By Ed Marshall
If you work in professional services, you already understand the need for professional services automation (PSA) software to track employee hours, projects and costs. But what you may not know is that recent trends in the services industry are motivating more companies to move from standalone PSA to end-to-end services resource planning (SRP) platforms.
Jeanne Urich, managing director of the research consultancy Service Performance Insight (SPI), notes that as competition continues to rise among services firms, the need for more integration between standalone applications—namely PSA, ERP and CRM—has grown. The most mature, leading services organizations are investing in full-fledged SRP systems, such as NetSuite's cloud-based SRP, SPI Research has found.
The catalyst for this increased SRP adoption, according to SPI's annual global benchmark of 1,500 firms and 375,000 consultants in the services industry, is stiffer competition as well as a slowing of revenue growth beginning around the end of 2013 and early 2014. This, combined with lower utilization rates and more overhead, make for lower profits overall.
According to SPI Research, services companies are looking for six capabilities in their SRP system to help them overcome these emerging challenges:
Human capital management. Employee turnover is higher and consultants' billable utilization rates are lower than they should be, according to SPI Research. That indicates services firms should focus on better human resources management. The new term is human capital management, which treats employees as assets and manages them from pre-recruitment and training through to knowledge transfer and termination.
"A key differentiator in this space is HCM. Companies used to have just an employee database, but now it's important to have more people-based systems—with performance management, recruiting, talent management—integrated with the selling and delivery side of things," Urich said. "These are all new areas rapidly expanding in project-based ERP."
Service-specific financials. To stay competitive, services firms have developed more creative ways to package services, offering them in different bundles and pricing formats. There are subscription-based monthly fees, flat-rate projects, a la carte offerings, renewable yearly contracts, non-renewable contracts, payments based on milestones reached or percentage of the project completed, and any combinations of the above mentioned. So the financial side of the SRP application has to be flexible enough to support an endless variety of pricing options.
Social. Today's services-based SRP software must have social media capabilities, because millennial-aged workers expect to have Facebook-equivalent functionality for sharing information, marketing their professional expertise and collaborating on projects.
Mobile access. Services professionals are out of the office much of the time, so they need mobile access to their data. They need to record their time and expenses, access contact lists and read texts and emails on the road. And it's not just the consultants—just about everyone, even the finance staff, expects to have mobile access to email and other key work data on the go.
Reporting and analysis tools. Services firms need actionable data. While this isn't unique to their business, it is especially important to their success. Services are fleeting—an hour of a consultation time can't be stored—and services executives need on-the-fly analytics to identify the best opportunities to increase business, before those opportunities are past.
Cloud-based architecture. Needless to say, if an organization needs anywhere, anytime access to its data, it will be looking at cloud-based applications to achieve that. A cloud-based ERP platform provides both easy access via web browsers—rather than specially equipped laptops with VPNs and client software—and integration between all of the various ERP components. Cloud platforms also often have easy-to-use workflow customization tools. That's important in today's constantly changing organizations.
As Urich explained, "Today's organization is very fluid, and it may have an employee in a business development role who's also helping with recruiting, who then shifts into some aspect of project management. The systems that the organization uses must mirror this fluidity."
Ed Marshall is SVP and General Manager of the Services Vertical at NetSuite.
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