Ask more of your existing systems
Get the basics right first. If you want to improve your profitability the first thing to do is take a long, hard look at the software you are already using for your project management and financial management. And, be honest with yourself: can this software process data in real time to give you an accurate representation of all client-related work past, current and future Can it provide you with the insight you need to make those all important business decisions about workload and resources Can it determine what a commercially viable client project is and what is an unprofitable one Can the software help keep projects on-schedule so they are delivered on time and within budget If you have answered no to any of these questions, then you most certainly need a system upgrade.
In essence, you just have to have the right technology for the job. If you are a professional services firm, your people are your core asset and the knowledge and expertise they provide are your revenue generators. If your software isnt cutting the mustard, your business will struggle to maximise profits and productivity. If this is the case, you might consider moving to a project-centric enterprise resource planning (ERP) system. This supports your workflows; and helps you to more efficiently manage your people, projects and processes all those things that are so critical to your income generation.
Make your data perform and win the best business
Once you have the ERP system in place, how do you make the best use of it to maximise each projects profitability By using it to consider your past performance data and draw out those bottomless pit projects that have only broken even or even lost money in the past. With a project-centric ERP that has the ability to integrate financial and project data, you will have access to multiple critical insights including margins, percentages of wins and losses and turnover trends so you can make the business-critical decisions you need to ensure your projects and services are profitable.
Have the resource power to profit
If you’re a business that relies on people power then you need a strong platform that can manage all the people resources you have available at any given time. An intelligent ERP solution will help you manage projects and ensure you have the appropriate and cost-effective support to make each project a success. Small improvements in resource planning often have an exponential improvement on your project’s return over time. For instance, cut back on unnecessary freelancer or contractor costs by utilising in-house resources more effectively or plan for those resource-light times when you may need additional help.
Streamline reporting procedures and achieve better billability
You can further enhance productivity by streamlining the administration of a project or your business. If you want to find bottlenecks, just look for projects being managed through spreadsheets or schedules held together with project management tools that look more like sticky tape than management systems. An ERP system will store vital information in one central hub making sure duplication is a thing of the past.
For a company that offers professional services, time management is essential so anything you can do to improve this process is crucial. You could offer your employees a mobile time sheet system via their smart phones that can be used to update their timesheets on the go. In our The Hunt for Profitability‘ report last year it showed that employees who regularly track and log time as they work on the project bill more hours than those who fill in their timesheets at the end of the day, week or other infrequent intervals.
Is the price right
Setting a pricing structure for your services can be fraught with difficulty. How you charge clients must make both commercial sense for your own company, as well as being competitive enough to retain customers and grow the business.
You should expand the responsibility for budgeting and pricing outside just the delivery team to those in the finance department as well as senior management. It is key to improving visibility across all internal and external components that could dramatically impact on a project’s success. Analysing historical data your company holds via your ERP system can also provide you with the invaluable insight into pricing information from the past, and what has and hasnt worked.
The invoice timeline
Many good businesses have been brought to their knees simply because of cash flow, or rather lack of it. Bringing billing procedures together using a single centralised accounting platform will help to ensure the whole company is in line with the billing process – right from the merging of critical time sheet, expenses and costing data into a companys invoice template. This will help to automate the process, and make sure it delivers the right information to the customer at the right time. This, in turn, assists with document compliancy and follows up so that outstanding invoices can be quickly identified and payment secured.
Fergus Gilmore is Managing Director of Deltek UK