Over the past few blog posts we have been examining the different aspects of how professional services automation (PSA) software can benefit a service organization. From enhancing utilization to streamlining the delivery process and ultimately improving profitability, PSA software is an essential tool for service firms. We’ve spent a significant amount of time demonstrating the effect service automation software can have on your bottom line, but we have yet to examine PSA software’s own bottom line. Let’s talk turkey.
Like many enterprise software solutions, it can be challenging to get a full understanding of the costs associated with implementing a PSA solution until you have spent a considerable amount of time reviewing a tool—prices aren’t openly published, different types of users often come with different fees, and implementation costs are hard to quantify. Today we will take a look at average subscription and implementation costs for leading PSA tools.
The Cost of PSA Software
In our recent PSA software Infographic, 8 Fast Facts about Professional Services Automation, we examined the average cost of PSA software and compared it to bottom line gains of implementing a PSA tool. We found that the average yearly cost per user ($852) was significantly lower than the improvements in profitability ($20,000 per user) that organizations were able to realize by implementing a PSA solution. We also found that one-time implementation costs tend to run around $700 per user. Of course these amounts will vary depending on your organization’s needs, the PSA tool you select, and the complexity of your implementation.
Given that PSA software often covers a broad set of needs for service firms the relative cost of implementing a service automation tool seems like a no-brainer. There are, however, other factors that are important to consider when determining the total ownership cost of PSA software.
When discussing costs of subscription-based software the natural place to start is the price for each user of the system. Although vendors often arrive at user prices a little different—some are flat priced, while others are value based or even role driven—the price range spans from about $20 per user all the way up to around $150. The price range for PSA software can be wide, but most organizations end up selecting a tool that costs about $25 to $50 per user on average. Here at Projector PSA, we’ve tried to keep our pricing at the lower end of the cost curve while still providing PSA software at an enterprise level.
Regardless of the user price a vendor is offering, you will want to make sure their pricing and contract structures are dependent on your continued satisfaction with their PSA solution. In a recent blog post I wrote about how to select the right software vendor, I stressed that software buyers need to view software-as-a-service (SaaS) solution providers as partners instead of just vendors. Gone are the days of stand-alone applications, and implementing a SaaS solution means you are investing in the future of that tool. Keep a watchful eye out for vendors that try to lock you into term commitments, force you to guess staffing and user levels instead of bill in an on-demand fashion, or include other contract terms that are focused on extending the life of their customers and not the value each organization receives.
Despite the price tag or contract terms for the tool you select, the odds are in your favor that you will still see a positive ROI. In a previous installment of our Infographic Deconstructed series we compared the average revenue and profit per employee for firms that do and do not use a services automation tool. The difference is stark. As I mentioned earlier, service firms that use PSA software earn, on average, $39,000 more in revenue and $20,000 more in profit per billable employee each year. Compare that with PSA’s average user cost of $852 per year and an average one-time implementation cost of $711 and the value proposition becomes very simple. Said differently, the profit advantage service firms realize from implementing PSA software can pay for an entire year’s worth of service in less than one month. For firms that use Projector’s PSA solution, this breakeven point could be as little as two weeks.
The Benefits Outweigh the Cost of PSA Software
If PSA software is so affordable and effective, why don’t all service firms use it? That’s a great question, and there isn’t really a great answer to it. The most likely explanation for service firms that have yet to implement a PSA solution is that they haven’t figured out how green the grass on the other side really is. They have been able to “get by” with a tangled mess of spreadsheets and tracking tools without a full appreciation of how much their business could have grown with a services automation tool in place.
If that sounds like you, then it is probably time to take a look at PSA software. Regardless of the complexity of your business, regardless of the tools you have used to get by, there is a PSA solution that will fit your needs. Taking the time to implement one now will help bolster your growth, empower your workforce, and ultimately pay for itself many times over.