If you work in the professional services industry, you already know how hard it can be to keep track of time and resources spent on a project, to attribute billing items back to billable efforts, and to compare actual expenses against the budget. There are legions of activities that need attention while meeting the needs of a consulting client, and managing them all manually is a nightmare, to put it bluntly.

While industries like manufacturing and tech have been quick to embrace automation, professional services has not. We continue struggling to produce accurate invoices because we’re tracking everything manually. In the course of a given project, we have to track:

•      Forecasted demand
•      Requirements
•      Resource pool and allocation
•      Effort and expense
•      Team collaboration
•      What’s delivered vs. what was planned
•      Actual time and costs vs. what was budgeted

To be fair, part of the problem is that, while there are solutions that can do some of these tasks individually (like time trackers and project management apps), there hasn’t always been one that can cover the breadth of functions a given services team needs. That isn’t the case anymore. Professional services automation (PSA) is now a reality, and few industries stand to benefit from automation as much as services, and specifically, consulting.

What is Professional Services Automation (PSA)?

Professional services automation is software designed to help services teams track and measure key indicators from bid to bill. It does what the name implies—it streamlines, simplifies, and otherwise automates processes, removing the burden of having to do them manually. Unlike other automation tools, however, it’s designed specifically for the professional services industry, and covers all of the functions a consultant needs.

That’s a fairly vague explanation, however, so let’s take a look at some specifics.

What Does PSA Do?

Your first question is likely to revolve around relevant use cases. In other words, what exactly does PSA do?

First and foremost, PSA provides the tools necessary to build a holistic view of a project. It does this by bridging the gaps between your service team, and the sales and finance teams. By connecting service to sales and to finance via a comprehensive application, PSA provides improved visibility into each project. This gives you the ability to forecast and make real-time decisions that will have a positive impact on the business.

Projects in professional services are not static things. They flow and move, changing as time progresses, and things like quarterly or annual reviews don’t always provide the insight we need. Companies may claim that they can handle a forward-looking view, but without capacity view and scenario modeling no team can see the early signs of red flags (projects past due, overruns, and so forth). This can rob a team of the ability to take action before it’s too late.

From these descriptions, you may be thinking that PSA is the same as project management software. It’s not. Project management can only get you so far. It won’t help with capacity and demand planning, with resource management, or with time and expense billing. If you have over 10 projects, or multiple projects across multiple resources and departments, your spreadsheet solution isn’t going to help you.

Ultimately, if you want to forecast the success of a project, and want to have an accurate, real-time picture of its financial health, PSA was made for you.

What Can PSA Help You Achieve?

When utilized effectively, PSA can help your team achieve a number of goals that you’ve likely struggled to manage on your own. Here are the three most important:

1. Revenue recognition: PSA helps you capture the right data and provide it to the finance team to enable revenue recognition.
2. Accurate forecasting: PSA builds a single source of truth you can rely on for accurate project information.
3. Resource utilization: PSA ensures that your resources are maximized.

If you have the right PSA, it can even simplify the tracking of resources with a mobile app, allowing you to input time and expense on the go.

With PSA, you can also measure your resource utilization, which is what most services leaders are concerned with. How busy are their resources (actually)? It is important to keep in mind that a target is closer to 85% rather than 100% (or more, which is a red flag) to provide a realistic picture of what the team can accomplish. Seeing a holistic view of how much resources are allocated over a given period of time helps leaders make decisions and maximize efficiency.

What PSA Is Not

PSA does a lot, but I want to be clear about the shortcomings that people often forget about when seeing all the things it can help with. When putting PSA to use, it’s important to know what its limitations are. As a comprehensive solution, it’s designed to do quite a bit, but it’s not a cure all. It won’t replace common sense, and it’s not designed to replace your project manager, or your resource manager. PSA simply helps gather the data in one place so a project and/or resource manager can make better decisions with.

It’s also not a financial solution. A good PSA helps make finance’s job easier by collecting the information necessary for a project, but it won’t do their job for them or replace an ERP. Rather, a PSA is complementary and collect necessary data without a finance person needing to bother themselves with the ins and outs of the project’s inner workings.

Lastly, a PSA isn’t going to solve all of your project problems. It’s a tool that can help you interpret data, but it’s not going to manage the projects for you. You’ll still have to run the team, helping them manage their workflow and workload, and you’ll still have to make calls when emergencies come up. What a PSA is good for is making the whole project visible, so that when you need to shift things around, you know where to put them.

And just so you know, professional service automation has very little to do with public service announcements—though we suspect there are a few organizations that could benefit from a PSA about PSAs, if you know what we mean.

Examples of PSA in Action

There are many PSA solutions out there, all with their own merits, but here are a couple examples that we have seen of how PSA can help a business succeed.

Prairie Capital Advisors

Prairie Capital Advisors, a professional services organization incorporated in 1996, saw tremendous growth in the first seven years of doing business. They originally used Excel spreadsheets and QuickBooks to track time and expenses, but quickly found this system failing to meet their needs. So they switched to cloud-based solutions to help simplify their work.

They were still missing something, though, so they began searching for true professional services automation, and that’s when they found KeyedIn. Utilizing our PSA solution, they were able to integrate their cloud-based financial and customer relations solutions, gain increased visibility into each project, and improve collaboration between departments.

LightEdge

LightEdge is an enterprise-grade cloud services, colocation, and consulting company focused on business IT needs. Their project managers worked in four disparate project categories: product development, IT, consulting and business operations. The siloed nature of the different departments slowed reporting down dramatically:

•      It took 2-4 days to reconcile activities and deliver a rolled-up status report to executive sponsors because each department tracked information in a separate manual spreadsheet.
•      Engineering and product teams used agile software that did not translate well across all departments.
•      Project intake was unevenly managed across the company due to lack of specific intake rules for every department to use.

Implementing our PSA solution had significant positive impacts on processes, including a reduction of time spent on reporting by 40%. In the words of Natalie Stepp, their Senior Project Manager, “Everything works so much more quickly and capacity control for the whole company is now within reach.”

What to Look for in PSA Software

○      Characteristics of KeyedIn software

■      What-if scenario modeling: Resources are an organization’s most valuable asset, and utilizing them is often the toughest part. What-if scenarios allow you to model different resource assignments to understand the impact of changes before they are made and plan the best utilization of your precious people.

■      Project Insights: Many projects have standard KPIs that let you know if a project is in “good” health or “bad.” But sometimes that’s not enough. Project Insights allows project managers to understand what is going on in a project that might be causing a delay and make changes before it gets derailed. Understand the risk, the investment and the value and make project decisions based on accurate data.

■      Portfolio Analysis: Projects can be managed much more efficiently if they are looked at holistically as part of a program or portfolio. Portfolio analysis helps leaders understand which projects are the best for the business with value based scoring, and allows you to make decisions based on what is best for the business. Understand how much of your resources are dedicated to maintenance or administrative work versus innovative-value producing projects. Report on the business impact of your organization and plan resources based on constraints you know you have. Portfolio analysis will ultimately help you provide more business benefits and keep driving toward what matters most.

■      Services is critical. If you run a services or consulting business, you know how important professional services is for any business. Make sure you understand what implementation entails, how much it is going to tax your team, and what the expectations are of the services team you are working with. It takes one to know one, and partnering with services professionals that are in it with you will go a long way.

Conclusion

For professional services agencies that want to improve the efficiency of their teams, increase their financial visibility, and arm themselves with the data to make critical decisions, PSA is the solution they need. It’s not just project management. It’s “customer relationship management” for your services team.

Back to Mastering Professional Services Portfolio Management.