One of the biggest industries in the world — generating $6.4 trillion in 2023[1] — is Professional Services. This industry represents product lines including employment and staffing services, advertising, management consulting, and accounting. In cases where you have to have work done for you, rather than a product shipped to you, you’re hiring a Professional Services firm.
While that may sound simpler than carrying inventory and maintaining factories and delivery trucks, that doesn’t mean Professional Services is a simple business. Delivering high-quality service offerings at competitive prices, and with acceptable margins, requires flawless planning and execution on several fronts:
- Your product is largely people. Often these people have specialized skills and are in high demand. Talent management (recruiting, onboarding, training, and certification), skills identification, and labor optimization are all critical to client satisfaction and profitability.
- Your product is highly customized. No two clients buy the same outsourcing support, advertising campaign, or accounting services. So Professional Services executives must thoroughly know the costs for each service you offer, and have visibility into your available resources, to bid accurately — at the lowest possible price that preserves your organization’s target margin, especially since most Professional Services work is won through competitive bidding. And if you’ve ever been part of the process for bidding on a large project, you know that bid adjustments are frequent and that winning the award often depends on submitting a compelling bid at the last possible second. That necessitates having a flexible, responsive bidding process and access to real-time information. Success also means effectively collaborating across many corporate functions: legal, finance, human resources, operations, procurement, engineering, and more.
- After you win the award comes the hard part: Delivering what was bid according to the terms of the contract. Preventing “margin leakage” (reduction in targeted contract profitability across the entire “bid-to-bill” lifecycle) is vital to operating a successful Professional Services business. Margin leakage can have many causes, but one major cause is a disconnect between the bidding team and the delivery team tasked with designing and delivering the actual engagement. And “margin enhancement” from successfully managing the change order process can be a significant source of revenue…If your processes are air-tight, your collaboration is top-notch, and you have all the relevant data at your fingertips. On the other hand, mismanaging the change order process is a great way of losing your shirt on a project while, at the same time, angering the client.
Which brings us to the key question: What can we do to optimize quoting, contracting, delivery, and change orders? Step one is to understand the drivers of each part of the process and identify the — often seemingly small — inefficiencies and process defects (Excel spreadsheets emailed around, anyone?) that impede your efforts to run your Professional Services business professionally and profitably.
In my experience, most Professional Services firms have a great understanding of the processes they need for success—after all, they ARE experts in process improvement. But their software applications and infrastructure often can’t meet the requirements laid out above.
First off, most Professional Services Automation (PSA) systems aren’t fully integrated with other core systems such as finance and HR, so a change in one data element (maybe hourly labor rate) isn’t instantly reflected throughout the systems. Such data anomalies, even though they may get corrected by a delayed data copy process, make a difference when your bids must be adjusted right now! Worse, if a vendor has stitched their suite together out of ill-fitting acquisitions, data may not be synchronized at all. Lack of a single source of truth means any decision might be based on incorrect or obsolete data, which adds risk to dynamic, fast-moving projects. Even if data can be reconciled, the analytics that go into such a decision are time consuming and difficult when you lack a single source of truth.
With Workday, by contrast, the intelligent data core securely connects data from across the business with the firm’s financial system of record, giving finance ownership of its data and delivering a complete, multidimensional view of the business. Finance, operational, HR, and other critical data sources are integrated so performance can be compared and analyzed across products, customer segments, regions, and other dimensions. This also means leaders can make timely, data-driven decisions with confidence. This integrated view comes out of the box with built-in security, auditing, and reporting.
In addition to a lack of integration, many PSA tools lack robust workflow capabilities that speed approvals (may we reduce the bid by $10K?), enforce controls (two signatures are required on major purchases), and effectively communicate notifications (click to acknowledge completion of step ‘x’).
Relying on emails, phone calls, and chat applications muddies audit trails (when did someone sign off?), promotes miscommunication (oh, I didn’t look in Messenger), and allows leakage of confidential information (let me forward that voicemail to you). Of course, at a Professional Services firm, your key decision-makers and approvers aren’t in the corporate office where you can easily track them down for a hallway chat. Firms make money when teams are out in the field, so tools must route information and requests to whoever is appropriate and wherever people are, on a real-time basis. And even if a PSA tool includes basic workflow, you may be flying blind if you can’t insert relevant information from a transactional system into a workflow message (project completion date is delayed until “insert <end date> from system”).
Workday offers a robust solution to the problem of disconnected workflows: 500+ business processes delivered out of the box for unified workflows across its entire platform; its Business Process Framework, moreover, is easily configurable by the business for use cases that aren’t covered by out-of-the-box functionality.
Professional Services projects depend on marshaling the right people, with the right skills, at the right times and places. If your PSA tools lack Workday’s tight integration with the human resources information system (HRIS) foundation, your projects will fail. Maybe they’ll fail today if you can’t identify the people you need and assign them to the right teams. Or maybe they’ll fail tomorrow if you aren’t attracting and training your future workforce. Once your team is assembled, you need to be able to closely manage their schedules, ensuring that your actual labor costs conform to what you bid. You must also manage every aspect of their compensation, from rates to taxes to benefits to expense accounts, to ensure employee satisfaction and accurate project invoice generation.
Unless your PSA, HRIS, and Payroll tools are tightly linked, you may not realize that a union employee isn’t being paid local prevailing wages, or that they’re not properly licensed, or that their drug test must be renewed — any of which can cause major project issues with your client.
Workday offers intelligent resource management — augmented by the company’s long-standing use of artificial intelligence (AI) and machine learning (ML) — that helps firms match people to projects as they automate their business.
Of course, you must also have modern financial and accounting tools. Accurate credit decisioning, quick and accurate billing, approval, and payment portals for clients and vendors, and automated financial close/reporting tools are necessary for smooth and efficient business operations.
Workday co-developed its software with customers, ensuring tight alignment between customer needs and product functionality. That’s a big reason why Workday has more than 1,400 customers each for Financial Management and Projects — including 700+ Professional Services firms. Workday was also recognized as a Leader in the 2022 Gartner® Magic Quadrant™ for Cloud ERP for Service-Centric Enterprises2. As a cloud-based platform, the Workday software ensures customers have the flexibility and scalability to drive services revenue growth, while ensuring Workday’s apps fit into their preferred IT architecture.
And there you have it: The key Professional Services capabilities that let you manage your remote teams; bid and execute profitable projects; support your people; collaborate with clients, vendors, and prospects; and maintain effective controls. It’s that breadth of functionality, integrated across the firm’s core business apps, that will ensure success in 2023 and beyond. After all, it’s hard enough to do with world-class tools, but why burden your business with legacy systems? Look for an enterprise management cloud suite that enhances your Professional Services expertise rather than one that lets you down.
- Professional Services Global Market Report 2023 (reportlinker.com) ↑
- Gartner Magic Quadrant for Cloud ERP for Service-Centric Enterprises, John Van Decker, Denis Torii, Tim Faith, Sam Grinter, Patrick Connaughton, 12 July 2022
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