The Top 10 Warning Signs You May Need a PSA Solution

Published: December 13, 2006

by Joe Gulino

Knowing when and how to invest in growing a professional services organization is a challenge, particularly where a Professional Services Automation (PSA) solution is being considered. However, when a PSA solution is implemented correctly and in line with your business goals, it can rapidly enable the business to grow profitably, which is music to any CFO's ears. It is therefore imperative that CFOs are attuned to the warning signs that indicate when a PSA solution is required, whether for the first time or as an overhaul to their current solution.

Here are the 10 top reasons you may need a PSA solution:

1. Declining Customer satisfaction - Customers are your business' greatest asset. It is therefore essential that professional services organizations are able to respond to client demands rapidly and effectively by deploying resources with the right skills, experience and know-how to get the job done fast. Not having up-to-the-minute information about resource availability and skill sets will negatively impact customer satisfaction. PSA solutions can provide real-time access to the information required to instantly respond to client requests, leading to satisfied customers that keep coming back.
2. High growth, but eroding cash flow - When your business' accounts receivable are on the rise, so are its cash flow problems. As the volume of projects, transactions and customer invoices grows, so too does the need to ensure that account and project managers have timely information about their respective clients. Visibility into which clients and projects may be approaching delinquency can prompt the client management team to contact the client and address any issues or concerns they may have before a cash shortage occurs. An integrated PSA solution can provide these red flags to the front line as a regular part of the client and project management process so that cash flow issues are avoided.
3. Inefficient management decision support - As your professional services organization grows and the scope and volume of its services expands, it becomes increasingly important for management to be able to make timely decisions. Access to accurate and current information is important to support decision making on a daily and weekly basis. All too often, management discovers a problem at month-end or quarter-end, when it is too late to react and potentially avoid a dilemma. A PSA solution enables such reporting without the substantial duplication of effort required in non-automated environments where disaggregated spreadsheets must be updated manually to provide the overarching perspective of business operations required to make sound decisions and facilitate proactive management.
4. Losing to competitive pressure - When your internal resources are not allocated efficiently, your professional services organization will find that they do not have the capacity to meet their existing customers' needs. When a client requires a response urgently, this puts the organization at risk against competitors that can provide the required resource sooner. Additionally, the ineffective allocation of resources can result in a loss of new business opportunities if an organization does not have the bandwidth to pitch for new clients, losing to competitors who are better equipped to scale their business to meet both customer and market demand. A PSA solution enables real-time visibility of resource availability to help businesses make efficient allocation decisions.
5. Antiquated financial reporting capabilities - It is critical that your CFO adheres to Sarbanes-Oxley regulations. With multiple legacy systems or spreadsheets to manage, audit and control processes are not integrated in your company's accounting system. In order to be compliant, a current PSA solution is necessary to ensure regulated financial reporting.
6. Resource utilization is lagging - The inability to accurately forecast resource utilization is a major cost for professional services organizations. By having some resources constantly over utilized, your organization risks losing high-value employees because they are overworked and stressed out. Conversely, underutilized resources are a huge burden to the bottom line. One of the greatest challenges in the professional services industry is having enough employees with the right skill sets available at the right time, which requires being able to access accurate and timely information about current and forecasted utilization on demand. PSA offers resource integration support for all functions of a business, ensuring that the right resources are working in the right place at the right time to optimize employee development and revenue.
7. Misaligned sales focus -In the professional services industry, it is vital to know which service lines and clients contribute the most to the bottom line. While it may seem counter intuitive, the highest revenue service lines and clients are not always the most profitable. Knowing where profits originate means the sales effort can focus on driving future business development with clients and projects in that given area. A PSA solution enables managers to easily link the disparate data required to achieve this kind of insight and arms business and account development teams to be as productive as possible.
8. Business benefits are not being realized - Most professional services organizations have invested in technology to address business issues and better manage growth. Oftentimes though, businesses make the mistake of automating their current business processes using the latest technology and applications, which do not support their ever-evolving and changing business. What works for smaller organizations typically does not support those of a larger size. Successful PSA implementations always start with identifying the business goals and the processes needed to deliver them. Although it can be an arduous task to think through and document how the business needs to operate, this process ensures there is a solid understanding of what technology solution is required to support the current and foreseeable future needs of the business.
9. Existing technology does not support growth - As a business changes and evolves, so must its PSA solution. When an existing solution is not able to keep up with your business' growth, and as the number of employees, clients, projects, and transactions increase, it will rapidly become a drain on your financial and human resources. Are the number of un-billable administrative resources spiraling upward due to the amount of manual work required in the organization? This is a clear indication that it is time to pause, step back from the day-to-day activities and address the larger business issues at hand. Ignoring the current process will only compound the problem when the decision is finally made to make a fundamental business change. The longer you wait, the more difficult it will be to make a change.
10. Increasing IT spend with decreasing IT performance - Merely having a PSA solution does not guarantee it is saving your business time and money. PSA is a tool that is meant to solve business problems, not cause them. So when a business' IT department is constantly making one-off customizations to the current system, performance across all departments can subsequently decrease due to increased complexity that does not allow the system to run seamlessly across the business. The key to an effective PSA solution is implementing the solution to support the success of the business.

Joseph Gulino is the Practice Director for Finance and ERP at Green Beacon Solutions, a consultancy based in Boston, Massachusetts. Gulino, who joined Green Beacon in the spring of 2005, has more than 20 years of experience building and running mid-market focused ERP and accounting systems in several vertical industries, including manufacturing, distribution, and professional services.