One of the unusual things about the Professional Services Automation (PSA) software space is that there are two distinct segments of the market, managed services vs professional services, with vendors that don’t generally overlap with each other. Our product, Projector, is a well-known solution in one of those segments and is targeted at professional services organizations. A few years ago, I was speaking with a prominent analyst who covered the “other” PSA software segment, and it was like we were speaking different languages.
During our discussion, I mentioned the names of some of the other well-known vendors that we compete against, that we appear in studies and benchmarks alongside, and that heavily use the term “Professional Services Automation.” The response? (Long pause.) “Hmmm…never really heard of them.”
Similarly, when talking with people intimately familiar with the professional services market, I mentioned a few of the prominent players, the “big three” PSA vendors, in the other segment. Got a similar reaction.
So, I thought it would be useful for me to write up a short article that seeks to differentiate managed services vs professional services within the PSA software space. Hopefully it will help to dispel some confusion there may be out in the market. This is also one of the topics that I covered in my recent eBook about Professional Services Automation software.
PSA Software for Professional Services Organizations
Professional Services Organizations (PSOs) are people-centric firms that deliver IP-based services on an assignment or project basis. These firms are often consultancies, digital marketing agencies, and systems integration firms.
Not all of these firms deliver services using the same delivery model. But, at the risk of oversimplification, PSOs generally spool up temporary teams to deliver work for a client in a very project-centric manner. “Temporary” may be several days or several years, but most often is of some finite timeframe. “Teams” may be a single person working from home or several hundred consultants all over the world, but often are composed of a well-defined set of people.
“Projects,” though, tend to be more similar: the commitment to a client to deliver a certain scope for a certain fee. That scope tends to be very high-value, IP-based work that is heavily dependent on the knowledge and skill of the individual or team. Think business process reengineering, management consulting, software development, brand strategy design, marketing campaign execution, and all of the other services that you need to get some real, specialized, heavy hitters in place to deliver.
Because of this emphasis, PSA solutions targeted at PSOs emphasize features like resource management, or the efficient pairing of people (a PSO’s most valuable asset) with staffing needs on projects. They focus on project accounting to track what investment in labor and out of pocket expenses were expended to deliver the project. They concentrate on complex bill rate modeling, invoicing, and revenue recognition to ensure the client gets billed efficiently and revenue is managed accurately. They target project management to ensure projects are well planned, efficiently executed, and kept under control.
These are really the business problems that PSA software targeted at PSOs (like Projector) are really great at solving given that they’re targeted at the people- and project-centric nature of the work that PSOs deliver to their clients.
PSA Software for Managed Service Providers
Managed Service Providers (MSPs), on the other hand, are technology-centric organizations that are primarily focused on remotely monitoring and managing their client’s IT infrastructure. I’m no expert in the MSP space given that Projector isn’t particularly targeted here, but I know enough to understand that MSPs are quite different from PSOs.
MSPs commonly bill their clients on a recurring revenue, subscription model for ongoing services rather than individual projects of finite duration. Those ongoing services may range from outsourced IT services for the SMB market to large-scale remote application hosting services. While the focus of MSPs is really on the technology, that doesn’t mean that capable, knowledgeable, skilled people are unimportant to them. It’s just that clients are expecting (and are getting billed for) a particular outcome or a certain level of service on a continual, recurring basis. The individual people who are providing that service tend to be (again, generalizing greatly) a little more interchangeable than consultants in the PSO model.
PSAs targeted at MSPs have a very different emphasis from those targeted at PSOs. These products emphasize remote monitoring and management (RMM) capabilities. RMM allows MSP personnel to efficiently manage and troubleshoot problems with servers, desktop hardware, or mobile devices without having to have physical access to those devices. PSAs targeted at MSPs may also more heavily incorporate ticket tracking, field dispatch, and inventory tracking functionality to support their service delivery teams. Finally, service-level agreement, contract management and renewal, recurring billing, and subscription management features are much more important in these products than for PSAs used by PSOs.
PSA Software for Your Organization
We have seen a trend in the past few years of PSOs starting to dabble in the MSP space and vice versa. As a result, we’ve added some capabilities to Projector to support some of the basic recurring revenue and subscription billing needs these clients have. However, the primary business of organizations we’ve worked with have still been weighted to the professional services side, causing them to be searching primarily for PSA software targeted for PSOs.
Either way, the big takeaway here is that if you see a list of the “Big X PSA Vendors,” and you don’t see one of the tools you were interested in researching, don’t discount it solely because it’s not included in the list. You just may be a PSO looking at a list targeted at MSPs or vice versa.
If you’re interested in learning more about PSA software for services organizations, take a look at our recently published eBook. In it, you’ll find additional information about how Professional Services Automation solutions can improve the performance of a services organization. You’ll also see information about some of the decision points you’ll need to make when selecting a PSA, some of the trends we’re seeing in the PSA market, and much more: