How Purpose-Built Software for Services Improves Four Key Performance Indicators
The most successful services organizations understand that progress can only be achieved if it is actively measured. In order to compete today, services businesses must take a more quantified approach toward success. This requires establishing a set of standard key performance indicators (KPIs) most relevant to success at your business. Today, it’s no longer enough to just measure KPIs — you have to be able to understand what they indicate and take action so that you can improve outcomes for your business and your clients.
This is where purpose-built, cloud-based professional services software can help. While professional services software certainly supports organizations in establishing and tracking metrics, the true value is realized when the business is able to make impactful decisions based on the data in the system. The best professional services SaaS technology makes sense of all the data and metrics, taking the guesswork out of running a high performing services organization and allowing your teams to do what they do best — serve clients.
This blog outlines how software designed for professional services firms improves four of the most impactful metrics used in services today — utilization rate, profit margin, net promoter score, and employee attrition. Understanding these metrics, analyzing the data, and adjusting the appropriate levers can only be done with the help of purpose-built technology. Delivering services today is simply too complex to manage without the support of technology — especially for organizations looking to scale.
1. Utilization Rate
Successful services organizations understand that their most important asset is their people. Getting the right people on the right projects and maintaining optimal workloads results in more successful project delivery — not to mention happier and more engaged employees. The first step to ensuring your services organization is putting resources first is to take a look at your utilization rate. It’s rare to find a highly effective organization with a wildly high or low rate — neither is sustainable and will require optimization.
In order to optimize utilization rates, you must constantly manage a balancing act between your supply and your demand. This requires a streamlined resource management process which is becoming increasingly difficult to handle manually and without the support of technology. Effectively managing resources requires complete visibility into accurate, up-to-date, and comprehensive project and resource information such as cost, availability, and experience.
Purpose-built software for services organizations ensures that all past, current, and future project and resource data will be stored and accessed via one source of truth. Instead of playing a last-minute game of assigning resources to projects, professional services software makes it clear exactly what demand is coming in the pipeline, and flags managers if the appropriate resources will not be available. This allows resource managers to proactively assign teams to projects, ensuring the resources with the best-fit skill level, cost, experience, and availability can be scheduled. Making last-minute adjustments to resources will likely result in reduced profits, less-than-satisfied customers, and disengaged or burned out employees.
2. Profit Margin
Keeping a close eye on profits requires a methodical approach to operations along the entire project lifecycle — all the way from pre-sales to billing. This can seem daunting in today’s services market as there seems to be an endlessly evolving list of factors to keep an eye out for. Identifying areas where costs can be reduced, or operations can be streamlined is the first step to ensure you are maximizing profits and not inadvertently creating opportunities for revenue leakage to occur.
Technology makes it possible for services organizations to take a sort of audit across the delivery lifecycle — it raises red flags where there may be opportunity to reduce costs or improve profits. The right software solution gives users the visibility and control they need to proactively mitigate scope creep, margin dilution, and revenue leakage. This reduces the chances of surprises happening in the middle of a project that would otherwise take resources or additional cost to resolve. Any potential roadblocks or dependencies are brought to the surface at the start of a project, ensuring all teams involved have access to the same data and are on the same page in terms of goals. What may appear to be just a small opportunity to streamline costs can actually have an incredible impact on revenues. Slightly improving average project margin can increase your profits exponentially.
3. NPS (Net Promoter Score)
The Net Promoter Score (NPS) is calculated via survey and reflects the likelihood that respondents would recommend a company or product to a friend or colleague. Due to the nature of services, the more value you can deliver to your clients the more likely they are to come back for more business, which in turn increases the likelihood they will refer you to someone facing the same challenges. Delivering high-value projects and gaining recognition requires consistent, repeatable, and agile operations and processes.
Technology plays a key role in keeping service delivery consistently aligned with client expectations across a multitude of projects. Services organizations with a high NPS tend to have systems and tools in place that support and empower users through data and analytics. Purpose-built software makes project resource and financial information completely visible to appropriate team members. This allows everyone to be on the same page in terms of client expectations, timeline, costs, and potential roadblocks.
Technology that’s purpose-built for professional services empowers services organizations to get ahead of the kinds of roadblocks that lead to delays and missed milestones — reducing the chance of client dissatisfaction. The happiest clients are the most likely to give an organization a high NPS rating and — they’re also more likely to be return customers and to play a significant role in bolstering a business’s position in the market.
4. Employee Attrition
The most crucial component of successfully delivering professional services has always been (and will always be) having the right people. Services organizations must invest in their resources in order to retain the best talent and in turn deliver the most value to clients. It’s tough to deliver projects successfully and at scale if an organization is low on resources or is forced to assign sub-optimal resources to assignments.
It’s key to have a variety of resources (different costs, skills) available for upcoming demand without too many people sitting on the bench. This requires a delicate balance as you don’t want resources working too much or too little as it will significantly impact not only utilization metrics but overall employee morale and engagement.
Ensure you have systems in place that support your resources — not only along the project lifecycle, but along their career journey. Purpose-built software for professional services empowers your resources by ensuring all relevant information about them (such as skill level, availability, career aspirations, etc.) is visible to management. This means that resource assignments take into account not only the needs of the client, but the needs of the resource as well.
For example, you may have a junior consultant who is working on developing a certain skill — resource managers can easily see this information when finding the right candidate for a project — and can choose to pair them with a senior resource or certain client in order to hone the relevant. If there’s one area of the business you can be sure to see an almost immediate return on investment, it’s investing in tools to support your people.
The cost of replacing key resources is high — especially in professional services. The right software solutions not only keep workloads reasonable and utilization levels at an optimal level, they actually advocate for the people delivering services. Technology makes it easier for resource managers to take career goals and skills development into consideration when assigning resources to projects. This significantly reduces turnover and fuels retention, which is one of the absolutely essential components of successfully — and profitably — scaling services today.
Learn More
These are just four of the many KPIs that purpose-built software for services organizations was designed to improve. If you find yourself struggling to access comprehensive delivery data, or see an opportunity to cut costs or streamlined operations and processes at your organization, consider learning more about The Kantata Professional Services Cloud.