Looking at 2013 through the lens of broad, macroeconomic indicators here in the US, one might be tempted to take at least a cautiously optimistic view of the state of the world. Unemployment continued to fall to its lowest level since the financial crisis, the stock market performed better than it had since the late 90’s, and growth in developed economies finally started to catch up with emerging markets. While this broad, wide-angle view may be sufficient for some, if you’re reading this, you’re probably more interested a close-up picture of what this all means for the professional services market. This report provides that closer view and much more.
SPI’s 2014 Professional Services Benchmark Report paints a portrait of the professional services landscape—a picture much less idyllic, punctuated by remnants of battles past and portents of challenges ahead. The professional services industry saw revenue growth slow to its lowest level in five years, and nearly 15% of firms contracted rather than experiencing any growth at all. This slowing growth, driven in part by commoditization and rate erosion, was accompanied by a sharp decline in billable utilization, a spike in attrition, overcapacity in both billable staff and non-billable overhead, and a precipitous falloff in profitability. In fact, most of the key professional services metrics deteriorated—suggesting that in order to survive in 2014, professional services firms will need to reconsider strategies and refocus on efficiency and productivity.
So ultimately, what should a services organization do—not just to survive, but to thrive within an environment this challenging? One of the strategies supported by SPI’s research is to invest in business application infrastructures that focus on efficiency and productivity…applications such as Professional Services Automation (PSA) tools. Of those deteriorating metrics mentioned above, including billable utilization, revenue per employee, and overhead staff, all were significantly healthier in firms that used a PSA to run their businesses as compared to ones that didn’t. In fact, amongst all the business applications cited in the study, Professional Services Automation tools drove the largest improvement in bottom-line profitability, a number that succinctly sums up the effects of all of the individual, isolated metrics.
What’s important about SPI’s 2014 benchmark report is that it presents this wide plus deep picture against the backdrop of the shifting economic landscape, an evolving professional services market, and an ever-maturing portfolio of business management solutions. More importantly, it tells these tales based on fact, illuminated by insight. In a manner unlike many other studies I have seen, this benchmark report manages to tell a story with these pictures, not just raw data stripped of perspective or unsubstantiated opinion devoid of fact.
Projector PSA is a proud sponsor of SPI Research’s ongoing efforts to help the professional services community measure and improve its performance. We are pleased to have played a small part in bringing you the 2014 Professional Services Benchmark Report.
To see these perspectives and to start benchmarking your organization against your peers:
Sign up to download the 2014 Professional Services Benchmark Survey Results
We hope the insight that it contains helps you to achieve your goals no matter what surprises 2014 and beyond may bring.