Tech Tools Grow the BusinessBy Tony Kontzer | Posted 2012-06-05 Print
Professional services firms are implementing automation, mobility and document management systems to expand market share and become more profitable.
By Tony Kontzer
It's been eight years since Collaborative Consulting turned to the category of software known as professional services automation, and the move appears to be paying off. The Burlington, Mass-based consultancy first used OpenAir's suite of professional services automation (PSA) to automate its processing of time sheets and expense reports, and feed that data into the invoicing module.
But as the company has expanded its use of OpenAir (since acquired by NetSuite)—most recently by using the software's resource management capabilities—the portion of its consultants’ total hours that are billable (its utilization rate) has grown from a percentage in the high 70s in 2009 to about 84 percent today, according to Richard Curzi, vice president of operations. That represents a huge improvement for a company that's embarked on a five-year plan with a goal of doubling the size of the company, while adding as few employees as possible and keeping administrative costs at a minimum.
"To the degree that we can eke out an additional amount of utilization from the existing staff, that revenue comes at no cost and goes straight to the bottom line," says Curzi.
PSA applications represent one of the most critical IT tools that professional services firms rely on to thrive in an increasingly competitive market. According to Jeanne Urich, managing director of consultancy SPI Research, which generates an annual benchmark report that professional services firms use to compare themselves with their peers, the number of professional services firms has been growing steadily over the past several years.
Urich says they now number 1.5 million in the United States alone, most employing fewer than 100 people. Meanwhile, her analysis of U.S. government statistics pegs the U.S. professional services market at $1.3 trillion, with the two biggest sectors, IT consulting and legal services, accounting for more than $500 billion of that.
In other words, more firms are hustling to claim their piece of an ever-growing pie, and, in order to do so, they need to be able to grow. The most effective way to scale a business to accommodate that growth, says Urich, is by investing in PSA software, and growing numbers of firms have been doing just that, trading in their previous dependency on spreadsheets in the process.
In the past five years, according to surveys by SPI, the portion of professional services firms that use PSA software has grown from less than 40 percent to nearly 70 percent. This growth has been fueled in part by PSA software becoming so much more accessible and affordable to firms of all sizes.
"Ten years ago, the software didn't run in the cloud," says Urich. "If it's cheap and it's great, why would you create spreadsheets?"
In fact, Collaborative Consulting's Curzi says that because the company's consultants are so often scattered all over the five states where it operates, if OpenAir weren't cloud-based, "it would be a nightmare."
Larry Quinlan, CIO of global business consultancy Deloitte, says that the New York City-based company has a years-long history of working with PSA software to automate everything from staff scheduling and availability to approval processes. Although Quinlan won't specify which PSA products Deloitte depends on, other than to say that SAP software is in the mix, he puts the firm's dependence on PSA bluntly: "I don't even know how we'd run the business without it."
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