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Why forecasting is the focus of top services leaders

In the world of professional services, things can and do change very quickly and it’s only accelerating as the services economy continues to evolve. Service leaders are on the hook to support new business models, revenue streams, and staffing requirements, all while keeping customer satisfaction and productivity high. What will separate the leaders? Predictability.

Organizations that can predict and react faster and smarter to market shifts will win the deals and come out ahead. This is a core reason why forecasting has become such a major focus for services leaders. But forecasting—already a challenge for traditional service organizations—has become even more complex with the introduction of all the new types of services, whether it’s managed services, technology services, subscription, etc. There are now more variables to factor in across the delivery processes. Let’s look at how to elevate your revenue forecasting process first.

Forecasting revenue accurately

As it is now, most organizations will build a forecast that looks at the close date of a deal and then evenly distribute the revenue over a number of months. But we can do better than that. A services pipeline forecast should mirror how it will actually be delivered and how you are actually going to realize it (e.g. is it a mix of fixed fee, T&M, and ratable, or some other combination?). To forecast this new norm accurately will require the use of fine-tuned formulas, unified datasets, and an IT framework to deliver the results. You’ll need to establish the right “delivery curves”, and weighing system that apply to your business and data, while creating a scenario framework to ensure milestones and impact on business is closely tracked.

This widely used guide “Powerful Forecasting at your Fingertips” can help you determine what formulas and scenarios to apply for your business also covering backlog, capacity planning, and utilization forecasting. Now let’s move onto the resource management side of the house.

See the future, plan accordingly

Right resources, right skills, right time: this mantra is critical to the success of professional organizations because it impacts your financials, your customers, and your staff happiness. It starts with knowing everything about your people and having the framework and visibility to run a more efficient, predictable services business. When you don’t the direct impact is lost revenue and margin erosion. The indirect impact is unhappy customers, project delays, and under or overworked resources.

Today, you need to be able to forecast utilization, backlog, and capacity with spot-on accuracy, and know when to recruit, hire, train the right people based on demand and capacity. You need to be able to generate reports and dashboards to help you spot customer or project trends, and closely track revenue, billing, and margin health in real-time to ensure margins are met and customers are happy. You should also be able to spot when to capitalize on product upgrades or cross-sells, which regions to focus on, or which customers need proactive outreach to prevent them from churning. This leads us to the benefits of an integrated professional services automation (PSA) solution and requirements for accurate forecasting.

CRM + PSA = best practices in forecasting

Leading industry analyst firms like Gartner, Services Performance Insights (SPI), and Technology Services Industry Association (TSIA), report that an accurate bottom-up forecast is only possible through a robust PSA solution integrated with a world-class CRM unifying all the data related to your customers, projects, resources, financials, all in one integrated services management application.  Additionally, by leveraging delivery curves—only available with Certinia PSA—you can create an accurate forecast instead of adding plugs or just spreading anticipated revenue. No other commercial PSA tool is capable of modeling how pipeline and unscheduled backlog will be delivered.

The result is what every services organization is chasing: predictability. For a complete look at how to achieve powerful forecasting, download this comprehensive guide.


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