By David Hofferberth, Managing Director Service Performance Insight, LLC
SPI Research has seen a strong trend toward making virtually all work, project-based work. Companies in every industry have turned their focus toward projects. A project focus makes sense as organizations plan work with a beginning, an end, and all the steps in between. The key element of projects is that there are costs and time associated with every phase or task, and there should also be value delivered. Every dollar spent on an initiative should be tracked to determine whether it was worth the investment.
Projects are easier to qualify and quantify and executives like that
A project-based business environment makes perfect sense to executives. Projects begin neat and orderly, with specific start and stop dates, projected costs and expected value. Leading organizations have also incorporated a structured delivery methodology into their project-based work in order to track everything related to it more closely. This environment helps companies better project a return-on-investment (ROI), which in today’s economy has become essential.
But very few projects go exactly according to plan, as unforeseen circumstances, or changes by the customer impact the project or service to be delivered. Those organizations that have taken a project-based approach to work can more easily change the scope of what is to be delivered, as well as its cost and expected change in duration. Again, this gives executives greater control over the work being delivered, ensuring the project provides value to both the organization delivering it and its customer.
Better tools are now available for customer and client facing organizations
Project management solutions have been around for a long time. They were initially developed and used in large scale internal projects such as IT, construction, or new programs. With the advent of the Professional Services Automation (PSA) market, project management gained in popularity for client facing, billable organizations. PSA is best known as a resource management and time and expense management solution, where the goal is to deliver projects at sufficient margin on-time and on-budget and to keep worker time and costs under control.
Typically, PSA solutions did not have the robust project management capabilities of a solution like Microsoft Project, and eventually, many PSA and project management solutions morphed into a supercharged project management solution, called project portfolio management (PPM). PPM includes additional capabilities that provide visibility to a portfolio of projects including their time and cost commitments and especially their strategic value to the organization so they can be prioritized. These solutions give organizations greater project visibility and greater project structure through the use of standardized (or structured) delivery methodologies. Therefore, many PSA solutions are integrated with Microsoft Project when projects become more complex.
Perhaps the most important aspect of these tools is that they provide demonstrable return on investment to the organizations using them. In 20 years of researching the market for tools that improve operational efficiency and effectiveness, solutions in the project management space have more than paid for themselves. PSA’s benefits have been demonstrated for some time, especially in larger project-based organizations. SPI Research found that larger organizations increased billable utilization from 71% to over 75% with PSA, meaning roughly 80 additional billable hours annually per consultant. Even more important, PSA helped increase profitability per consultant by over 200%, from$7,575 to $24,018!
This benefit does not include many others such as increased customer satisfaction as projects are completed more frequently on-time and on-budget, more satisfied employees, as they better understand what is required of them and the value they must deliver, and greater financial governance, tracking all costs associated with project delivery and comparing them to the revenue generated.
Now, new Project Service Automation (PSA) solutions are coming to market specifically designed to help client-facing organizations in all industries focus on completing project-based work. The functionality of Project Service Automation, does not differ significantly from Professional Services Automation but is built on top of Customer/Client Relationship Management (CRM) solutions to optimize the activities of client-facing organizations such as sales and project/service delivery.
While the global economy is not where most would like it to be, it has “heated up” enough that voluntary employee attrition is on the rise, which negatively impacts profit because it is more expensive to recruit, hire and train employees. This operating environment calls for greater structure, enabling individuals and teams to better work together, utilizing consistent methodologies in the project-related work they conduct.
This is especially true in the manufacturing sector, where companies have become more dependent on services as a key differentiator. These product-centric organizations now rely on services as a profit center because manufacturing has become commoditized so customers look for better support to improve the value of their purchase. It is also very relevant in other industries, such as accounting, Architecture, Engineering and Construction, Advertising and more, as the need to deliver high quality services on-time and on-budget become even more critical in a very competitive global environment.
Taking a project-based approach to work provides executives, employees, customers and clients with greater visibility into work conducted, its cost, revenue, and ultimately value delivered. In an age where more executives demand to see quantifiable value in the work they pay for, companies that take a project-based approach to work have a leg up on the competition.