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[Watch this presentation with audio: http://planview.com/watch-psmaturity] [Request slides without watermark: [email protected]] Service Performance Insight (SPI Research) discusses their latest findings of the lauded PS Maturity Benchmark designed for service organizations seeking to know: * How to measure against the latest industry metrics * The industry data needed to support corporate strategy * A way to objectively quantify an organization's strengths and weaknesses to create an actionable business plan * Where to invest in order to yield the highest impact By comparing process maturity and Key Performance Indicators (KPIs) of over 230 participating organizations with the cumulative information provided by seven years of this annual, benchmarking report; webcast participants will walk away with a current state of professional services and a roadmap for process and program improvements.
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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
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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
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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
See in action: planview.com/SRPDemo| Get the research: planview.com/psmaturity
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
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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
Watch this presentation with audioGo to: planview.com/watch-psmaturity
See in action: planview.com/SRPDemo| Get the research: planview.com/psmaturity
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
ProcessProcessCopyright:Service Performance Insight | Get the research: planview.com/psmaturity
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.
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ProcessProcessCopyright:Service Performance Insight | Get the research: planview.com/psmaturity
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
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ProcessProcessCopyright:Service Performance Insight | Get the research: planview.com/psmaturity
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
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ProcessProcessCopyright:Service Performance Insight | Get the research: planview.com/psmaturity
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
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ProcessProcessCopyright:Service Performance Insight | Get the research: planview.com/psmaturity
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
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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
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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
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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
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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
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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
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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
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Focus on Service Delivery
19
• Charter• Portfolio• Alignment
• Differentiation• Pricing• Satisfaction
• Revenue• Margin• Overhead• Billing
• Skills• Compensation• Training
ResourcesProcessQuality
Timeliness
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Can you get “the Red Out”?
20
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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
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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
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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
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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
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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
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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
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Planview’s Quick TakeawaysPerspective on the 2014 PS Maturity Benchmark’s Findings
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Real improvement
Scalable improvementPlanview SRP Product DemoPlanview.com/SRPDemo
The Benefits of Integrated SRP
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Survey Participant’s PrioritiesAccording to SPI Research Planview’s SRP Solution Offering
Prioritizing Improvements
Planview SRP Product DemoPlanview.com/SRPDemo
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Survey Participant’s PrioritiesAccording to SPI Research Planview’s SRP Solution Offering
Prioritizing Improvements
Planview SRP Product DemoPlanview.com/SRPDemo
Questions?
Watch this presentation with audioGo to: planview.com/watch-psmaturity
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