Professional Service Organisations – Being responsive in a disruptive market
Posted by Ben Gordon
The landscape for Professional Services Organisations (PSO’s) is constantly evolving. Whether it is the new demands of customers or new geographical regions or revenue streams, successful organisations are constantly adapting to thrive, spotting opportunities either organically or through M&A activity. Over the years I have witnessed many changes within the PSO sector however three key macro IT needs still hold true:
1. Identifying opportunities – standing still isn’t an option
In order to be responsive, you need to have solid processes and systems for planning, budgeting and forecasting. Disruptive and uncertain markets bring opportunities, growth regions or even target acquisitions. Unfortunately poor and inadequate budgeting and forecasting tools can leave service based organisations blinkered by the opportunities and threats that lay ahead.
Many organisations today still rely on complex, unsecure spreadsheets. Many suffer with the confusion resulting from the existence of multiple versions of those spreadsheets and the issues arising from formula errors, which all too often lead to decision makers taking the wrong direction based on inaccurate data. Indeed in my experience, directors are frequently under the impression that the master spreadsheet is under the ownership and control of a key user and that they will ensure that the information generated and shared is wholly accurate, based on the latest version and therefore up to date. In reality however Excel is just not suitable or scalable for comprehensive budgeting and forecasting processes involving multiple users and large data volumes. A Financial Planning & Analysis (FP&A) Trends survey revealed that almost 70% of businesses were spending more than two months on their annual planning process, and that less than a third were using specialist Corporate Performance Management and Business Intelligence tools to support their planning. A lack of accurate, concise and timely information can shackle organisations from responding to the right opportunities as they present themselves. This can be compounded through M&A activity by collecting multiple ‘sources of the truth’ and financial charts of accounts.
By adopting structured Corporate Performance Management and Business Intelligence tools, it can help sign-post the direction of the organisation.
Finally, it should be noted that in order to support the evolving requirements of the organisation, planning must be an ongoing activity and something that doesn’t take weeks to carry out.
2. Agility to act on opportunities
Successful organisations rely heavily on a flexible infrastructure allowing them to realise the synergies from a major business change or acquisition quickly. Service organisations are people centric; they are the assets of the target organisation and there is often a fine line between success and failure when it comes to the ability to integrate a new organisation into an existing group quickly and seamlessly.
It has been estimated that Professional Services Organisations with an average of 700 employees typically go through three acquisitions (Source SPI Research 2014), so they need to adapt quickly to change. The ability of the back office systems to support the technology change at the same pace as the business change is critical therefore. Unfortunately many legacy solutions are not built for rapid change or organisational restructures; all too often they are built on dated architecture and not designed with changes in mind or for IT advances such as Cloud, mobile and, more recently, Artificial Intelligence and machine learning.
Think about the last major change within your organisation, whether it was acquisition, a new revenue stream, an organisation restructure or just adhering to new and/or changing reporting standards. And how easily did your systems flex and adapt and did you manage it all without a lot of disruption and cost?
3. Maximising the opportunities with your main assets, your employees
For PSOs, employee stakeholders are their greatest assets and the ability to retain and grow their existing people, whilst attracting new talent, underpins everything service organisations do. Two phases that sum this up perfectly are;
‘Train people well enough so they can leave, treat them well enough so they don't want to.’
‘Look after your staff and they will look after your customers.’
The systems you put in front of your employees have a significant impact on productivity, engagement and reaction to change. This can be magnified by cultural differences through geographical expansion. If the systems in place are difficult to access and/or use and prevent your employees from doing what they love and do best, it can have a detrimental impact on morale, customer service and ultimately the P&L bottom line.
Traditional back office systems are built for processes rather than for people, often creating barriers or completely separate systems between departments. Whilst control, governance and processes are clearly important, service based organisations seek to empower employees through the use of technology, utilising mobile and electronic workflows as well as Artificial Intelligence for transactional activities, which bridges departments in areas such expenses, timesheets, purchase orders and absence requests. This in turn allows staff to focus their time on more valued activities and engagement with the customer.
It has been reported that along with other factors, such as an unclear company vision and lack of employee growth, poor back office systems affect productivity and job satisfaction, which in turn has a direct correlation on employee attrition. An engaged workforce, coupled with a strong culture and supported by decent systems, improves productivity allowing employees to be more attuned to the customers’ needs, which in turn leads to stronger organic growth.
One certainty for Professional Services Organisations is change, however the three areas outlined above will always be constant. Ultimately they will make the difference between those service based organisations that thrive and those that fail or get swallowed up through acquisition.