The easiest way to boost utilization
In a professional services organization, utilization rates are the best barometer for productivity and performance. Improving utilization has an immediate impact on the bottom line: If a company with 500 employees billing at $200 per hour achieves a 1% increase in utilization, that equates to over $2 million in additional revenue. That data point alone should prompt every professional services organization to evaluate its current utilization practices.
You can start by asking yourself two important questions:
- Is your organization doing everything it can to maximize utilization? (e.g. forecasting resource needs, ensuring accurate time entry, tracking targets)
- Do your current systems and processes hinder or help your efforts?
Typically, a professional services organization should strive for an overall utilization rate of 75% or more. Unfortunately, valuable billable hours too often get spent on administrative tasks, the bench isn’t properly staffed for the projects at hand, and billable hours get written off in the event of project overruns.
While many professional services organizations will always have to sacrifice some billable hours for non-billable work, fixing utilization issues is an easy way to minimize how often this occurs. You also need to find ways to optimize resource management practices to improve utilization and keep your bench light. And these days, the services world is only getting more complex as the types of delivery and billing models multiply.
Why professional services automation has become mandatory
Even among services organizations doing great work for their clients, many are still operating in spreadsheets or a hodgepodge of disconnected systems. But services businesses that want to properly track and manage utilization need deep visibility across sales, services, resources, and projects. Gaining visibility into these dimensions enables businesses to track incoming jobs and bring in the right people for the right jobs at the right time.
The most successful organizations are using professional services automation (PSA) tools to plan and staff projects, schedule and manage resources, and closely track projects and profitability. The right PSA provides a resource and project dashboard plus demand forecast. It helps manage service delivery by overseeing opportunities, staffing, project management, and collaboration. And it both collects time and expense and invoices clients. The end result is a dramatic increase in utilization, improved margins, and happy customers.
The right PSA will also have the capabilities to act as the system of record for resource skills, competencies, and consultant preferences by integrating to the employee and contractor database. Because it is used to collect time and expense by project and resource down to the task level, it also serves as the system of record for resource utilization and project costs.
The numbers don’t lie: PSA boosts utilization
Service Performance Insight’s (SPI) PS Maturity Benchmark Report is the industry standard for professional services benchmarking. In a 2019 survey of 660 professional services organizations, SPI found that professional services organizations moving from no PSA to a commercial PSA solution saw a 7% rise in utilization and a 4% increase in annual revenue.
What separates the good from the great services organizations is the ability to know everything about your people and having the framework and visibility to elevate process efficiencies, spot trends, and run a more predictable services business.
Try the ROI calculator
Want to find out if PSA is right for your business? Try our web-based ROI calculator. By inputting just a few data points specific to your organization, you can quickly uncover the benefits of implementing PSA and see what a 7% increase in utilization looks like for your business.
For more information about PSA solutions, download this comprehensive guide on Certinia PSA.