies will look for PSA to do even more. Instead of predictive analytics which arm project managers with data from which to draw conclusions and plan, the technology can now offer more of what we call prescriptive analytics, providing useful suggestions about how exactly to remedy challenges – from suggesting the right consultants to add to a project, to recommending a hiring spree on a certain job level to improve project profitability).
The next generation of PSAs will address other problems, such as the problem of guiding a global workforce. There will likely be greater use of bots – to guide consultants to take the next best action, remind them to approve their timesheets or suggest a course of action.