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Resource Management
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professional services organization is affected by a number of factors, making it difficult to estimate precisely at what size automation will become an appropriate option. Therefore, the firm must judge for itself whether the current administration justifies an investment of capital for labor. Here are just three of the many factors that can create complexity:11
1. Number of skill types needed and provided. (A technology company
with 50 people that offers help desk, desk-side support, network support, application development, and acquisition management is more
complex than a technology company of 75 people that offers only one
of the preceding services.)
2. Variety of project contract length.
3. Variety of client types (e.g., financial services, pharmaceuticals, telecommunications).
To get an idea of how these factors might impact an organization, consider the example of a small IT consulting company specializing in help desk support for small financial services companies has a one-year renewable contract relationship. Now the firm adds two more client verticals, two more types of contract terms, and two more service offerings. They have progressed from offering one type of service to one client for a specific period of time to a model where they are selling more than nine possible offering combinations. Add to this a little growth in staff, and the situation can quickly spiral out of manageable control.
Not staying on top of all resource management and business activities can spell doom for the professional services firm. In one instance, a money-losing consulting division was further wrecked by increasing complexity. The firm found that 50 percent of the billable consultants were engaged in nonbillable and under-the-radar back office projects.
An inventory of activities in which underutilized, otherwise billable resources generally engage when they are off a billable project and below any radar follows:
• Monitoring processes that could be cheaply automated, thus removing the need for monitoring
• Doing research for other team members who are not fully utilized
themselves
• Running reports of questionable value that few, if any, ever read (this one is a favorite)
• Conducting internally focused surveys and queries that do not lead anywhere
• Working on low-return/questionable return in-house projects
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Services Delivery: Taking Care of Business
In many cases, these resources feel vulnerable and will not come to managers asking for more billable work. In other cases, they lack only one or two vital skills that would make them suitable for any of the current billable projects. Again, however, feeling vulnerable, they are unlikely to bring this to the attention of their manager voluntarily. The solution to this situation is for managers to maintain and manage according to a global view of the various activities within their organizations.
To help managers address this challenge, many organizations turn to software solutions, which substitute systems and capital for labor and are appropriate for mid-to-large sized firms. Enterprise service automation (ESA) solutions, as this family of application software is called, brings to service organizations benefits similar to those that enterprise resource planning (ERP) tools give to the manufacturing and distribution industries. Software tools can help professional services organizations to better manage things such as planning, scheduling, managing billable resource utilization across multiple projects, salesforce coordination, customer relationship management, performance management, and communications. In addition, some software tools can automate the processes of collecting professional staff billing information and carry it all the way through the generation of billing and invoicing clients.
ESA Options
Because the professional service firm market is so large, it is not surprising that more than 30 software vendors, including major players such as Icarian, PeopleSoft, and SAP, as well as a number of newcomers, including Augeo Software, ChangePoint Corp., Opus360 Corp., and PlanView, now offer software tools to the professional services industry. These tools vary in their capabilities. Some are able to handle end-to-end operations, while others focus on specific segments such as resource management across projects.
A number of professional services organizations will, from time to time, opt to build their own software tools. A number of these custom application are used by firms to automate timecard information collection, billing and utilization, and other important processes. While these tools tend to have a good fit to the business because they have been specifically built for the firm, they can often have a less than stellar performance over the long-haul because they are expensive to maintain, and lack the scalability to effectively evolve with the needs of a growing business. The bottom line is that companies that opt to build tools for themselves often end up paying many hidden and unforeseen costs in the form of operational expenses, maintenance expenses, and, ultimately, the expense of rebuilding to keep up with the growth and evolving requirements of their business.
Averbook is quick to point out that, on the other hand, companies that buy from vendors such as his firm, PeopleSoft, are avoiding these hassles and getting more than just task automation. “In addition to automation, buyers are
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getting the benefit of the best practices captured in the software solution,”
states Averbook.12 He also points out that due to their ability to leverage their cost across multiple clients, operations and maintenance expenses passed on to the client through the pricing models are lower than they would be if directly managed and paid by the client.
In summary, if the firm has reached a level of complexity that benefits from automation, the firm should strongly consider a purchased package application instead of a custom-built, internally created solution. When evaluating the cost, the firm should also consider the immediate counter-balancing benefits of effective automation, which include, but are not limited to, the following:
• Days-sales-outstanding (DSO) reduction
• Administrative and overhead cost reduction
• Speed-to-respond to new business improvement
Naturally, the more appropriate the software solution is to the firms needs, the bigger and better the investment will pay off.
Buying the Right Software Solution
Such a broad array of choices with rich features, can make the task of selecting the right solution difficult. The vendor selection process is beyond the scope of this chapter. Chapter 10 of The Executives Guide to Information Technology has a thorough, detailed treatment of the process and should be considered mandatory reading for any firm considering the purchase of packaged software.13
Develop Engaging Management Skills
Up to this point, the focus of our discussion has been on:
• Being clear on the type of talents, skills, capabilities, and passions the firm needs to succeed
• Determining what needed talents, skills, capabilities, and passions are in the resource pool
• Determining the right level of utilization to expect from each individual resource
• Managing the billable pool of resources for optimal levels of revenue and profitability
• Determining when and how to automate some or all of these processes so that you can focus less on collecting, categorizing, and collating and more time making decisions, leading your business, and driving results.
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Services Delivery: Taking Care of Business
All of these add up to the techniques and skills used to maximize billable resources. Another important dimension, however, is the topic of engagement. Engagement is the maximization of personal dedication and energy that each of your people puts into the hours worked as he or she applies talents, skills, and capabilities, toward meeting the needs of clients and the development of the firm and their professional careers.
In addition to bench management, the firm can achieve significant benefits by focusing on the practices that lead to engaging professional staff in their work as fully as possible. Without engagement, your resources may be physically present, and utilized in the proper quantities of time, but their output and the value delivered to clients will not ref lect the fullest capacity of their talents, skills and capabilities.
According to a Gallup study, every year in America, companies lose $350
billion due to having disengaged employees. The primary reason is the lack of management and leadership capability among the ranks of their direct managers.14
New managers recently promoted to their positions from the ranks of