When did you last consider what fundamentally constitutes your company?
During a networking event recently, I did an experiment where I asked that exact question to company owners and CFOs.
Most answers were trivial: Employees, buildings, the product, a fax machine (in 2019!) and so on.
We needed a CFO with hands deep down in the machinery before processes were mentioned.
A company, especially if it is a consultancy, consists of people doing something. They sell, invoice, advise, make decisions and do the cleaning.
How well you run your business determines whether or not your processes are good.
This means that companies' IT budgets increase exponentially with the number of digital solutions. Often, the solutions are not integrated but isolated around the specific process.
Does it sound familiar?
Then it is because this is the reality for many companies, maybe yours.
And this is where Professional Services Automation software enters the picture.
The core of all good PSA software is to support and help you optimise the business processes which keep your business afloat.
It provides links between processes; you do not need to buy a separate system for each process.
And because PSA systems are built specifically to match consultancies, you do not need to force your company into a vast system constructed mainly for manufacturing companies (you may have heard about ERP).
In other words, the system is adjusted to support and optimise the work processes in your company, not more, not less.
The most significant immediate change your company and all employees experience with PSA is when time tracking starts to work.
If you sell counselling and consultancy services, time registration is a cornerstone in your company.
The leadership team, bookkeeper, consultants and project managers feel it in their daily work.
Therefore, time registration forms the basis for PSA software. It feeds the hours into the invoicing, builds your reporting and makes the company’s project management work.
An excellent PSA system has easy-to-use time registration, which does not take away time from the consultants or cause inconvenience during their work day.
In many companies, invoicing is often disconnected from the daily operations.
"We must remember to do the invoicing” is probably one of the most said sentences in project-oriented companies.
Because it takes place in the end, across departments, and based on loosely collected time registrations, the invoicing is insufficient in many companies.
Sound PSA systems link their invoicing to time registrations and project management to ensure all hours and projects are invoiced.
The project managers can quickly create invoices directly based on project registrations and transfer the completed invoice drafts to the finance system.
It gives a better profit margin on projects because invoicing is not forgotten, and hours are not lost due to insufficient time registration or when handed over to the bookkeeper.
If you are a project manager, a large part of your work is to gather information from many different sources. It may be the project workers’ time consumption, progress, budgets, and project plans.
Because you have many sources, the project management takes time, is troublesome, and it may be difficult to get a complete financial overview.
Is my project on track, or have I lost my profit?
Professional Services Automation provides the project manager with a project management tool. It automatically gathers relevant information and provides an overview of progress and finances.
If your project finances are off track, you can change the project group or re-negotiate the price with the customer.
The project manager is better equipped to ensure project profit than if the project finances are the CFO’s responsibility, which is the case in many companies.
PSA systems have in-build project management, which helps the project manager to plan and execute your company’s projects.
If you are a project manager, it is essential that you break down your project into a project plan, plan milestones, follow progress down to each task and employee, and make sure you spend your resources optimally.
A PSA system supports all the project manager’s processes in planning and executing projects.
Resource planning may be a headache for most project managers if the company lacks a good resource management tool.
PSA integrates resource management with project management; the project manager always has an overview of available resources.
At the same time, it enables the CFO to see if there are employees who are not added correctly and thereby lower the invoicing percentage.
Even today, the reality for many CFOs (and leaders) is that they often have outdated vital figures.
If you are in charge of the company’s financial statement, you are probably familiar with collecting critical figures from different sources, systems, Excel sheets, and pieces of paper.
This process is automated with PSA systems, and the key figures are always available in real time.
The benefit of PSA systems is that the necessary data to build your company’s key figures is always available in a straightforward system.
This means that you can always follow the value creation, invoicing percentage, the projects’ profitability, etc. because the value of the employees’ registered hours is automatically linked to customers, projects and tasks.
You can always present the latest key figures to the rest of the leadership team and be well-informed about the project’s progress.
In the same way as invoicing, salary management in consultancy companies may be frustrating Excel work.
Often, timesheets are not handed in in time or include errors that need to be compensated.
In many companies, the bookkeeper must chase and remind the colleagues about handing in their timesheets.
Professional Services Automation has built-in time registration.
This means that you, as a bookkeeper, can transfer the registered hours, flex hours, and absences directly from the PSA system to the salary system.
Every company needs to have good dialogues with the customers and keep track of the sales pipeline.
The waterproof documentation in PSA systems’ project management and time registration helps the project manager communicate the projects’ status and progress precisely.
Instead of collecting status updates from the entire project group, all information is already available through the time registration.
This is especially important to customers demanding a lot of project documentation.
At the same time, sound PSA systems include pipeline management integrated into the customer base for your sales consultants to work with.
This means that the transition between sales, project execution, invoicing and follow-up takes place in one system, and the history is always included.
In this way, PSA systems break down silos between the company’s departments and create more extensive visibility through sales, the project group, the bookkeeper and the leadership team.
Even though you are not a larger company with +50 employees, it makes sense to take a closer look at a PSA system if you also have a fragmented process and system landscape.
All consultancies experience challenges with these processes; elevating them and professionalising the business always pays off.
Research shows the same.
American SPI Research does a significant benchmark for the consultancies’ key figures each year. This year, 622 companies participated.
The 2019 benchmark demonstrates that companies using a PSA solution have an 8% higher invoicing percentage and a 9% higher average project margin. They grow their revenue by 81% yearly compared to companies that do not use a total PSA solution.