2014 PS Maturity Benchmark Study Results by SPI Research

Take a Huge STEP Forward in 2014

Align your organization to improve performance and profit

Service Performance InsightAccelerate Service Productivity & Profit

Copyright © 2014 Service Performance Insight, LLC All Rights Reserved. Not for Distribution.

February 18, 2014

Prepared by

R. David HofferberthManaging Director

Service Performance Insight

Brought to you by

See in action: planview.com/SRPDemo| Get the research: planview.com/psmaturity

Introductions

About Planview

Service Performance Insight’s PS Maturity Benchmark Results:

Take a Huge STEP Forward in 2014 Planview’s Quick Takeaways

Questions and Answers

Agenda

Watch this presentation with audioGo to: planview.com/watch-psmaturity


Presenters

Dave HofferberthFounder and Managing Director, SPI Research 15 years as the leading analyst and consultant of Independent Software

Vendors (ISVs) and Professional Services Organizations (PSOs)

Lead researcher and founder of these key tools The annual PS Maturity Benchmark® PS Maturity Model™ Five Service Performance Pillars™ of organizational maturity

Steve BeaumontSRP Solution Marketing Manager, Planview

25-years experience as a management consultant with Deloitte, Coopers & Lybrand, and E&Y and working in the Software Industry

Currently owns the client-perspective for the Planview Services Resource Planning (SRP) technology solution


About PlanviewOptimize the Core of Your Business

Operations

Strategy

Financials

Maximize Opportunitywith ConstrainedResources

Improve Agility and Capacityto Innovate

Build an IntegratedStrategy and

Execution Plan

Measure Results InReal‐Time


Elevate YourBusiness Impact

Boost YourProduct Pipeline

Optimize YourServices Business

Information TechnologyProduct Development Professional Services

Advance Your Strategic Business Planning Finance

About PlanviewPortfolio Solutions for the Enterprise

Sharpen Your Marketing Execution Marketing

Optimize Resources Enterprise‐Wide EPMO



Planview’sService Resource Planning (SRP) Solution

www.spiresearch.com

Peop

lePe

ople

ProcessProcessCopyright:Service Performance Insight | Get the research: planview.com/psmaturity

Take a Huge STEP Forward in 2014

Align your organization to improve performance and profit

Service Performance InsightAccelerate Service Productivity & Profit

Copyright © 2014 Service Performance Insight, LLC All Rights Reserved. Not for Distribution.

February 18, 2014

Prepared by

R. David HofferberthManaging Director

Service Performance Insight

Brought to you byWatch this presentation with audioGo to: planview.com/watch-psmaturity

www.spiresearch.com

Peop

lePe

ople


Introduction

8

Service Performance Insight (SPI) is a global research, consulting and training organization dedicated to help professionalservice organizations (PSOs) make quantum improvements in productivity and profit. In 2007, SPI developed the PSMaturity Model™ as a strategic planning and management framework. It is now the industry-leading performanceimprovement tool used by over 6,000 service and project-oriented organizations to chart their course to service excellence.

The core tenet of the PS Maturity Model™ is PSOs achieve success through the optimization of five Service PerformancePillars™:

1. Leadership – Vision, Strategy and Culture2. Client Relationships3. Human Capital Alignment4. Service Execution5. Finance and Operations

SPI provides a unique depth of operating experience combined withunsurpassed analytic capability. We not only diagnose areas forimprovement but also provide the business value of change. We then workcollaboratively with our clients to create new management processes totransform and ignite performance.

www.spiresearch.com

Peop

lePe

ople


Professional Services Maturity™ Benchmark

0% 20% 40% 60%

IT Consulting

PS within Software company

Management Consulting

Other PS

PS within SaaS company

Advertising (Marcom)

Architecture/Engineering

PS within HW & Networking

Accounting

Percentage of Observations

Mark

et

238 PSOs completed the survey in 2013

74% North America18% Europe8% APAC

9

www.spiresearch.com

Peop

lePe

ople


Maturity Matters!238 PSOs

Level 1Initiated

Level 2Piloted

Level 3Deployed

Level 4Institution.

Level 5Optimized

Well understood vision, mission and strategy 3.57 3.64 3.93 4.33 4.38

Bid-to-win ratio (per 10 bids) 4.05 5.24 5.00 5.32 6.88

Referenceable Clients 68.2% 71.4% 76.9% 81.9% 84.6%

Employee billable utilization 61.4% 69.6% 72.7% 74.4% 78.1%

Projects delivered on-time 73.0% 76.1% 79.9% 79.6% 85.8%

Annual revenue per billable consultant (k) $115 $165 $222 $258 $281

Quarterly revenue target in backlog 27.6% 40.0% 49.2% 62.1% 64.2%

Earnings before Income Taxes, Depreciation & Amortization (EBITDA) 3.8% 9.2% 9.7% 18.5% 22.5%

10

www.spiresearch.com

Peop

lePe

ople


Market Dynamics

How things can change so rapidly

2010 was about Sales2011 was about Execution2012 is about Talent2013 was about Profit2014 is about taking a big STEP forward!

The PS Market is dynamicGlobalizationMergers & AcquisitionsTalent CliffClient Sophistication

Executives must prepareDevelop flexible workforceCreate loyal clientsImprove financial security

Monitor and manage leading indicators!

11


www.spiresearch.com

Peop

lePe

ople


Four Major Trends Impacting Profit

0%2%4%6%8%

10%12%14%

2009 2010 2011 2012 2013

3.6%

7.6%

13.7%11.5%

10.0%

Year

-ove

r-Yea

r cha

nge i

n PS

Re

venu

e

Year

4.70

4.80

4.90

5.00

5.10

5.20

5.30

2009 2010 2011 2012 2013

5.30

5.19 5.21 5.19

4.96

Bid-

to-W

in (p

er 10

bid

s)

Year

5.0%5.5%6.0%6.5%7.0%7.5%8.0%8.5%

2009 2010 2011 2012 2013

6.1%6.8%

7.4% 7.2%

8.3%

Annu

al Em

ploy

ee A

ttriti

on

Year

66%

67%

68%

69%

70%

71%

2009 2010 2011 2012 2013

67.6% 67.5%

69.6%70.3%

69.7%

Empl

oyee

Util

izatio

n

Year0%

2%

4%

6%

8%

10%

12%

14%

16%

18%

2010 2011 2012 2013

16.1%13.5%

16.8%

11.4%

EBIT

DA

12


www.spiresearch.com

Peop

lePe

ople


Focus on Profit

13

Steps to improve profitability Survey IT Consulting

Management Consulting

Improve sales effectiveness 3.92 4.10 4.10

Improve billable utilization 3.71 3.72 3.71

Improve methods and tools 3.69 3.56 3.55

Improve marketing effectiveness 3.68 3.85 4.33

Improve solution portfolio 3.59 3.77 3.45

Improve hiring and ramping 3.51 3.60 3.50

Reduce non-billable time 3.34 3.29 3.52

Increases rates 2.83 3.35 2.65

www.spiresearch.com

Peop

lePe

ople


STEP Forward

Sell – Focus on high profit/margin services

Talent – Develop and maintain quality individuals

Execute – Deliver efficiently and effectively

Profit – Run the business to optimize cash flow andmaximize profit

14


www.spiresearch.com

Peop

lePe

ople


Sell – Focus on high profit/margin services

15

• Sales forecast• Sales opportunities• Sales pipeline• Service pricing• Potential skills

required

• Project plan• Resource requirements• Resource availability• Schedules• Time and expenses• Project cost• Project margin

• Project cost• Project revenue• Billing information• Days sales

outstanding• Regulatory &

shareholder reporting

Sell & Bid Deliver Bill & Collect

Integration

Interoperability

www.spiresearch.com

Peop

lePe

ople


Manage Talent

Limited resource poolWhat skills are needed?3 months to find and hire3-6 months to train and ramp

Manage resourcesSkillsCostAvailability

Look forward 6-12 months

Use CRM to forecast needsLink with SRP to staff

16

www.spiresearch.com

Peop

lePe

ople


Execute – Deliver efficiently and effectively

17

Standardize deliveryBuild repeatable processes

Improve project managementManage scope creepKeep your eye on billable utilization Watch this presentation with audio

Go to: planview.com/watch-psmaturity

www.spiresearch.com

Peop

lePe

ople


KPI Top 20% Rest ▲

Annual revenue per billable consultant (k) $231 $182 27%

Annual revenue per employee (k) $195 $144 36%

Average revenue per project (k) $264 $169 56%

Project margin 41.9% 35.6% 18%

Quarterly revenue target in backlog 56.1% 41.8% 34%

EBITDA 14.6% 10.3% 42%

1. Build the business plan

2. Segment client base

3. Build backlog

4. Focus on larger project acquisition

5. Capture and bill time and expense

6. Manage overhead

7. Examine Income Statement

8. Invest in systems!

Profit – Optimize cash flow and maximize profit

18

www.spiresearch.com

Peop

lePe

ople


Focus on Service Delivery

19

• Charter• Portfolio• Alignment

• Differentiation• Pricing• Satisfaction

• Revenue• Margin• Overhead• Billing

• Skills• Compensation• Training

ResourcesProcessQuality

Timeliness

www.spiresearch.com

Peop

lePe

ople


Can you get “the Red Out”?

20

www.spiresearch.com

Peop

lePe

ople


Repeatable processes improve delivery

KPI >80% <80% ▲

Annual revenue per employee (k) $173 $143 21%

Average project overrun 7.4% 9.3% 20%

Year-over-year change in PS revenue 10.5% 9.2% 15%

Projects canceled 1.8% 2.1% 14%

Employee annual attrition 7.6% 8.8% 14%

Project Margin 37.5% 33.3% 13%

EBITDA % 11.4% 10.9% 4%

Percentage of the time a standardized delivery is used

21

www.spiresearch.com

Peop

lePe

ople


Improve Project Management

It starts with the Project ManagerCertifications are good……but visibility and the ability to communicate, delegate and dictate are necessary

Manage deliveryCollaborate with ClientTrack time, expenses and valueInsure resources are available when needed

22

www.spiresearch.com

Peop

lePe

ople


Manage Scope Creep

Start with an agreement of the deliverables

Deliverables has specific tasksUse major and minor milestonesAssign specific resources

Create a clear project scheduleSet up change control processes – tasks, deliverables, cost, authorizationCommunicate and collaborate with all partiesThere will always be some type of scope creep – be prepared

23

www.spiresearch.com

Peop

lePe

ople


Utilization improves financial performance

0%

5%

10%

15%

20%

25%

30%

35%

Under50%

50% -60%

60% -70%

70% -80%

80% -90%

Over90%

Perc

enta

ge o

f obs

erva

tions

Workforce Utilization PSOs must have visibility out at least two quartersHR must be closely involved to assure the proper resources are on boardSubcontracting for peaks and valleys and special skillsEmployees must also work to remain highly utilized

24

www.spiresearch.com

Peop

lePe

ople


The Benefits of Integrated SRP

Billable Utilization (2,000 hrs.) 67.8% 70.8% 73.5%

Project Margin 35.8% 37.6% 37.9%

Revenue per Consultant $192k $204k $223k

25

www.spiresearch.com

Peop

lePe

ople


Recommendations & Conclusions

The market is tightening, but you can prosperFocus on improving every aspect of your organizationProfit is driven by improving:

Sales – Effective sellingTalent – Hire the right peopleExecution – Service delivery excellenceProfit – Sound financial management

The time to STEP forward is now!

26


Planview’s Quick TakeawaysPerspective on the 2014 PS Maturity Benchmark’s Findings



Real improvement

Scalable improvementPlanview SRP Product DemoPlanview.com/SRPDemo

The Benefits of Integrated SRP


Survey Participant’s PrioritiesAccording to SPI Research Planview’s SRP Solution Offering

Prioritizing Improvements

Planview SRP Product DemoPlanview.com/SRPDemo

Questions?


Additional Resources Get the PS Maturity Benchmark at planview.com/psmaturity

Reach out to Planview or send questions to [email protected]

Join us for a 30-minute Planview Services Resource Planning (SRP) product demonstration

Contact Service Performance Insight at SPIResearch.com

Planview.com/SRPDemo

2014 PS Maturity Benchmark Study Results by SPI Research

Business

Transcript of 2014 PS Maturity Benchmark Study Results by SPI Research