What is a Professional Services Organization, and how can they benefit from cloud-based ERP?
The professional services sector is one of the biggest employers globally, and Unit4 specializes in creating software solutions for them, but what exactly are professional services, and why are their business models so unique?
Professional service organizations (PSOs) are project-based and usually address a specific problem or challenge. They sit in the service sector, primarily work on business-to-business projects, and require specialized training. PSOs, such as architects, accountants, engineers, consultants, and financial services providers, need experts who possess specific and, often at times, rare skills to provide their expertise to clients. It is then the satisfied clients, repeat clientele, and recommendations that ensure business success.
Click to read How to win the service game with ERP Gated
Generally, you fit the description if you harness the talents of skilled, knowledgeable individuals to provide advice and support to other businesses.
The main characteristics of a PSO are:
Your greatest asset is your talent
Professional services businesses are fundamentally about people. PSOs need the necessary processes in place to attract, develop, and retain top talent, as these are the people who deliver those exceptional client services. Providing outstanding working experiences for your people will enhance the services they deliver to your clients.
Leadership Quality
Leadership quality is magnified in the professional services business. This includes setting strategy, business planning, goal setting, and management. Professionals are educated, intelligent self-starters and won’t hang around at a firm for long if the business leaders are below par. SPI advises that the leader’s unique knowledge, vision, and passion must be nurtured and continuously kindled within new employees. Any potential clients will scrutinize and judge the leadership quality of service providers through their business practices, processes, and the skillsets of consultants. Top-performing firms succeed because their leaders are highly skilled and effective organizers, foster a collaborative work environment, focus on innovation, and achieve strategic clarity throughout the PSO.
Marketing Experts
Professional service organizations provide intangible services and therefore are not always an easy proposition to market, especially with the high number of direct competitors. So how do you organize your service offerings? How do you differentiate from your competitors? How do you communicate the benefits of your service approach, style, and the type of people you employ? This is a very different challenge from that faced by a product-based marketer. It's essential for service companies to differentiate themselves from the competition and to effectively present their organization’s benefits to a client. One way to do this is by optimizing your back-office technology to ensure that your internal processes are efficient, seamless, and transparent. You’ll optimize your client’s experience and be one step ahead of your competition.
Selling a service
PSO sales are totally different from product sales. The experts providing the service must understand their client’s problems before presenting a solution. The skill in selling professional services lies in understanding the specific niche service they provide, knowing how to solve their client’s problems and how to communicate the benefits of their service over others. Only then will the business truly demonstrate the value they bring from bid-to-cash with end-to-end visibility of processes.
Flexible Pricing
“In professional services, it is far more difficult to develop a pricing strategy than in product-based organizations.” Multiple factors will influence the pricing strategy of a professional services firm - market demand, competition, service model, the complexity of the project, and the brand premium will all play a part. Flexibility is always available to the professional services firm; each tender presents an opportunity to renew the pricing strategy, model, and rate. They may offer a fixed price based on project completion or outcomes, or they may use the traditional time and materials model. PSO firms are always aware that an un-billed hour can never be recovered, which is why they need accurate reporting and precision billing.
It is evident that PSOs are significantly different from product-based companies, so how can you ensure that your processes reflect this?
Your technology
Project-based work requires the ability to build lasting client relationships while working to strict deadlines and budget constraints. It’s essential that the experts delivering services have access to data, analytics, and workflow models that will empower them to deliver premium work.
Professional services firms often use a multitude of different systems to capture time spent on projects, record project expenses, plan tasks, record different hourly or daily fee rates, invoice clients, and track work in progress. Firms need to know how busy their people are, how profitable each project is, if time is going un-billed, and also track budget and performance against plan.
Business leaders can manage this much more easily if they have easy access to the information needed and integrated reporting from aggregated to a detailed level. Outdated, legacy systems, spreadsheets, or manual paper-based processes can lead to human error, duplication of data entry, and siloes. If the focus is to be on service delivery, then an integrated ERP solution is the only way forward. And for professional services organizations looking at ERP capabilities, a truly flexible solution will help you move faster, become more productive, and sidestep disruption. It'll be primed for change, so you can react quickly as new needs emerge.
Empower your people
How do professional services business leaders make sure that, as their most valuable asset, their people are motivated and empowered to deliver top-notch services? The answer is to have one eye on the present and one on the future. The right financial planning and analysis (FP&A) tools give a greater understanding of the numbers, which help turn insight into actions and free teams to spend more time delivering insights and creating value for the business. The right HCM and Talent Management tools can also provide key insights to ensure your employees feel heard and valued.
Automation is key
Purposeful automation provides PSOs with a better way to work and frees their people to focus on what matters: their success and yours. Our practice management solution, Unit4 PSA, helps you to stay ahead of your competition and focus on your client and employee experience by creating seamless and smart processes. A single application can manage and optimize your end-to-end business from funnel to cash. It allows you to track all communications, spend, expenses, and billable time associated with each project to ensure timely responses, higher rates of utilization, and proactively identify and capitalize on new opportunities for projects as they arise. PSA also provides you with visibility into performance across the whole business, with the ability to forecast for the future more accurately and flexibly.
How can Unit4 help PSOs excel?
We have deep knowledge of PSOs and their processes. With the right technology supporting you, your PSO can focus on People Experience to help free your professionals to do more of what matters: attracting, supporting, and retaining clients.
Our people-centric, project-focused solutions are purpose-built. Firms can better manage their businesses with industry-leading software for Enterprise Resource Planning (ERP), Human Capital Management (HCM), and Financial Planning and Analysis (FP&A).
Check out Unit4's People Experience suite. Our solutions support all types of PSOs around the world, offering unbeatable functionality, and giving you the tools you need to become the PSO of tomorrow.
