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Why enterprises struggle to achieve professional services nirvana

Steve CluneThis guest post was written by Steve Clune, CEO of CLD Partners, a long-standing Certinia consulting and implementation partner. Steve sets CLD’s technology vision and has led some of the largest Certinia enterprise cloud ERP implementations.

In my last blog post, I explained how the revenue leakage issue plaguing many professional services companies originates because of the gap between service quoting and delivery. As I revealed, companies can drive the most revenue possible at the highest margin – what I call Professional Services Nirvana – by managing the quote-to-cash cycle seamlessly and effectively. When that happens, each professional services quote informs the order and project, which in turn drives accurate billing, revenue, and cost transactions. 

Unfortunately, few companies are positioned to achieve this nirvana. 

Four core barriers to efficient service delivery:

In our experience at CLD Partners, enterprises struggle to achieve this nirvana for four main reasons:

  1. Disjointed quote-to-cash process

  2. Time lag between process steps

  3. Master data challenge

  4. Huge technology hurdles


1. Relying on a disjointed quote-to-cash process

Many organizations are contending with a poorly executed quote-to-cash process. The array of data captured across this process is essential when it comes to revenue management. But it’s kept siloed in disjointed systems used across the business to handle quotes, contracts, and other key information in a professional services engagement. 

Disconnected systems means that cost data is often missing from service quotes and invoices. Enterprise companies often push billing and revenue transactions into an off-platform ERP system, but the cost information remains in their Professional Services Automation (PSA) system or spreadsheets or other project-focused system.

These disjointed systems usually include siloed front- and back-office solutions along with standalone analytics used by different business functions. In fact, organizations are forced to extract data from their different point solutions and load them into the analytics engine. 

Like every other infrastructure disconnect in a business, this one negatively impacts the underlying process it is meant to enable. In this case, quote to cash. Every services-oriented business that fails to address this major challenge is at great risk of continuing to lose revenue and fall behind in the market.

2. Suffering time lag between steps

Matters aren’t helped by the inconsistency in the amount of time it takes for a sale to be converted to an order and then to a project with assigned resources. Every step of this process is often handled on an ad hoc basis – and sometimes interrupted by other priorities or dragged out because of the disconnected systems mentioned above.  

In most organizations, it takes several days to go from a closed deal to assigned project resources. Yet few organizations can quantify the overall time and lag between steps – in fact, they often struggle to access the relevant data to even quantify and articulate the problem. In an indirect way, they take a financial hit as a result.   

Take this real-world example of a CLD Partners’ client that provides professional services.

Before working with us, an enterprise client in the medical industry penalized professional services personnel who didn’t comply with the company’s time entry requirement. The reason for this punitive approach was that it often took project managers three weeks to compare data from time cards with data captured in the company’s SAP system used for projects, invoicing and G/L. If they discovered discrepancies, they were forced to correct the time in the system. It took another three weeks for the SAP feed to be updated. In other words, it could take up to six weeks for a project manager to be certain about time spent on a project to date. 

It was hard for the client to understand how much revenue was outstanding because no one could easily and quickly query to determine approved time cards, and scheduled versus delivered hours. 

3. Hampered by the master data challenge

Most enterprises try to arrive at an understanding of project status and time spent by gathering data from disparate systems into a separate analytics engine. However, this only results in additional time lag, and introduces the potential for error with data being pulled from multiple systems.  

Another one of CLD Partners’ clients struggled in this way due to a reliance on disconnected legacy systems, processes, and data. It was incredibly difficult to quickly ascertain project time spent. The company tried to address this by building a standalone enterprise data warehouse that ingested quote data, project data, subscription data, invoicing data, revenue data, forecasting data from six different systems into a single analytics engine.

The problem begins when a GL account code is tied to a region and a practice, and separate project data is created in a quote or on a PSA system without referencing that GL account code. It’s hard to connect the dots once all summary hours are moved into the analytics engine and all summary revenue is captured by a different system. In addition, by the time they aggregated and verified the data it was outdated.

It ultimately boils down to a master data challenge. When an organization is dealing with rate and time cards for professional services staff dispersed around the world, confusion ensues once the data is pulled into a corporate report. It’s impossible to determine if the report is showing an apples-to-apples comparison or to get a simple view into previous versus current rates and pinpoint the reason for discrepancies across regions. 

4. Challenged to overcome huge technology hurdles

While I’ve already touched upon problems associated with disparate systems, it’s worth noting why it’s challenging to integrate them. The array of technology powering most enterprises represents solutions from multiple technology vendors. Managing these in house requires a range of skills specific to each technology. Even enterprises that can afford to maintain a technology staff with these specialized skills often find themselves challenged when it comes to integrations. At the most basic level is getting a handle on the data traversing all these systems and ensuring consistency between data across the systems once they’re integrated. The first step is figuring out which data set is the master source of accurate, updated data – no small feat.

Enterprises are operating blind 

These issues combined burden services-oriented enterprises with blind spots. Lack of a clear view into customer-related transactions negatively impacts billing, revenue, and the overall customer experience. As mentioned in my previous post, they struggle to map revenue to multi-element orders, and billing and revenue are out of sync.

As a result, enterprises are unable to easily answer key questions, such as:

  • What is the source of our revenue?
  • What is the margin on that revenue?
  • When can we recognize that revenue?
  • What is the margin on performance in a particular region?
  • Can our vendor fulfill the order on the quote? 
  • What is our mark-up and margin on the vendor-related element?

A common cloud platform is the solution

Regardless of the systems they have in place, all enterprises follow a basic process when offering professional services of any kind:  

  1. Create an order including a project 
  2. Assign people to execute the services work 
  3. Bill for that work to cover costs and make a profit
  4. Recognize revenue
  5. Post to the General Ledger

In order for that to happen, the quote-to-cash process needs to occur on a common cloud platform fed by a common data set. With that platform and data in place, all transactions in the journey are linked. This provides end-to-end visibility into the following:

  • What is the source of the bill rate?
  • What is the status of this project?
  • What was the margin on this engagement?
  • Who did I deliver this engagement quote to and when?
  • How was the project invoiced?
  • How did it impact revenue recognition?
  • How did I apply the cost?

Certinia PSA: The Heart of the Cloud Platform

CLD Partners has successfully enabled this cloud platform by making Certinia Professional Services Automation the center of the entire service delivery process. Building solutions on the Salesforce platform with Certinia as the core gives our clients the ability to set up and tightly associate orders, projects, and revenue contracts so they can execute invoicing and revenue transactions in a coordinated manner.

Simply put, this platform approach makes project time cards the financial control. Once a time card is approved, it automatically kicks off invoice creation, enabling the revenue to be recognized during the quarter. Moreover, Certinia PSA provides an audit trail on who submitted the time card, what days they worked, who approved the time card, any changes made along the way, and more.

In addition to enabling accurate time cards and revenue transactions, such a platform helps ensure all professional services staff are assigned to the right projects and perform as expected. This Professional Services Nirvana also improves the customer experience by ensuring projects move forward smoothly and customers are kept updated about project status and changes. Plus, with end-to-end integration across project data, enterprises can invoice on time, in the right amount, ensuring the invoice mirrors the contract. In fact, Certinia PSA makes it possible for enterprises to see real-time availability of resources, easily share project status with customers, and empower customers with the ability to self-serve when it comes to paying invoices. 

Combined, these improvements enable enterprises to deliver an outstanding customer experience that translates into renewed subscriptions, repeat business, valuable sales references, and expanded opportunities throughout the customer lifecycle. These are just a few key things your services organization can do to strengthen your services organization. For more insights and strategies, download the Unleash Professional Services Growth ebook.

In my next post, I’ll explain how this Professional Services Nirvana empowers enterprises to further unlock value from their data.


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