Managing time management in professional services

We wrote recently about the “Friday Dash” – the time at the end of the week when people in service-based businesses scramble to get ready for the weekend by getting all their expenses and timesheets in at the last minute.

It’s something everyone who’s worked in a professional service organization will have experienced at least once. Everyone knows it isn’t efficient, nobody enjoys it, but most struggle to avoid it. There’s a very simple reason for this: most PSOs don’t work nearly hard enough to put proper time management protocols in place to avoid the circumstances that make the dash a feature of their workflows.

Are you taking your time seriously enough?

It’s a cliché, but in professional services, time really does mean money.

In a company with 200 fee earners, working 220 days a year, making $1000 per employee per day in billable revenue, with a 70% utilization rate and a 15% margin will see $30.8m in a year in revenue, and $4.62m in profit.

If we increase utilization to 73.5% (just a 3.5% increase), revenue jumps to $32.34m – an increase of around 5%. However, because the company’s costs haven’t changed, this additional $1.54m can be added directly to margin. This means that if we boost utilization by 3.5%, we can increase margin from 15% to 19% and total profit by 33%.

Utilization (and its opposite, bench time) are rightly key concerns for PSOs – the more your people work, the more money they make. And generally speaking, well utilized people are more satisfied, tend to stay with the business longer, and are closely correlated to key metrics of success from project profitability to service delivery levels, and, crucially, optimal headcount.

Click to read How to win the service game with ERP Gated

Improving time management is about more than increasing hours worked

One of the most basic errors that PSOs typically make when trying to manage their time is simply setting a (usually ambitious) target and increasing the workloads of their people to meet it.

This approach runs afoul of Peter Drucker’s warning that a metric which becomes a target in and of itself will become meaningless. “Forcing” utilization improvement in this way is likely to result in a boost to utilization measurements in the short term but huge operational problems in the long term as your fee-earners burn out trying to meet unsustainable goals. It also fails to address the underlying issues which lead to poor time management in the first place.

What gets in the way of effective time management for PSOs?

Despite most service-based businesses running on a model that relies on accurate billing and time/project tracking, many still don’t pay enough attention to real-time tracking of time spent per client. Even those working on fixed-fee bases need to take this seriously, as it’s key to their ability to effectively price future contracts to ensure profitability.

Failure to monitor time expenditure as it occurs creates a slew of issues that contribute to “pile ups” and projects running out of control in the long term:

• If you don’t know how much time your people are spending on projects, you also don’t know what resources are being used for them.
• If you can’t track resource usage accurately, you can’t make accurate estimates of the costs associated with given projects (and with the clients you do them for), making your forecasts meaningless.
• If you’re unable to make realistic estimates of the manpower, time, and resources required to complete specific types of work, your projects will be incorrectly staffed; either too “lean” or too “fat”.

This sequence leads to unusual peaks and troughs in availability – with some teams and individuals overutilized and some left on the bench. It also leads to a kind of “Friday Dash” when it comes to the timely completion of projects. It’s obvious that meeting your deadlines with your clients is vital to a successful ongoing relationship – but when you’re not effectively managing your peoples’ time, a mad scramble at the end of a project can actually erode that project’s profitability – jeopardizing your long-term relationship even as you work to save it in the short term.

So how can you avoid this trap and take control of time management?

We believe the answer lies in technology. As we said last year in a spotlight on the architecture and engineering sector, it’s no coincidence that A&E firms – which lag behind all other professional services industries in terms of their adoption of operational technology – also struggle the most with effective time and project management, with a whopping 86% claiming their legacy technology is holding them back.

As operational complexity grows with increasingly tightening schedules and resource limitations, technology’s importance in improving efficiency, effectiveness, and resilience will be critical. An investment in modern enterprise software also has huge potential to enhance both resource and project management by taking a more joined-up, premeditative approach to planning schedules and matching the best resources to the right jobs. It also helps to manage engagement and wellness to avoid burnout in an increasingly tight talent market.

Modern operational technology – particularly cloud ERP – makes more effective time and resource management possible by creating unified data flows throughout every part of your organization and making round-the-clock reporting and “instant insight” possible. Giving project managers a complete and reliable picture of resource usage, work in progress, and how and when to make use of your internal resources and those of your external contractors and partner organizations.

Other tools – specifically Professional Services Automation (PSA) platforms – integrate client, project, and resource data, including peoples’ availability and skill sets, providing a single home for data on all projects from the prospect stage through to final billing, giving real time visibility and access to all customer, project, resource, and financial data in a single application. This makes tracking time spent and utilization optimization a much more manageable challenge.

How can Unit4 help you?

We have deep knowledge of PSOs, their processes and complexities. 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). They’re designed to help you track project KPIs, including estimated time to complete, time spent, and expenses with a view to successfully running global projects. Real-time reporting data enables better billing and revenue recognition, and makes managing change and review throughout the project lifecycle simple – with dedicated processes even for highly complex projects.

Our PSA solution is an integrated practice management solution built on Microsoft Dynamics CRM that helps you win, execute, and bill your projects as accurately and efficiently as possible.

Our solutions support all types of PSOs globally, offering unbeatable functionality to help you deliver your projects on-time and on-budget. Check out this flyer to learn how.