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Refine your plan-to-profit process with ERP 2023 containing 8 chapters.

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IMPROVE YOUR
PLAN-TO-PROFIT
PROCESS


INSIGHT FOR BUSINESS AND FINANCE LEADERS
IN THE 2023 PROFESSIONAL SERVICES
MATURITY BENCHMARK REPORT FROM SPI.

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Refine your plan-to-profit process with ERP 2023 containing 8 chapters.

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Contents




IMPROVE YOUR
PLAN-TO-PROFIT
PROCESS


INSIGHT FOR BUSINESS AND FINANCE LEADERS
IN THE 2023 PROFESSIONAL SERVICES
MATURITY BENCHMARK REPORT FROM SPI.

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Refine your plan-to-profit process with ERP 2023 containing 8 chapters.

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Contents




IMPROVE YOUR
PLAN-TO-PROFIT
PROCESS


INSIGHT FOR BUSINESS AND FINANCE LEADERS
IN THE 2023 PROFESSIONAL SERVICES
MATURITY BENCHMARK REPORT FROM SPI.

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IMPROVE YOUR
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PROCESS


INSIGHT FOR BUSINESS AND FINANCE LEADERS
IN THE 2023 PROFESSIONAL SERVICES
MATURITY BENCHMARK REPORT FROM SPI.

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REFINE YOUR PLAN-TO-PROFIT PROCESS WITH ERP 2023


INSIGHT FOR BUSINESS AND FINANCE LEADERS IN THIS YEAR’S PROFESSIONAL SERVICES
MATURITY BENCHMARK REPORT ON THE ROLE OF SOFTWARE TOOLS IN SUCCESS.


IMPROVE YOUR PLAN-TO-PROFIT PROCESS


INSIGHT FOR BUSINESS AND FINANCE LEADERS IN THE 2023 **<I>PROFESSIONAL SERVICES
MATURITY BENCHMARK REPORT ** FROM SPI.</I>


FINANCIAL & LEADERSHIP PERFORMANCE IN 2022


SERVICE PERFORMANCE INSIGHT (SPI) HAVE BEEN PUBLISHING THEIR <I>PROFESSIONAL
SERVICES MATURITY BENCHMARK</I> FOR THE PAST 16 YEARS. IN THIS EBOOK WE’LL BE
EXPLORING KEY FINDINGS RELATING TO **FINANCIAL** AND **LEADERSHIP** PERFORMANCE
– THE TWO MOST IMPORTANT PILLARS OF SPI’S MATURITY MODEL. AND HOW YOU CAN
UNDERSTAND THEIR DRIVERS TO HELP YOUR BUSINESS PERFORM AT THE SAME LEVEL AS THE
TOP 5% IN THE MARKET.


THE PROFESSIONAL SERVICES MATURITY BENCHMARK


LET’S TAKE A QUICK LOOK AT THE RESEARCH BEHIND THIS REPORT.


ABOUT THE RESEARCH

SPI’s Professional Services Maturity Benchmark was created by polling 709 firms
– representing 430,000 consultants worldwide across accounting, architecture and
engineering, advertising and marketing, IT services, and management consultancy.

 

--------------------------------------------------------------------------------

The maturity benchmark is broken into 5 levels (1 being the least mature and 5
being the most) to indicate “maturity” across individual pillars and the whole
organization. A level 5 organization will exhibit a collaborative approach with
firmly established processes and a focus on continuous improvement.

 

Read the full report


LEADERSHIP AND PLANNING **– THE KEY PILLARS TO SUCCESS**


LEADERSHIP SUCCESS DRIVES FINANCIAL SUCCESS


 


OPTIMIZING THESE TWO AREAS OF YOUR FIRM’S OPERATIONS CAN DRIVE SIGNIFICANT
IMPROVEMENTS IN PERFORMANCE.

 

Leadership: This examines how PS executives can most effectively offer a clear
and compelling strategy to provide a unifying focus for organization and action.

The effects of good leadership are seen in improved confidence in leaders, lower
attrition levels, and a more productive workforce.

 

Financial and Operations: This considers the management of all financial
information – revenue, margin, billing, and collections.

In many ways, this is the pillar on which all others rest – good leadership,
talent management, client relationships and service delivery don’t amount to
much if your firm can’t hit its financial goals.


LEADERSHIP: **IN DEPTH**


**BALANCING COMMUNICATION AND INNOVATION**

 

Strategic decisions set the direction and tone for any professional services
company. Determining everything from goals to objectives, the types of clients
your firm will pursue, the types of services you offer, and even the types of
employees who will thrive within the business.

Without optimization, poor leadership can hamstring cross-functional alignment.
Leading to organizational alienation, the emergence of functional silos, and
chaos in the form of infighting, workflow mismanagement that leads to a
firefighting mentality, and ultimately staff burnout.


GOOD LEADERSHIP SPEAKS FOR ITSELF

The effects of good leadership are visible in every aspect of performance. Even
a well understood mission, vision, and strategy can have a huge effect on
billable utilization, project delivery, and annual revenue per head.

 

--------------------------------------------------------------------------------

Confidence in leadership shows a similar gap between the least and most mature
businesses – with a 15.8% difference in % of employees billable between the top
and bottom performers between top and bottom performers.

 

--------------------------------------------------------------------------------

And the effect on “ease of getting things done” (i.e. minimal red tape and
ability to assign qualified resources quickly) speaks for itself.

 

--------------------------------------------------------------------------------


8 LEADERSHIP ISSUES THAT STAND IN THE WAY OF PERFORMANCE

1. Unclear strategy compromises a firm’s ability to capitalize on opportunities.
It also diminishes the drive toward repeat sales and leads to limited
differentiation, poor sales and marketing, and delivery.

2. Lack of alignment creates conflict between driving revenue and margins and
helping the company achieve its objectives.

3. Silos exist in all companies, but their most obvious damage in professional
services comes in the form of poor handoffs and disconnected processes.

4. Reactive not proactive thinking limits your ability to capitalize on future
opportunities by forcing you to forecast on the basis of past performance.

5. Skills imbalances create issues with sub-par utilization, further deepens
silo divides, and causes difficulty in recruiting and retaining staff and easily
staffing projects.

6. Immature processes based around poor systems and tools and inconsistent
workflows lead to low repeatability and an inability to be efficient.

7. Poor quality and customer satisfaction resulting from failed projects, cost
overruns, and leading to difficulty securing references.

8. Poor financial performance occurs as a result of the above factors – all of
which start from the top.

 

Bad financial performance stems from poor leadership, and itself causes a
vicious cycle of high attrition, low morale, and poor engagement. These in turn
lead to low levels of client satisfaction, and poor financial results.


OVERCOMING THE CHALLENGES WITH TECHNOLOGY

Profitability can be improved by boosting utilization, reducing nonbillable
time, increasing hourly rates, and evolving your marketing effectiveness and
solution portfolio.

Technology can help with this. And with changing workforce dynamics, effective,
ethical, and collaborative leadership is also required more than ever before.

 

 

By leveraging modern management tools like cloud-based ERP systems, your
leadership can plan continuously, updating your forecasts, expectations, and
strategies around up-to-the minute reporting and analytics. With the addition of
other tools like PSA software, this will provide a solid foundation for
operations that accounts for every part of your business’s process from
prospecting to billing.

These tools can also help create policies that ensure communication,
collaboration and alignment. And design systems and processes around real-time
visibility and management control, giving you the ability to create a virtual
office environment that supports consultants wherever they are without the
emergence of silos.

These systems can also help you to achieve a greater level of people management.
Leaders at the best firms work to create a culture and work environment that’s
fair, well-managed, and carries ample rewards and career progression
opportunities.

Technology can help you to achieve this by making it easier to nurture your
talent, track their skills and development, and present them with growth
opportunities by assigning them to projects that will challenge and stimulate
them. Giving you a head start on developing both the skills your people will
need for the future, and developing your firm’s future leaders. This also serves
to lower attrition, as people are kept happier and can feel a sense of continual
improvement.


FINANCE:** THE NUMBERS**


**PROFITABILITY WAS THE ONLY KPI TO RISE IN 2022 – INDICATING A NEED FOR TIGHTER
REVENUE AND MARGIN PLANNING.**


IN 2022, PROFITABILITY ROSE TO THE HIGHEST LEVEL SINCE 2018, WHILST EVERY OTHER
FINANCIAL KPI WENT DOWN.  THE DIFFERENCE BETWEEN THE LOWER PERFORMING FIRMS
(LEVEL 1 AND 2) AND THE TOP PERFORMING FIRMS (LEVEL 4 AND 5) IS SIGNIFICANT.
MUCH OF THIS IS DUE TO BETTER SERVICE DELIVERY.


MATURITY MAKES THE DIFFERENCE

As you’ll see from the table opposite, maturity in finance and operations has a
significant impact on all major financial KPIs.

 

--------------------------------------------------------------------------------


SPI HIGHLIGHTS ANNUAL REVENUE PER BILLABLE CONSULTANT FOR SCRUTINY. IT’S THE
SINGLE STRONGEST PREDICTOR FOR PROFITABILITY, AND THERE’S A $194 DIFFERENCE
BETWEEN THE MOST AND LEAST MATURE BUSINESSES.


On top of these strong financial indicators, the research also shows that
organizations who achieved their revenue targets had lower attrition rates,
reflecting financial stability and an ability to both reward good performances
and reinvest in their business.

Days sales outstanding (DSO), another of the most important financial KPIs in
the sector, increased on average in 2022 to 46.8 days from 43.5 in 2021. This
acts as a powerful indicator of operating controls, but also client satisfaction
(as indicated by their willingness to pay invoices) and client creditworthiness.

 

--------------------------------------------------------------------------------


STRONG FINANCIAL PERFORMANCE DEMANDS STRONG FINANCIAL TOOLS

High-performing organizations have moved away from the old trend of managing
based on out-of-date data via Excel spreadsheets. They’ve placed a great deal of
emphasis on building a strong financial application infrastructure. This
enhances visibility and management control, ultimately resulting in higher
productivity and profitability.

ERP (or CFM, as this report calls it), collects and manages all financial
information to provide reporting and visibility into total service revenue,
cost, and profitability. Visibility is particularly important here. The rewards
are significant for organizations who have integrated systems and management
dashboards that allow them to pinpoint issues and spot trends in real-time. They
can make decisions more quickly, and respond proactively to market changes.

The ability to seamlessly integrate the system of record for managing resources
and projects and financial management solutions that govern payroll, expenses,
invoicing, and revenue recognition, and project accounting is also cited as
critical.

In line with this, CFO interviews reveal the top selection criteria for business
applications includes powerful yet easy to use reporting capabilities with
mandatory mobile access.

 

--------------------------------------------------------------------------------


LEARNINGS


2022 WAS A YEAR OF CHANGE AND THE BEGINNING OF STRONG RECOVERY FOR PSOS. SPI
EXPECTS 2023 TO BE A YEAR OF SOLID GROW.


TO COME OUT AHEAD, BUSINESSES SHOULD NOW FOCUS ON THREE THINGS:

 1. Building leaders for the future.
    A younger workforce requires strong front-line management and guidance. With
    workforce dynamics changing, effective, ethical, and collaborative
    leadership is more important than ever.
     

 2. Focus on predictable and repeatable financial performance.
    This creates the breathing room you need to make investments in growth into
    new areas. The last 2 years have proven that discretionary expenditure makes
    very little difference in either employee wellbeing or business success.
    This means it pays to invest in tools that allow you to plan flexibly to
    meet targets even in uncertain conditions.
     

 3. Invest in your IT infrastructure to support both of the above.
    Many firms polled for this study lack the visibility and information they
    need to make real time decisions. Leveraging cloud technology helps ensure
    this level of visibility while breaking down internal silos and providing
    support for both better financial and leadership decisions through new
    capabilities like AI, machine learning, and smart automation.

 

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