Accurate monitoring of resources and finances continues to be a major problem for project managers. By working across multiple spreadsheets with teams distributed around the world, data silos have become a major risk to business productivity. With a direct impact on profits, addressing these data silos should be a top priority for companies looking to maintain resilience during the economic downturn.
In the Deltek 2022 study on architecture and clarity engineering, eight out of ten companies identified that investing in technology to improve operations will help their company get more business, with 55% saying they are losing or losing stakes. market within two years if it fails to make progress in this field. Therefore, we are seeing more companies recognize the importance and invest in digital transformation.
One area that requires such investment is project management, which is too often at the mercy of legacy systems and manual processes. For professional services firms, Professional Services Automation (PSA) offers tremendous opportunities to combat rising inflation and costs by simplifying project management.
What is PSA software?
Professional services firms have unique requirements. From securing new business and effective project management to ensuring timely and accurate payments, the way these businesses are handled is completely different from other industries. As such, professional services organizations face particular challenges, which require bespoke technology to deliver solutions.
Chief among these challenges is the need to manage multiple clients with different projects at the same time. Resources must be checked wisely, staff workloads monitored, project progress assessed, and finances monitored to the penny. PSA can increase risk understanding, with low-risk work requiring a low-impact governance process and higher-risk work requiring more in-depth control to ensure delivery, profit and cash flow risk be understood and mitigated.
Traditional project management tools often provide poor visibility and lack a single source of truth, which leads project managers to do manual reconciliations and supposed calculations. By taking into account the resulting inaccuracies, coupled with the human resource power needed to facilitate this process, the potential negative impact on profit margins becomes clear. This is where PSA software can make a difference.
PSA is designed for project-based companies that derive revenue and profits from the projects they manage for their clients. The software helps organizations quickly identify opportunities to acquire, service and retain customers by automating pipeline management, resource planning, expenses and cost tracking for project financial management.
For example, business leaders will often neglect project financial data to maintain cadence on delivery, thereby reducing project profitability. But with UK inflation at its 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 planned delivery time to monitor accuracy using PSA. Project expenses are tracked and recorded, with costs tracked at the time. Based on this information, real-time data-driven decisions can be made to protect the financial health of projects by preventing overspending and providing useful information.
How PSA supports the project life cycle
No day in a project-based company looks the same, but this can also create headaches when implementing new technology. Good PSA software should support businesses in everything from converting prospects into customers to delivering projects and accelerating cash flow.
When implemented correctly, PSA software can financially benefit companies by helping to increase payout rates and increase profits. By leveraging the information provided, business leaders can easily see which projects are most profitable for the benefit of the business development process. Thus, informed decisions can be made to support new business opportunities, ensuring that projects are prioritized with the highest potential return on investment.
In today’s business landscape, pricing is incredibly competitive as more suppliers try to get fewer jobs and competitive pricing generates reduced profit margins. A PSA system can help businesses create accurate forecasts that support profitable offers, ensuring that adequate margins are maintained. This level of knowledge is even more vital as the cost of doing business continues to rise.
People power projects, so obviously PSA has a crucial role to play in supporting companies to develop and use resources wisely. Software can facilitate more efficient use of resources by allowing business leaders to identify needs first, before enabling them to find and develop the right talent. These teams then have the ability to collaborate via PSA software to help them work efficiently, share updates with customers, and brainstorm.
If existing solutions are isolated, it can take days or weeks to get accurate information on schedules, costs, and profits by project or program. The right PSA solution not only gives companies complete and timely visibility into project status, but provides insights into their entire project portfolio. By leveraging the element of project and materials management, managers gain better visibility on projects, equipping them better to meet tasks and budget.
ERP vs PSA
A common question asked when trying to adopt PSA software is the difference between PSA and Enterprise Resource Planning (ERP). PSA differs from ERP in that a complete project ERP solution is custom built to handle all aspects of business management, including accounting functions. A PSA solution traditionally manages the front-office functions of the company and projects; typically does not include accounting tools.
The definition and functionality of PSA solutions continues to evolve and the boundaries between ERP and PSA are becoming increasingly blurred. The key is to first understand the specific requirements of the company, before researching a PSA or ERP solution that aligns better.
Choosing the right PSA system
With continuing economic turmoil causing frequent project disruptions, the decision to digitally transform the project management process is more important than ever.
The PSA should not simply be considered a new tool to add to the corporate belt. Rather, it should be seen as a major investment in a vital aspect of a company’s digital
transformation. Whether businesses are looking for a new PSA system or re-evaluating vendors for an upgrade, the following considerations need to be made:
- The chosen solution should be designed with the business sector in mind. A generic solution that requires extensive customization to meet a company’s requirements will never be as effective as a comprehensive, specific solution.
- Does the solution come from a vendor that is respected by others in the same industry? Companies should look beyond the product to see supplier 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 can support growth is essential for any expanding business with ambitions for the future.
- With most businesses having accounting and customer relationship management (CRM) tools, the solutions should integrate with existing technology. In this way, costs will be reduced and employee adoption will increase.
- All costs must be transparent and clear from the first day of the employment relationship. Pricing models should outline all required details transparently.
- With PSA software underpinning all project management for the company, selecting a supplier with superior and flexible customer service plans ensures that the company can access supplier support when needed, especially after initial implementation .
As rising inflation continues to put pressure on businesses, investing in technologies that enhance productivity and profit is essential for those looking to remain resilient and competitive. In the Deltek Clarity report, companies cited the cost of technology as one of the three biggest technology challenges. While companies prioritize investment, adopting one or two technological advancements that ensure return on investment and meet key strategic criteria will help companies not only survive, but thrive as well.
Find out more from Deltek here.