Lessons from the top 12 professional service organizations
by Jeanne Urich and Dave Hofferberth, SPI Research
The 2010 Professional Services Maturity Model Benchmark reports that out of 225 participating organizations, 12 firms (5 percent) significantly outperformed the benchmark average by excelling in all five Service Performance Pillars:
- Finance and operations
- Human capital alignment
- Service execution
- Client relationships
The top 12 firms outperformed their peers and the benchmark average with almost double the revenue growth and 30 percent higher net profit.
Best-of-the-best PSO comparison
The top 2010 performers
The following professional services (PS) firms have superior PS Maturity benchmark scores:
- The Parker Avery Group is an advisor to retail and consumer packaged goods companies.
- OMNI Consulting Group LLP provides an economist strategy focus for global companies facing technology decisions, from acquisitions to valuation models.
- Accruent provides a comprehensive suite of enterprise location management solutions that help organizations operate their real estate and facilities portfolios as a competitive advantage.
- Verint® Systems is a provider of Actionable Intelligence® solutions and services for enterprise workforce optimization and security intelligence.
- Siemens PLM Software is a global provider of product lifecycle management (PLM) software.
- TOP Step Consulting improves business efficiency and productivity for professional service operations.
- Campus Management provides software solutions for higher-education institutions.
- RightNow® delivers cloud-based software solutions that create superior experiences for customers across the Web, social media and contact center.
- Blackbaud is a global provider of technology and services designed specifically for nonprofit organizations, to improve operational efficiency, build strong relationships and raise more money to support their missions.
- Stellar Solutions is an engineering services company providing end-to-end technical expertise and problem-solving skills to national and international aerospace programs.
- Thot Wave Technologies provides consulting services to help organizations get more value out of information by turning information into thinking data®.
- Maconomy is a global provider of enterprise resource planning business solutions for project-based and knowledge-intensive organizations.
According to Marc Chardon, Blackbaud’s CEO, “Blackbaud partners with nonprofits to accomplish their mission, and our professional services team is a critical part of delivering our complete solution. The 2010 PS Maturity Model Benchmark is an extremely comprehensive study, and we are proud to be named among the best-of-the-best.”
SPI Research interviewed the top firms to discover their best practices and reasons for their superlative performance. Although each firm has a different business model and operates in different industries, we discovered fascinating similarities in several key areas.
PS Maturity excellence starts with leadership
The leaders of the top 12 firms had significant prior experience creating and running PS organizations. Many of them started as consultants with the Big 5 or in PS for large technology companies. Based on years of experience, they bring deep vertical industry business process and consulting domain knowledge to their current leadership role.
Almost all the leaders of the top organizations have been in their current role for many years; they were either responsible for creating the organization or turning it around. Every leader relentlessly focuses on client and employee satisfaction. They “lead from the front” by setting an example of the types of relationships they value with ingrained respect and support for their clients and employees.
Top firms focus on specific vertical business processes
One of the most noticeable differences in the top 12 PS organizations is their vertical business-process focus. In almost all cases, the top performers focus on narrow and highly specialized vertical industries or business processes. Examples: Commercial real-estate management, retail price optimization, professional service automation and call center optimization.
Other top-performing firms focus on recession-resilient industries: not-for-profit fundraising, education learning systems, and aerospace and defense. Only one firm in this year’s best-of-the best is a broadly focused large system integrator. We believe this intense focus on specific vertical business processes and deep business domain knowledge is the future for PS organizations. Geographically-focused horizontal solution providers will find their markets increasingly commoditized and will be forced to compete on price and staffing. We believe firms of all sizes should think about vertical specialization. Specialized firms create market advantage and command the best rates.
PS Leaders have a seat at the executive table
A clear differentiator between the “best” and the “rest” is that PS has a seat at the executive table. PS is an integral part of the company’s strategy, regardless whether the firm embeds the PS organization within a product company or runs it as an independent service business. For the embedded PS organizations, several PS executives have moved into a quasi-COO role and have taken on additional responsibilities for support, engineering or alliances. In all cases, the PS leader operates at a peer level, not a subordinate level, with the sales counterpart. And in all cases, the primary product sales organization is compensated on selling PS.
No partner channel conflict
Another striking characteristic of the “best” firms is that they are often the sole supplier of PS for their company’s products. In other words, they don’t have to deal with partner channel conflict. For the embedded PS organizations within product companies, the percentage of PS revenue as a percent of total company revenue is well over 20 percent and in some cases, as high as 75 percent of total company revenue. These product companies rely on rich PS revenue and margin to fund research and development and/or sales.