Apply ‘The Goldilocks Principle’, win more projects and increase back-log
Posted by Anwen Robinson
2014 has been called the "Goldilocks Year" for professional service organizations (PSOs). Businesses saw incremental improvements that were not too high and not too low, but rather the steady level of growth required to ensure stability and success. According to the latest professional services benchmark report from SPI Research, these organizations make far more money on gradual and predictable growth than they do on big revenue swings brought on by mega-projects that cannot be repeated. “By applying ‘The Goldilocks Principle’ to professional services in the future… incremental growth, productivity and profit enhancements combine to deliver results that are ‘not too hot’, ‘not too cold' but ‘just right!’”
To ensure they adhere to ‘The Goldilocks Principle’ PSOs need to ensure they have the right systems and processes in place that provide insight and better support for decision making and forecasting. ERP systems will remain critical to providing this insight. In fact, cloud and new technology advancements in intelligent analytics and machine learning are creating a new kind of ERP. One that has the ability to deliver actionable insight based on what it already knows. We call this new breed ‘Self-Driving ERP’.
Like a self-driving car, Self-Driving ERP takes care of tasks that are better served by technology, leaving people to focus on exceptions and freeing their time for more value add activities. As almost 90% of all PS operating costs are associated with people, this sector has the potential to benefit more than any other. For professional services it will provide the intelligent support and planning system that utilizes information from all sorts of internal and external sources including productivity tools (calendar, outlook, document systems, social tools) to drive cases, projects and initiatives and tasks. The system will make suggestions based on company behavior, personal behavior, the weather, traffic and all other possible sources it pulls data from.
As well as gradual and predictable growth, the SPI benchmark highlights that successful PSOs require strong back-log (deals won and booked but not yet delivered). This is important for accurate forecasting and people planning for future projects. Self-Driving ERP is exactly what professional services firms need to be able to combine an analysis of historical data with predictive analytics to gain valuable insight on which projects to bid for (and which not). The insights delivered through machine learning and analytics will ensure better people planning; sound bids that meet prospect requirements and have a very high chance of success and profitability; leading to predictable growth and strong back-log.
Analyst Mint Jutras recently published a report on Unit4’s self-driving ERP promise. If we look at the example of a professional services firm, we can see the benefits this technology will deliver.
“Under the covers, Unit4 is leveraging the predictive capabilities of Microsoft Azure’s Machine Learning. This is a classic example of what is commonly referred to as “supervised machine learning” where you have known inputs (type, scope and cost range, etc. of the project) and known (expected) outcomes (cost, resources required and time frame). In this type of scenario, you have a good idea of which factors are most important in terms of predicting outcomes. These are the project characteristics you enter and you know what you are looking for – a similar project.
But have you ever managed a project that looked great on paper, but in reality it was the project from hell? You can’t tell everything from the numbers. So Unit4 uses sentiment analysis to assist, which is an example of “unsupervised machine learning.” With unsupervised learning you infer and identify patterns we might not otherwise see on our own. What is the most common word used? Perhaps you find it to be “team.” What other words or phrases are used in conjunction with team? If they are “complaints” or “excessive overtime,” perhaps the team is complaining about too much overtime. Is that sustainable? Do you really want to use this as your starting point?”