The Best Way to Select Software for your Professional Services Firm and Get it Right

Author: Categories: Professional Services, Scalability

Selecting professional services software for your firm
Selecting Professional Services Software for Your Firm

You have undertaken the selection process to find the right software solution for your professional services firm. You have a laundry list of functions the software needs to perform, you have Googled professional services software vendors, and you are quickly feeling overwhelmed with a handful of options, each promising to meet your every need.

How do you sort through this information overload? You decide to send your checklist of features to each of the vendors; the vendor that returns your checklist with the most boxes ticked wins.

My recommendation? Stop right there and quit while you are ahead. Not only does this checklist approach provide insufficient information, but it will also not help you make a vendor decision quickly. You will be missing the full picture, and your head will be spinning wondering how you got into this situation in the first place!

What do I recommend instead? Glad you asked! There are people who have approached this process in a different way and have found it to be quite painless…might I even say rewarding?

Let's take a look at how the most successful companies approach the software vendor selection process.

This or That
Software evaluation:
Comparing a Checklist
of Features Won't Help
Vendor A
Revenue Projections
Resource Scheduling
Time Entry
Invoicing
Budgeting
Vendor B
Revenue Projections
Resource Scheduling
Time Entry
Invoicing
Budgeting

  1. Ditch the professional services software checklist approach

Do This:
Have in-depth conversations.

Before you begin the search for a professional services software solution, take the time to have critical conversations with stakeholders in your organization to fully understand the business problems you are trying to solve. Countless times, people start searching for software solutions before they have identified their business's root problems.

For example, if fixed price projects are a core aspect of your business, you need dynamic visibility into revenue and mid-project profitability. As a result, you might think that you need to find a software solution that can perform revenue recognition on a monthly basis in proportion to how complete the project is with the ability to input placeholder revenue bookings to try and model revenue streams for the project going forward. However, the functionality to input placeholder revenue bookings is not a problem for the software to solve but rather a flawed solution to an unidentified problem. Allow me to explain.

The business problem described above is not actually about the software's ability to allow placeholder revenue bookings but rather about how to achieve accurate revenue and profitability forecasts for fixed price contracts while the project is underway. If you approach the vendor with this root problem already identified, the vendor can describe how its software handles this scenario to help your organization improve project profitability. For example, Projector's PSA solution allows you to forecast both revenue and mid-project profitability for fixed price projects easily, accurately, and in real-time—without any additional modeling needed. Many systems can achieve some of these goals, but not all of them. When you accurately identify your organization's root problem, rather than presenting a functionality requirement, you will set your business up for success and to realize performance gains.

Now that you have identified your business's root problems, you should take the time to communicate with each professional services software vendor both thoroughly and thoughtfully. You should explain your business model to each vendor and make sure that the tool you are evaluating will support your core processes. Present real business problems and goals to each software provider rather than a list of critical features you think the software needs so that you can learn how the software will help transform your business. This mindset shifts the process from emphasizing the what to exploring the how and the why, an important distinction because the vendor you choose should ultimately become a partner.

For example, firms might ask vendors if they can use their tool to build revenue projections. Yes or no. Each vendor checks a box and moves on to the next question. When managing fixed price projects, many solutions approach revenue projections differently. Without digging into the details during the sales process, organizations might find that that "yes" next to the "Can project revenue" requirement wasn’t exactly spot on…at least not for your business. It can be difficult for both software buyers and vendors to judge if the software solves a specific business problem in the right way for the organization unless the two parties engage in a thoughtful dialogue.

Ensure vendors are more than salespeople.

Rather, they should act as educators, strategic advisers, consultants, and coaches. The vendor should be as interested in understanding your business as you are about explaining it. A vendor should also ask for a history of your business's problems. Just like a doctor, the vendor wants a full "medical history", not just a list of symptoms, in order to help transform your business in a meaningful way. They should be encouraging you to ask questions you would not think to ask in the sales process. The vendor should be as concerned about convincing you what is a good fit as they are about identifying what is not a good fit to avoid buyer’s remorse. Remember that no solution is 100% perfect so if someone tries to tell you otherwise, proceed with caution.

Another method to determine the value a vendor will bring to your business is to research the vendor's executive team and ensure that they have deep industry expertise so they can serve as thought partners, rather than only salespeople. More on this in a bit…

Be wary of shortcuts.

Projector PSA's Chief Operating Officer, Steve Chong, describes a case study in his blog post, Choosing a Professional Services Automation Solution, in which, "One prospect gave us a 15-page use case of a real projectcomplete with tasks, schedules, resources, invoices, revenue recognition, budgets, scope changes…the works. They said 'model this'and we did."


"One prospect gave us a 15-page use case of a real project—complete with tasks, schedules, resources, invoices, revenue recognition, budgets, scope changes…the works. They said 'model this'—and we did."


If a vendor tells you its software can perform a function but they are not willing to demo it, you might want to keep searching for an alternative solution. Look to find passionate, customer-centric vendors who are committed to delivering a high-performing product.

Not This:
Do not follow the software vendor "Checklist Approach".

Do not formulate your organization's software requirements, ask stakeholders for input, compile a list of features, rate them based on importance, and send the list off to vendors as a Request for Proposal (RFP). This process seems rational, but with all of the complexities of project accounting, project management, time tracking, and resource scheduling, the software vendor assessment checklist often times results in a less than thorough evaluation. Rather, it focuses on the current shortcomings of an application or process that is being replaced instead of the actual business reasons behind the software's functionality.

  1. Ensure your vendor has experience in professional services

Do This:
Evaluate the people behind the software just as much as the tool itself.

When you buy cloud-based software, you are buying both the current version and all future versions of that tool. This means you need to evaluate the company, or people, behind the software just as much as the tool itself.

When choosing professional services software, think about forming a partnership with your solution provider. You need to be sure that they will be able to grow alongside your business and address your future needs. If you don’t, it will mean that you will need to go through the same daunting search for a software tool again in the next few years.

Here are a few things to think about when talking with vendors:

  • Flexible contract terms:

    Cloud-based software contract terms should be flexible and fair for both the vendor and the client. Watch out for organizations that try to force you to buy extra licenses or include term commitments, cancellation fees, or user licenses that need to be purchased each year. If a solution no longer works for your business, you should have the freedom to either ask the vendor to make some changes or to find a new solution without being locked into a binding contract.

  • Domain experience:

    There is a difference between understanding how to build software and having true domain experience. True domain experience can usually be spotted in a vendor’s story about how they got started. If the executive team lived and breathed the industry their product serves before starting their software company, there is a good chance they have broad domain experience. Their experience will become a competitive advantage for you. They have already made the mistakes other vendors in their market segment are still learning about and can translate these lessons into product designs that do a better job of supporting your business.

  • Post-sale support:

    Oftentimes, a vendor's ability to support you as you use the software is the difference between a failed and a successful implementation. Make sure the vendor includes full support in their subscription fees and provides a true implementation consultant to play both a strategic and tactical role. If your implementation resource is purely technical, he or she might not have the holistic approach to understand your company's best practices or to fully help solve your organization's problems. Before selecting a vendor, try their support out and make sure they know the product, the market, and can understand your business. Ask whether support is provided by full time employees or less knowledgeable, contracted, or offshore resources. Why not try giving them a call or sending them an email to see how quickly and thoroughly they respond?

Not This:
Do not only focus on the software features you need to achieve your job.

It is important to remember that stakeholders across different functions within your organization will benefit from using professional services automation software. Stay focused on the big picture and ensure that the vendor understands the needs of all potential users within your organization, not just your own. It is important for the software vendor to view your business relationship as a partnership, in which the vendor is equally as committed to growing with your organization as new business needs arise. A vendor should always be open to hearing about new ideas for future product enhancements.

  1. Gather a comprehensive team of software evaluators

Do This:
Gather your key stakeholders.

It is important to compile a vendor selection team with the key stakeholders in your organization that the software will impact. You should include the main players across functions and seniority levels. This will ensure that all services delivery needs are met and that key players have the opportunity to effectively communicate their needs to the software vendor without a chance for miscommunication.

For example, the leadership team will be able to weigh-in on the high-level strategy of how the software will impact the bottom line. Analysts will be able to ask critical questions about business operations processes to ensure the tool sufficiently meets the business's day-to-day needs. Project managers will know exactly what his or her team needs to protect project profitability when a project starts to run over budget. Resource managers will ensure the PSA tool can adequately deliver on resource planning and revenue projections. Controllers will know exactly how the PSA tool needs to integrate with its accounting system to scale with the organization.

Define a clear set of business goals for the professional services software.

From the very beginning, before you even begin researching PSA tools, make sure your selection team defines a clear set of goals related to your organization’s business operations that the software needs to be able to accomplish. As you explore vendors, you will be presented with a myriad of features, and it will be important to focus on the business goals you have clearly outlined so you do not get distracted by the noise. Remember that no solution is 100% perfect, so you will need to rely on your key stakeholders to distinguish must-haves from nice-to-haves.

When your selection team identifies goals for the software, it is helpful to keep in mind the distinction between business goals and functionality goals. Your stakeholders should outline the business goals first, followed by the functionality goals, allowing the business goals to drive the functionality goals in the right direction. Let's take a look at an example:

increase resource utilization for professional services firms

If you start by setting the business goal first and breaking down what it really means to improve resource utilization, you might realize that you are more likely to succeed by implementing a tool specifically designed for that purpose. Oftentimes, the fastest way to influence resource utilization is increasing visibility into an organization’s people and projects. When searching for visibility, a natural reaction is to focus on consolidating systems and data into a single platform. Unfortunately, this doesn't always help.

resource utilization for professional services firm

Getting visibility into people and projects is more about finding systems that can accurately model your business's data and less about where your business's data is modeled.

In general, a powerful tool, rather than a feature, will help transform your business and add efficiencies. In order to achieve a business goal, you will need to align your functionality goals accordingly. As a result, it is always a good idea, and an efficient one, to set your business goals first.

Not This:
Do not let a lack of stakeholder consensus halt the selection process.

It can be a challenge when a selection team is confronted with indecision or a tie about which solution to choose. If this happens, try taking a step back and reevaluating both your current and future needs. Getting to the root cause of the indecision or better prioritizing the outcomes you would like to see from the new solution should push the team closer to a choice. This should help keep team members focused on the big picture. Also, remember that the right vendor is a true partnership; the solution that can best flex to meet your organization's customized needs.

  1. Validate externally with industry analysts and customer reviews

Do This:
Validate your perception with unbiased, external reviews.

While your firsthand experience with a vendor should lead your evaluation process, it is always helpful to validate the software solution externally with unbiased sources.

A great place to start is by looking to prominent, external industry analysts that know the professional services software space well. The analyst of record when it comes to professional services software is Services Performance Insight (SPI), a global research, consulting and training organization dedicated to helping professional services organizations improve productivity and profit.

Each year, they release a benchmark, comparing the performance of professional services firms across the industry. In fact, the performance data that we use to measure how well organizations using Projector perform is based off of this benchmark.

In addition, SPI compiles an end user survey with PSA software reviews, providing insight into overall performance, system selection criteria, and return on investment (ROI).

Customer reviews of the professional services software industry are another insightful avenue to consider. Helpful reviews can be found at G2 Crowd with the ability to filter by organization size to find PSA solutions that best serve small businesses, mid markets, and enterprises. Take a close look at the high performers for user satisfaction, as it is a leading indicator for solutions that successfully avoid buyer’s remorse.

Why not take a look at the vendor’s customer review page as well? Do they have customers in your relevant industry and size? While a vendor can provide you with their perspective on how satisfied its customers are, it is always a good idea to validate.

Not This:
Do not overlook customer satisfaction in lieu of aesthetics.

The customer satisfaction metric for different vendors is a great way to see how one software stacks-up against competitors for the functions that matter most to you. If a vendor delivers exceptional customer satisfaction, you will have insight into how happy customers are with their PSA solution post-sale, and can draw inferences on important features such as customer support, ease of use, and overall performance. The software solution that looks the shiniest on the surface might not be the most powerful, high-performing solution on the market. Customer reviews will help you look past the surface-level.


Looking specifically for Professional Services Automation (PSA) software?
Here are some additional considerations to keep in mind...

  1. Integration...it's easier than you might think

Do This:
Brainstorm critical integrations for your organization.

We often hear about professional services firms that leverage salesforce.com or utilize Microsoft Project and want to know if our software solution can integrate with these systems. Many vendors partner with today’s leading business software vendors to provide pre-built integrations. Do not assume a vendor can or cannot integrate; always ask! Dive deeper and ask important questions about cost to integrate, ease of integration, etc.

Not This:
Do not assume a vendor is the perfect solution because of the platform it is built on.

Sometimes, organizations utilize popular platforms and hear about professional services solutions that are built on this platform as well. They assume that this means the software will integrate seamlessly and is the obvious, go-to, choice. However, this is not always the case. In fact, integration is easy and should not be considered the be-all and end-all! Yes, it is important to consider if a vendor offers the integration you are looking for but once you confirm this, you can keep this vendor on your evaluation list and get back to exploring the main question: how will this PSA tool help transform my business?

The benefit of having multiple systems sit on the same technology platform is direct access to data. However, this is the goal that an integration achieves; they both deliver the same end result. If you select a product just because it is built on the same platform as other systems you use, you might discover that the product does not bend to your business and instead, your business has to bend to meet the platform’s data model. Do not rule out a product simply because it is not built on the same platform. In this day and age, systems do not have to sit on the same technology platform in order to transfer and access the data that is most important to running a business.

  1. Automate responsibly

Do This:
Automate mundane and repetitive processes.

Like all things, there’s a time and a place for automation. Automate the mundane and the repetitive, and you and your team will have more time to exercise sound business judgment when it is important.

A question that we, as a provider of PSA software, have been asked countless times goes something like, "Is there a way to auto-populate someone’s timesheet with the hours they're scheduled to work each week? It will save us a ton of time." Our answer has always been "no." Not because we forgot to implement the feature, but because we believe in truth in reporting.

People are busy, and will track the time they think they were supposed to report. Projects will always be, curiously, exactly on budget, week after week. Until suddenly, they are not… and not just by a little. With no warning, you have a train wreck on your hands, all because you wanted to save your team the two minutes it takes to log what they actually, truthfully worked on that day. Perhaps a better approach would be to set a culture of truth in reporting, and then make it easy for people to tell the truth with an intuitive time reporting system.

Not This:
Do not automate broken processes that need to be fixed.

Automation of broken processes makes a bad process more efficiently worse. Over-automation can be even worse…it can take dysfunction and amplify it.

As you evaluate new tools, think about the key processes you need to run your business. Fix the ones that need to be fixed before you automate, and beware of the tools that say they can help you automate everything. These automation tools often appear as workflow engines or process builders, allowing you to create custom workflows unique to your business. The good news is that you can model your business exactly as you run it today. The bad news is that you might not be running your business as efficiently as you could be. While workflows should be sufficiently flexible, there should be a limit to the degree of flexibility to ensure the vendor helps you solve your business's inefficiencies rather than helps you to perpetuate them.

For example:

Let's envision a scenario in which a company's workflow requires that time is approved by two levels of internal stakeholders and the billing client before the organization can issue an invoice. You detail this scenario to a prospective vendor and ask if the software solution has the ability to model this customized workflow. A seasoned vendor should start asking questions to better understand how and why requiring multiple approvals for a time card is vital for your invoicing process, and if deemed inefficient, help propose alternative solutions.

Could you decrease the number of internal stakeholder approvals to one level and infer that the client approves the time card by paying the invoice? Do some stakeholders simply need to be made aware of the time and ask questions as needed? In short, the expertise a professional services software vendor brings to the table should help your business fix its inefficiencies and then automate the efficiencies. If a vendor cannot help you improve your business operations, this might mean that the software provider does not have enough real-world experience to understand the law of unintended consequences.

To sum it all up

Making the right choice the first time could mean never having to select another software vendor again.

 

The most successful companies tend to approach their vendor selection process with an open mind, a clear understanding of their goals, and a desire to view their software vendors as partners. They focus on tangible business resultsimproved resource utilization or better forecasting excellenceinstead of a laundry list of features that they think they need. The right vendor will grow alongside your business and will continue to adapt to the market's needs.

Selecting the right software vendor for your professional services firm can seem like a daunting process but if you follow these tips and take the time to do it right, you will successfully find a new vendor to partner with that can meet your organization's needs in regards to project accounting, project management, time entry and recording, resource scheduling, and beyond.

You're fully prepared to start your professional services software selection process noware you ready to jump in?


About the author:

Courtney Byer

Professional services aficionado. Communications connoisseur. World travel-voyager.
Writing meaningful content that helps professional services firms transform their businesses.
Find her on LinkedIn here: www.linkedin.com/in/courtney-byer/

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Read (7 min): Choosing a Professional Services Automation Solution:
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Learn: 2019 PSA Software Performance Comparison:
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