Project Management: IT's getting better

The latest buzz in the IT industry is professional services automation. Pat Sweet looks at how PSA applications can make professionals more efficient, and hence more profitable, while at the same time increasing levels of client satisfaction.

PSA solutions first appeared in the mid 1990s, largely as an extension of existing project management or time and expenses recording software. Early pioneers included companies such as Novient, Changepoint, Evolve and Niku. But recently, a variety of other vendors, including ERP specialists (Epicor and PeopleSoft) and mid-range accounting suppliers (Foundation Systems), have entered the arena.

Current predictions for this market are highly aggressive. Back in 1999, Aberdeen Group research analyst David Hofferberth originally estimated that the global PSA software market would be worth $1.3bn by 2003. His latest forecast, made in January 2000, now reckons PSA market revenue will be $3bn by 2004.

Reasons to believe

Part of the reason for this is that professional services organisations are facing increased competition within their markets, plus greater demands for quick delivery of services to customers and a shortage of critical skills. They need to know exactly which jobs they have in hand, what skills are required, where their staff are currently allocated and how the time and expense details that form the basis for client billing are building up.

In the past, companies have usually done this using a mixture of systems and approaches. The principle advantage of a PSA solution is that it pulls together all the information in a highly integrated, real-time fashion, usually via a web interface.

'Very often when we talk to clients we find that a lot of them are running their business using Microsoft Project plus a whole load of Excel spreadsheets which they have customised,' maintains Ayman Gabarin, vice president of Changepoint Europe. 'The amount of time and effort involved is very inefficient, and there is no way in which they can re-use knowledge and expertise successfully.'

In contrast, PSA software allows a company to analyse future opportunities against existing skill sets and project commitments. Once work begins, the software tracks all budget and target details, and all members of staff automatically log in time and expenses details.

Avoid the bottlenecks

'If you don't get the right person with the right skills at the time they are required, then a bottleneck develops,' explains Reid French, Novient's chief marketing officer. 'And that affects the bottom line directly - we have one management consultancy client where being able to get each person in the organisation on a job one day faster led to a $250m increase in operating profits.'

There are similar advantages to being able to get bills out faster and more accurately. Instead of a manager having to spend time looking for the relevant timesheets, chasing up missing details and putting everything together for the client, the PSA software handles this process automatically.

'Erratic, incomplete and inaccurate billing is one of the biggest reasons for client dissatisfaction,' points out James Norwood, director of product marketing at Epicor. The ERP supplier has just launched its PSA offering, eProject. 'In turn, this affects realisation rates and pushes up the length of time it takes to collect outstanding debts.'

There are also the softer benefits to be gained from working collaboratively. For example, consultancies can use their PSA systems to track when demand for rare skills is likely to peak, so that they can forewarn recruitment agencies or freelance professionals that their services will be required.

'Once a company has a PSA solution, it's got access to information real-time and quickly so visibility is improved,' maintains Rob Paton, product manager for SharpOwl, the PSA package from Foundation Systems. 'Therefore, it can use that data for much more proactive management of its work, rather than just for historical reporting. That can include spotting potential budget overruns much earlier.'

Typically, a PSA solution will pay for itself within six months. Many of the gains come from areas such as improved utilisation of staff, fewer bills written off, shorter billing cycles, less time spent resolving client conflicts and better re-use of expertise on new projects. Often staff retention rates also go up, saving recruitment costs, because people know their skills will be used effectively and the administrative burden is reduced.

So far, the majority of PSA sales have been to IT services organisations and management consultancies. But with Novient recently signing a deal with Accenture (formerly Andersen Consulting), and Evolve partnering KPMG, it looks likely that PSA's appeal will spread. Already vendors are reporting sales to banks and PR and media companies, the research and development arms of pharmaceutical companies and large organisations' in-house IT departments - just about any organisation with expert staff, working on projects, who need to bill or cross charge for their services.

MKI: Banking on professional services

The banking sector is experiencing unprecedented upheavals, and those supplying services need to be able to react rapidly to the changes their customers are experiencing. As Jeremy Fish, head of IT at Midas Kapiti International (MKI) explains, 'Banks have a greater emphasis on competitive advantage and are adopting technologies to help them drive down costs via the use of IT linked to process change.'

Part of Misys, MKI offers a broad product portfolio across banking, trading, risk management, front, middle and back office. It has wholly-owned subsidiaries in 25 countries, 1,700 staff, and annual sales in excess of £200m to more than 1,200 banks worldwide.

To ensure good levels of service and a competitive understanding of its global marketplace, MKI decided to implement SharpOWL, a PSA solution (from Foundation Systems), integrating time recording, resource management and billing applications.


With the market for professional services becoming increasingly competitive, MKI realised it needed to leverage its most important asset: its staff. However, with 11 different time recording solutions in operation across the company, and each branch reporting across different accounting periods, it was difficult to assess levels of chargeable utilisation of staff, or gain a comprehensive global picture of consultant productivity.

Fish recalls: 'We had an inaccurate picture of chargeable utilisation, our overall utilisation of resources, the productivity of staff, and cross-charging between branches.'

Before adopting a PSA solution, MKI tried a manual time recording system. It helped to create a much wider understanding of the need for accountability and to instill the need to record chargeable time monthly. But it did not significantly increase chargeable utilisation or billing to clients.

Fish explains: 'Without a seamless process from recording time to billing clients we gained huge discrepancies. While consultants were recording time as billable, they were not in fact consistently billing clients.'

'This clearly demonstrated to MKI that chargeable utilisation statistics are of limited use in isolation,' Fish insists. 'You have to be able to see the process through to the final invoice.'


MKI approached the PSA project with three objectives: to increase and understand chargeable utilisation; to be able to bill clients directly from the system; and to improve the efficiency of cross-charging between branches. 'We wanted a global view, so it was essential to have a central system.' More than 1,500 users worldwide now access the system to input time on a weekly basis.

Ease of use meant MKI was able to train staff very quickly. Even so, it invested heavily in training operations managers and administrative personnel to enable them to utilise the data within the application to assess project status, evaluate consultant performance and deliver improved customer service.'These people have become our product champions,' says Fish.


One of the most important benefits has been the raft of reports at both high and detailed level that are now available across MKI. 'The one-page summary report prepared for the CEO provides a complete profile of the entire business, the profitability and performance of each branch,' explains Fish. Drilling down through these figures shows the profitability of each project, or individual.

Since time is either charged, waiting to be charged or written off, there is nowhere to hide it. Fish cites maintenance contracts as a prime example. 'For the first time we know the profitability of each maintenance contract. We know how much we are billing the customer and we can see the number of hours booked to each maintenance contract.' The visibility of utilisation and fee earners' billing performance has been key: it offers the ability to compare contractual charges against actual charges, and a full audit trail of variations.

The system also allows MKI to build a global picture of its client relationships, allowing consolidation of client activities and enhanced information-based contract negotiations, which ensures a consistent level of customer service. Customers also benefit, with detailed invoice information, including who has undertaken work, where and at what hourly cost. Additionally, customers can have a tailored bill to meet their specific requirements if necessary. Fish says: 'We are really able to demonstrate that we provide better value for money with the information now available.

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