When Should You Implement a PSA Tool to Improve Delivery Efficiency

Author: Categories: Overview, PSA Software, Results

When to Implement a PSA Tool

Are you still managing your professional services firm with spreadsheets, whiteboards, emails, and a host of manual processes? Do you know what type of business software, such as a PSA tool, and business processes you need to manage your consulting firm more efficiently? As a savvy professional services executive, you might be asking yourself these important and perfectly reasonable questions while trying to figure out the pathway to success for your professional services firm. In this post, we’ll cover:

Table of Contents —

Questions to Ask Before Implementing a PSA Solution

$183 thousand was the average cost to implement and run a PSA solution for five years
$23 million was the average improvement in bottom-line profitability over those five years
96% was the fraction of gains attributable to just the top three categories: improvements in billable utilization, project margin, and successful project delivery

Every professional services firm will have its own set of unique questions to consider when finding the best professional services automation software to improve business results and service delivery but here are a few questions to keep in mind:

To answer these questions and more, read on…

When is the Right Time to Implement a PSA Solution?

The right time to implement a PSA tool is when your professional services firm reaches 20 or more employees, or plans to grow rapidly. Service Performance Insight (SPI) Research, a global analyst firm that helps professional services organizations improve productivity and profit, expands upon this question with tangible answers. Their latest research report, the Professional Services Automation End-user Survey, is an independent, vendor-agnostic look into the world of Professional Services Automation (PSA) solutions, and its impact on the performance of the services firms that use this software.

SPI Research and PSA Tools

SPI Research’s End-user Survey examines users of the 11 most widely adopted PSA software solutions on the market and measures the impact of PSA system adoption on the key performance metrics that professional services firms track to enhance business performance such as billable utilization, resource management effectiveness, and project profitability. The research even goes a step further and, based on the reported performance gains, puts together a return on investment (ROI) model that illustrates the gains an average 172-person consulting organization would see by implementing an average PSA solution. The results are nothing less than startling.

So if implementing a PSA solution is in your plans for the coming year, you might feel as though you have a tremendous amount of work cut-out for you. While the process can feel daunting and should be performed thoughtfully, a two-step framework can help you manage the process: measure where you are, and then have conversations with the top PSA solutions to see how they can help you get to where you want to be. Before you can do this, your organization will need to develop a clear vision of its future. With your business goals clearly defined, you will be well positioned to choose the best software to help you improve the metrics that matter to your organization. Here are some examples of common business metrics specific to professional services firms that you should consider measuring and setting goals for:

Not All PSA Solutions Deliver an Optimal Return on Investment

Software vendors offer various subscription types based on the amount of users and functionality required from the software, and it is fairly uncommon to see pricing transparency in the PSA industry. This often leaves people wondering how much they should expect to pay to implement professional services automation software and if the bottom line improvements will outweigh the cost. The average yearly cost for PSA software is approximately $850 per user with an average one-time implementation cost of around $700 per user. Overall, the average improvements in profitability are approximately $20,000 per user.

Regardless of the price that a vendor offers, make sure that you don’t get locked into term commitments that make it difficult for you to exit the contract. Software-as-a-service (SaaS) solution providers should partner with your organization to focus on your continued satisfaction and the value your company receives from utilizing their solution. Contract terms should be flexible and fair for both the vendor and the client.

While the SPI Research Professional Services Automation End-user Survey shows incredible return on investment by implementing a Professional Services Automation system, the underlying data also shows that not all PSA applications are created equally. In fact:

  • Projector was the most widely adopted PSA solution among the survey respondents
  • Projector users showed the best performance in billable utilization and amongst the best performance in project margin and successful project delivery, key service metrics that account for 96% of the gains realized by implementing PSA software
  • Projector continued its performance as the vendor with the highest overall satisfaction and is the only product to score above average on seven of the eight satisfaction metrics in the survey

In short, the study shows how much benefit professional services firms gain from implementing a PSA solution as well as how to determine which solutions help professional services organizations perform better.

In Summary

To wrap it all up, once your professional services firm reaches 20 or more employees, or plans to grow quickly, you should make implementing a professional services automation solution a priority to set your business up for future success. PSA software is the key operational system specifically targeted at accomplishing the needs and goals of professional services firms. It is the critical link between the organization’s industry-agnostic CRM and financial systems.

In order to realize the most significant performance gains and satisfaction with your PSA solution, you should outline your firm’s business goals and thoroughly consider the questions you will need to answer and the problems you will need to solve in order to achieve these goals. Ensure you do your research by having meaningful conversations with vendors about the performance gains PSAs can bring to your services firm, and choose the software that will deliver the most significant return-on-investment.

One day, when your firm is running like a well-oiled machine, you will be grateful that you implemented a PSA solution as early-on as you did.

Explore PSA Solutions

If you’re interested in learning more about PSA software for professional services firms, take a look at our recently published eBook. You’ll find:

  • Additional information about how Professional Services Automation systems can improve the performance of a services organization
  • Information about some of the decision points you’ll need to consider when selecting a PSA solution
  • Trends in the PSA market, and much more…

Check out our eBook:
Professional Services Automation: A Quick Primer.

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