Accurately tracking resources and finances continues to be a huge problem for project managers. Working across multiple spreadsheets with teams distributed around the world, data silos have become a major risk for business productivity. With a direct impact on profit, addressing these data silos should be a top priority for businesses looking to maintain resilience through the economic downturn.
In the Deltek 2022 Clarity Architecture and Engineering Study, eight in ten businesses identified that investing in technology to improve operations will help their firm win more business, with 55 percent stating that they are losing, or will lose market share within two years if they fail to make progress in this area. As such, we’re seeing more businesses recognize the importance of and investing in digital transformation.
One area that requires such investment is project management – which is all too often at the mercy of legacy systems and manual processes. For professional services businesses, Professional Services Automation (PSA) holds huge opportunities to combat rising inflation and costs, by streamlining project management.
What is PSA software?
Professional services businesses have unique requirements. From securing new business and effectively managing projects to ensuring timely and accurate payments, the way in which these businesses are managed is entirely different to those in other industries. As such, professional services organizations have particular challenges, requiring bespoke technology to offer solutions.
Primary among these challenges, is the need to manage multiple clients with varying projects at the same time. Resources need to be controlled wisely, staff workloads monitored, project progress evaluated, and financials tracked to the penny. PSA can elevate the insight into risk, with low risk work requiring a low touch governance process, and higher risk work requiring higher scrutiny to ensure delivery, profit and cashflow risk is understood and mitigated.
Traditional project management tools often provide poor visibility and lack a single source of truth, which leads project managers to make manual reconciliations and assumed calculations. Taking the resulting inaccuracies into consideration, alongside the human resource power needed to facilitate this process, the negative potential impact on profit margins becomes clear. This is where PSA software can make a difference.
PSA is designed for project-based businesses that derive revenue and profit from the projects they manage for their clients. The software helps organizations quickly identify opportunities to win, service and retain customers by automating pipeline management, resource planning, expense, and cost tracking for project financial management.
For example, business leaders will often overlook the project financials in order to maintain cadence on the delivery – consequently reducing project profitability. But with UK inflation running at a 40-year high, profit margins have never been more important.
With a configurable timesheet interface, companies can track hours worked and compare data directly with the planned delivery timeline to monitor accuracy using PSA. Project expenses are tracked and recorded, with costs monitored to the moment. Based on these insights, real-time data-led decision making can be made to protect the financial health of projects – preventing overbudget spending and providing actionable insights.
How PSA supports the project lifecycle
No day in a project-based business looks the same, but this can also create a headache when implementing new technology. Good PSA software should support businesses with everything from converting prospects to customers through to project delivery and cash flow acceleration.
If implemented well, PSA software can financially benefit businesses by helping to increase win rates and boost profits. Leveraging the insights provided, business leaders can easily see which projects are most profitable to benefit the business development process. Therefore, informed decisions can be made to support new business opportunities – ensuring prioritization of the projects with the greatest potential return on investment.
In today’s business landscape, pricing is incredibly competitive as more suppliers jockey for fewer jobs, and competitive pricing breeds tight profit margins. A PSA system can help businesses create accurate forecasts that support profitable bids, ensuring that adequate margins are maintained. This level of insight is even more vital as the cost of doing business continues to increase.
People power projects, so of course PSA must play a crucial role in supporting businesses to develop and use resources wisely. The software can facilitate more efficient resource utilization by enabling business leaders to first identify needs, before allowing them to find and develop the right talent. These teams then have the ability to collaborate via the PSA software to help them work efficiently, share updates with clients and brainstorm ideas.
If existing solutions are siloed, it can take days or weeks to get accurate information about schedules, costs, and profits by project or program. The right PSA solution not only gives businesses complete and timely visibility into the status of projects but provides insights into the entire project portfolio. Leveraging the project and material management element, managers gain better visibility into projects, better equipping them to stay on task and on budget.
ERP vs PSA
A common question asked when looking to adopt PSA software is the difference between PSA and Enterprise Resource Planning (ERP). PSA differs from ERP in that a full project ERP solution is bespoke built to manage all aspects of business management, including accounting functions. A PSA solution traditionally handles the front-office functions of the business and projects; it does not typically include accounting tools.
The definition and functionality of PSA solutions continues to evolve and the lines between ERP and PSA are becoming more blurred. The key is first understanding the business’s particular requirements, before researching a PSA or ERP solution that best aligns.
Choosing the right PSA system
With continued economic turbulence causing frequent project disturbances, the decision to digitally transform the process of project management is more important than ever.
PSA should not simply be considered a new tool to add onto the corporate belt. Rather, it should be considered an important investment into a vital aspect of a business’s digital
transformation. Whether companies are looking for a new PSA system or re-evaluating vendors for an upgrade, the following considerations need to be made:
- The solution selected should be designed with the company’s industry in mind. A generic solution requiring extensive customization to fit a company’s requirements will never be as effective as a comprehensive, purpose-built solution.
- Does the solution come from a vendor respected by others in the same industry? Companies should look beyond the product to observe the vendor’s influence, reputation and understanding of relevant challenges and opportunities.
- Scalability is a consideration often overlooked by those looking for a simple solution. Selecting a product that will support growth is essential for any scaling business with ambitions for the future.
- With the majority of businesses having accounting and customer relationship management (CRM) tools in place, solutions should integrate with existing technology. That way, costs will be kept down, and employee adoption increased.
- All costs should be transparent and clear from day one of the working relationship. Pricing models should outline all required details transparently.
- With PSA software underpinning all project management for the business, selecting a provider with superior and flexible customer service plans ensures the business can access vendor support when needed, especially following initial implementation.
As rising inflation continues to put pressure on businesses, investing in technology that can streamline productivity and profit is essential for those looking to remain resilient and competitive. In the Deltek Clarity report, businesses cited the cost of technology as one of the three greatest tech challenges. While companies prioritize investment, adopting one or two technological advancements that ensure return on investment and meet key strategic criteria will support companies to not just survive, but thrive.
Learn more from Deltek here.