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Record net profits for professional services but turbulence lies ahead — learn from The Best and compare with The Rest

Posted by  Henk Jan Onstwedder

After net profits for professional services organizations hit a record high, a new benchmarking study predicts turbulence for the industry in 2019.

The 2019 Professional Services Maturity Benchmark report (PSMB), produced by independent research firm, Service Performance Insight (SPI) and Unit4, predicts that growth will continue this year for the professional services (PS) sector, but not at the same levels seen in recent years.

Year-over-year earnings have increased steadily over the past three years with overall sector net profit, or EBITDA (earnings before income tax, depreciation and amortization) soaring to a record high of 18.5 percent in 12 years of the study.

“PS growth and profit soared in 2018,” SPI says. “The professional services market continues to grow. While no one has a crystal ball, the sector continues to be poised for growth, albeit not at the levels seen in 2017 and 2018.”

A good but turbulent year in 2019

However, SPI also issues some bad news, as it notes “serious cracks” are starting to show in underlying workforce productivity. Billable utilization dipped to new low, headcount growth dropped from its zenith in 2017, and employee attrition has been climbing steadily since the recession.

Meanwhile, the number of wasted hours spent on non-productive meetings and administration also climbed year-over-year. In the report, the analyst predicts turbulence ahead and issues a stark warning to the industry: “PS organizations must take action now to turn around these troubling trends or revenue and profits will suffer in 2019.”

About the report

PSMB 2019 set out to investigate whether increasing levels of ‘maturity’ — standardization in operating processes and management controls — improve customer satisfaction and financial performance. The report concludes that increasing levels of business process ‘maturity’ do result in “significant performance improvements”. SPI collated key performance indicators from global PS businesses using surveys and live interviews with leaders.

The study helps you understand how your organization compares to similar businesses as well as against the top five percent of firms and against the backdrop of the broader global market. It provides an objective, fact-based framework for performance improvements that helps pinpoint the areas that will provide the greatest impact.

Learn from The Best

This year’s report found that the top five percent of the PS organizations (The Best) say they “rely on” CRM software to improve marketing and bridge the gap between sales and service.

These top-performers also have low levels of attrition, high levels of employee satisfaction and referrals. This is partly because, says SPI, they embrace technology to “reinvent the workplace” with knowledge-sharing, team-building, transparency, and collaboration.

This year’s cohort of star performers credit their consistent service delivery excellence — executing high quality, profitable projects — to professional services automation (PSA) applications.

And they achieve “enviable” financial results — including higher margins and more revenue per employee, project, and consultant — partly because they have deployed a finance and accounting solution partially integrated with their PSA.

Compare with The Rest

Developed in 2007, the PS Maturity Model is a performance improvement tool used by over 20,000 service and project-oriented organizations to chart their course to service excellence.

PSMB 2019 allows you to gauge your own organization's process ‘maturity’ against the top-performing firms as well as against similar organizations in terms of vertical market, size, business type and geographical location.

Download the 2019 PSMB report for free.

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Henk Jan Onstwedder

Henk Jan is an experienced executive in the software business, who has worked in the ERP market for 25 years. Prior to joining Unit4 in 2016, he held a range of line-management roles in the software industry, covering sales, delivery and general management. Henk Jan is responsible for building Unit4’s Public Services and Not for Profit global value proposition, creating and delivering on industry product roadmaps, developing the ecosystem, and leading strategic sales engagements.