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The Five KPIs that Matter for Professional Services
SHARON CARNICELLI Sr. Product Marketing Manager Intacct
DAVE HOFFERBERTHManaging DirectorService Performance Insight
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Today’s Agenda
Introduction to Intacct
The 5 KPIs
– 2014 Professional Services Maturity™ Benchmark
– Market dynamics and trends
– Where to start
– Five KPIs to help drive greater financial success
– Integrate your information infrastructure
Summary and additional resources
CONFIDENTIAL | 4
95% Customer Satisfaction
Services Companies Rely On Intacct
Real
Value7,300+Growth Companies
43,000+Business Entities
Growing with
Intacct
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Partnering for Success
120+ partners 75% of our customers integrate with 2+ partners
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Capture Comprehensive DataAutomate Project Delivery and Project Accounting
ResourceScheduling
Billing$
RevenueRecognition
Time, Expense, Materials
Fixed Price$
Project,Task,Budget
CONFIDENTIAL | 7
Today’s Agenda
Introduction to Intacct
The 5 KPIs
– 2014 Professional Services Maturity™ Benchmark
– Market dynamics and trends
– Where to start
– Five KPIs to help drive greater financial success
– Integrate your information infrastructure
Summary and additional resources
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Introduction
8
Service Performance Insight (SPI) is a global research, consulting and training organization dedicated to help professional
service organizations (PSOs) make quantum improvements in productivity and profit. In 2007, SPI developed the PS
Maturity Model™ as a strategic planning and management framework. It is now the industry-leading performance
improvement tool used by over 10,000 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 Performance
Pillars™:
1. Leadership – Vision, Strategy and Culture
2. Client Relationships
3. Human Capital Alignment
4. Service Execution
5. Finance and Operations
SPI provides a unique depth of operating experience combined with
unsurpassed analytic capability. We not only diagnose areas for
improvement but also provide the business value of change. We then work
collaboratively with our clients to create new management processes to
transform and ignite performance.
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Today’s Agenda
9
2014 Professional Services
Maturity™ Benchmark
Market dynamics and trends
Where to start
Five KPIs to help drive greater
financial success
Integrate your information
infrastructure
Conclusions and
recommendations
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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
Mar
ket
238 PSOs completed the survey in 2013
74% North America
18% Europe
8% APAC
10
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Financial Maturity Matters!234 PSOs
Level 1Initiated
Level 2Piloted
Level 3Deployed
Level 4Institution.
Level 5Optimized
Annual revenue per billable consultant (k) $159 $188 $223 $251 $252
Annual revenue per employee (k) $115 $156 $180 $211 $215
Project Margin 26.4% 35.6% 37.3% 40.0% 47.3%
Quarterly revenue target in backlog 29.4% 38.4% 45.0% 54.0% 63.5%
Percent of annual revenue target achieved 85.3% 91.0% 91.0% 96.3% 96.5%
Percent of annual margin target achieved 79.9% 86.8% 87.1% 94.1% 97.7%
Earnings before Income Taxes, Depreciation
& Amortization (EBITDA)1.3% 9.8% 13.2% 27.1% 37.0%
11
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Financial Maturity Cuts Across All Departments
12
• Services offered
• Market expansionExecutive
• Mktg. & Sales cost
• Bid price
• Client profitability
Marketing
& Sales
• Employee cost• Recruit/hire
• Pay
• Benefits
• Training
Human
Resources
• Time & expense
• Project margin
• Invoicing
Service
Delivery
Accounting
& Finance
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Market Dynamics
How things can change so rapidly
2010 was about Sales
2011 was about Execution
2012 is about Talent
2013 was about Profit
2014 is about All of the above
Executives must prepare
Create loyal clients
Develop flexible workforce
Deliver on time and at high levels of quality
Improve financial security
13
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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%
Yea
r-o
ver-
Yea
r ch
ang
e in
PS
R
even
ue
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
-Win
(p
er 1
0 b
ids)
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%
An
nu
al E
mp
loye
e A
ttri
tio
n
Year
66%
67%
68%
69%
70%
71%
2009 2010 2011 2012 2013
67.6% 67.5%
69.6%
70.3%
69.7%
Em
plo
yee
Uti
lizat
ion
Year
0%
2%
4%
6%
8%
10%
12%
14%
16%
18%
2010 2011 2012 2013
16.1%
13.5%
16.8%
11.4%
EB
ITD
A
14
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2013 Planned Steps Taken to Improve Profitability
Steps Taken to Improve Profitability Survey Embedded Independent
Improve sales effectiveness 3.91 3.78 3.99
Improve utilization 3.86 3.88 3.85
Improve methods and tools 3.78 3.95 3.68
Improve marketing effectiveness 3.72 3.36 3.92
Improve solution portfolio 3.65 3.71 3.61
Improve hiring 3.55 3.75 3.43
Reduce non-billable time 3.51 3.75 3.37
Increases rates 3.04 2.61 3.28
15
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Polling Question
Does your company have plans to improve profitability in
2014?
A. We don’t really have a specific plan
B. We have very early plans to improve profitability
C. We feel ready to execute a plan to improve profitability
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It’s not just as easy as getting the red out
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Focus on Profit
18
• Charter
• Portfolio
• Alignment
• Differentiation
• Pricing
• Satisfaction
• Cost
• Quality
• Timing
• Skills
• Compensation
• Training
PSRevenueProfitQuality
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Understand how profit is made
Profit
Bill Rate
Hours
Overhead
Labor Cost
Revenue
Cost
• Move to more strategic services
• Longer duration projects (man-months)
• Improve utilization
• Capture and invoice all costs
• Dedicated sales and delivery roles
• Invest in superior talent
• Service Packages demonstrate value
• Great references and client results
• Reduce fixed costs
• Staff with high margin resources
• Reduce non-billable time
• Pay for performance
• Optimize sales / marketing focus
• Reduce overhead
• Use technology to optimize resources and reduce
cost
19
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Follow the MoneyCash is the Lifeblood of PSOs
Employees (internal and external)
Recruit / Hire
Train
Compensate
Project Costs
Travel
Materials
SG&A
Sales / Marketing
IT
Office Costs
Administrative
Financing
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Cash out the Door Cash in the Door
Billings!
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It should be an easy process ……
Work
• Plan, execute and complete work
• Capture costs
Invoice
• Create / review invoice
• Send invoice to client
Collect
• Collect money from client
• Account for money collected
21
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..…. But it is not
Work is completed late
Invoices go out late
The wrong work is done
Write-offs
Invoices are incomplete
Revenue leakage
Invoices are wrong
Redo
Payments are slow
DSO
22
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Polling Question
Do you have a set of standard service-focused profitability
KPIs?
A. We track just a few regular KPIs
B. Sometimes we measure better than other times
C. We are happy with the metrics we measure but not the methods of measuring
D. We are happy with both the metrics and the methods we use to track those
metrics
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Maximize Annual Revenue per Billable Consultant
KPIOver
$200k
Under
$200k▲
Annual revenue per
employee (k)$220 $101 117%
Average revenue per project
(k)$273 $137 100%
Quarterly revenue target in
backlog53.5% 38.0% 41%
% of billable work is written
off2.64% 3.51% 25%
Average project overrun 7.8% 9.2% 15%
Billable utilization (2,000
hours)77.3% 66.9% 16%
EBITDA % 13.4% 8.5% 58%
24
Revenue per Billable Consultant (k)
1
0% 10% 20% 30%
Under $100k
$100k - $150k
$150k - $200k
$200k - $250k
$250k - $300k
Over $300k
Percentage of Observations
Ave
rag
e R
even
ue
per
Bill
able
Co
nsu
ltan
t
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Focus on Revenue per Employee
KPI >180k <180k ▲
EBITDA % 16.0% 9.6% 67%
Annual Revenue per Billable
Consultant (k)$293 $157 86%
Employee utilization 73.1% 69.0% 6%
Year-over-Year change in
PS Revenue11.7% 9.4% 25%
Average Project Overrun 7.8% 8.8% 11%
Quarterly Revenue Target in
Backlog54.7% 42.4% 29%
Bid-to-Win ratio (per 10 bids) 5.24 4.86 8%
25
Revenue per Employee (k)
2
0% 10% 20% 30%
Under $100k
$100k - $150k
$150k - $200k
$200k - $250k
$250k - $300k
Over $300k
Percentage of Observations
Ave
rag
e R
even
ue
per
Em
plo
yee
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Maximize Billable Utilization
KPIOver
70%
Under
70%▲
% of billable work is written off
2.45% 3.67% 33%
Average project overrun 7.8% 9.6% 18%
% of "referenceable" clients 77.8% 70.5% 10%
Projects canceled 1.8% 2.1% 1.8%
Projects delivered on-time 77.2% 77.4% 77.2%
Annual revenue per employee (k)
$168 $147 14%
26
Annual Employee Billable Utilization
3
0% 20% 40%
Under 50%
50% - 60%
60% - 70%
70% - 80%
80% - 90%
Over 90%
Percentage of Observations
Bill
able
Uti
lizat
ion
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Minimize Project Overrun
KPIUnder
5%
Over
5%▲
Projects canceled 1.7% 2.2% 23%
% of billable work is written off 2.34% 3.70% 37%
% of "referenceable" clients 78.0% 71.3% 9%
Bid-to-win ratio (per 10 bids) 5.04 4.78 5%
Project Margin 36.3% 33.9% 7%
27
Project Overrun
4
0% 10% 20% 30% 40%
Never
0% - 5%
5% - 10%
10% - 20%
20% - 30%
Over 30%
Percentage of Observations
Ave
rag
e P
roje
ct O
verr
un
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Maximize Project Margin
KPIOver
40%
Under
40%▲
Annual revenue per
consultant (k)$223 $172 30%
% of billable work is written
off2.24% 3.39% 34%
Annual revenue per
employee (k)$176 $143 22%
% of "referenceable" clients 77.0% 73.1% 5%
Revenue leakage 3.49% 4.44% 21%
Deal pipeline relative to qtr.
bookings forecast206% 186% 11%
28
Project Margin
5
0% 10% 20% 30%
Under 20%
20% - 30%
30% - 40%
40% - 50%
Over 50%
N/A - NotApplicable
Percentage of Observations
Pro
ject
Mar
gin
fo
r T
ime
& M
ater
ials
Pro
ject
s
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Integration with ERP Matters!Over 100 employees
Levels 1 & 2 Level 3 Levels 4 & 5
Survey percentage 55% 25% 20%
CRM integration 24.7% 32.1% 51.4%
PSA integration 57.1% 78.1% 91.7%
HCM integration 40.0% 44.4% 74.0%
Earnings Before Income Taxes,
Depreciation & Amortization (EBITDA)-1.3% 9.0% 25.0%
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Conclusions & Recommendations
30
1. Improving financial performance means
first aligning the organization
2. Focus on clients and services that deliver
the highest margins and profit
3. Build your organization’s backlog
4. Focus on larger project acquisition
5. Manage all project cost
6. Manage overhead
7. Use your integrated ERP solution to
analyze all financial information
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Accelerate Service Productivity & Profit™
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