This year has been challenging for many companies, from economic uncertainty to market changes and beyond.
According to the TSIA 2022 PS Benchmark Survey, 73% of companies expect revenue growth in 2023. But 49% of companies expect hiring freezes or potential layoffs this year, and 57% expect budgets to be flat or reduced in 2023.
As Thomas Lah, EVP at TSIA says, “You can’t cut your way to success.”
Instead of slashing budgets or reducing headcount, successful professional services companies make the most of their current investments or rebalance their spend to streamline, automate, and build effective systems.
Even with these challenges and conditions, many companies aren’t receiving the maximum benefits of PSA. A recent Planview webinar featuring TSIA VP of Technology and Ecosystems John Ragsdale, Planview Sr. Customer Success Strategist Dave Blumhorst, and Planview Director of Solution Consulting AJ Shavell, dug into how companies and consultants can align PSA capabilities to business challenges. You can re-watch the webinar here.
Why are companies missing out on the full benefits of PSA?
From research and interviews with numerous customers, John says it boils down to three main reasons:
- Companies purchased PSA for a single business challenge, like revenue forecasting, and never expanded its potential to other areas.
- IT drove the purchase, and business leaders don’t know what they have. It’s not uncommon for IT to purchase a PSA but not fully explain its features or potential to the people actually using it.
- Companies are clinging to old manual processes and not taking advantage of automation. Moving to the digital world and challenging established policies and processes can be challenging.
Maximizing the benefits of PSA and using the system to its full potential not only helps companies get the full benefit of what they’re paying for; it can revolutionize systems, drive automation, and provide opportunities for growth and expansion, even in a challenging market.
Four Categories of PSA Capabilities
The beauty of a PSA is that it can impact nearly every area of a business. Consider PSA capabilities generally grouped in these four categories:
- Revenue management. A PSA integrates into existing systems so companies can understand what’s coming down the pipeline forecast revenue. When companies have this visibility, they are more predictable and more proactive, and they have time to educate sales on what they should be selling and the advantages of more value-added products.
- Resource management. A PSA allows for resource forecasting and gives insights into utilization rates. That knowledge enables companies to staff projects to maximize utilization rates and put the right skillset at the right price for the right project. And with an eye to the future, PSA helps companies manage current projects and consider what they will need six or 12 months from now.
- Project management. Project templates, dashboards, plans, and milestones allow for effective delivery. Operating without a real-time view is a lost opportunity for companies and can lessen the results and impact of a project.
- Project accounting. Billing can be very complex, especially with varying billing methods. With project account, track costs associate with project delivery for use in calculating plans vs actual, margins, revenue, time and expenses, then tightly integrate to your ERP for invoicing, revenue recognition and tracking reporting metrics like days-sales-outstanding (DSO).
Common Business Challenges
Every company has its own set of unique business challenges that a PSA can solve. However, there are some common challenges across professional services.
Profitability as companies wrestle with project gross margin and measuring the delivery efficiency and price performance. Managing profitability manually is challenging and can lead to inconsistencies.
Resource management is often the highest cost of doing business. Without the right resources to manage projects, companies often end up with a customer backlog. Resource management also includes employee retention and satisfaction. Hiring and training a new consultant takes months and can significantly cut into the project pipeline. Forecasting resources is a challenge as companies try to consider what projects they’ll be tackling six or 12 months from now.
Solving Business Challenges with a PSA
It’s no surprise that 2023 has been a challenging year. But leaning into the full capabilities of PSA can transform how companies do business, manage projects, and forecast for the future.
Understanding business challenges is the first half of overcoming them. The second is aligning those challenges with PSA capabilities to solve them.
But the truth is that you can’t implement everything all at once. Consider prioritizing business challenges that will guide your implementation plan.
Lastly, it’s always important to consider that professional services does not live in a silo. You need to be connected to the rest of the organization and use the software to empower collaboration. A PSA integrates with other systems, most commonly a CRM or ERP, to create a united approach to delivering services to customers and driving business performance.
To learn more about which PSA capabilities solve your business challenges and how to maximize their potential, watch the webinar Aligning PSA Capabilities to Business Challenges.