Services organizations face an unenviable challenge. How to deploy the right resources to optimize billable utilization while also remaining profitable? How to avoid overloading or overworking resources? And how can this all be down with limited resources and limited budgets without affecting performance?
With so many factors to consider, it can be difficult to know where to start. So… start small. Our three changes below explain how small tweaks to your PSA process can make a big difference – with immediate results.
1. Aim to deliver outcomes, not just services
Services tied to the implementation of a product, the ongoing maintenance of a product, or to ensure success of using a product are significantly different from services that are standalone.
When standalone, these services have the benefit of perspective and a longer time frame – an immediate result is not needed if we are paying for process improvement, ideation, or something other than the delivery of a Software-as-a-Service (SaaS). However, in the world of SaaS professional services, the delivery team has to be focused on one thing: the desired customer outcome.
This isn’t to say other things shouldn’t be measured or cared about – Time-to-value, utilization rate, and project duration are all fine metrics, but they are means to an end. The ultimate goal of these customer engagements are to make sure the software is implemented, users are trained, and the customer is successful. In short: focussing on the project instead of the outcome might actually cause more harm than good.
Here’s an example. Often in this industry, it’s thought that a project is successful if delivered on time, within budget, and with as few change requests as possible. This makes sense: if the services were sold for $10,000 and it only cost us $8,000 to deliver, that’s profitable. But what about when the customer churns early because user adoption was never there? Or when the sales team miscommunicated the objective of the customer and now the delivery team has to go back and correct a mistake?
Focusing on the service without the context of the customer outcome is to miss the forest for the trees. Oftentimes, if these teams strictly focus on the SOW in front of them without asking the customer what their end goal is, this can lead to additional work needed and a potentially less happy customer. However, if the outcome is delivered, the service will be successful. The opposite isn’t always true.
Remember why this engagement is happening in the first place: the customer asked us to solve a challenge, the last thing we want is to create a new one for them.
2. Work with Sales to understand need
Too often professional services leaders are caught off guard when a SOW shows up and someone is needed to deliver the requested work. The usual fix? Having additional resources on the bench that are ready to spring into action when a project needs to be started.
The downside of this is obvious: organizations are often paying for resources to not be on a project, but to be available just in case. Having under-utilized employees like this hurts the department’s overall bottom line.
The easiest solution? Talk to sales.
Create a relationship and an ongoing cadence that gives Sales the opportunity to let Services know what might be coming in terms of projects needing to be delivered. Historically, services professionals have been hesitant to do so, but remember, it’s in the sales team’s best interest too – the last thing they want is to tell their customer that the project has to be delayed because there’s no resourcing available.
Now, don’t read this as suggesting resources should be run at 100% billable utilization – but as a suggestion to find the balance between billable utilization and bench time. In finding this balance, teams need to be prepared for a surprise change request or deal being closed a month before it was supposed to be. This is where the inverse of the Sales/Delivery relationship stands.
Yes, sales needs to communicate to delivery where deals are and what the scope is turning out to be; but delivery also needs to communicate to sales what their immediate, available capacity looks like. Getting ahead of these obstacles early is key: communicate with the customer, create a mutual action plan, and be flexible when needed.
3. Track time-to-value, not project duration
Cloud Coach is not shy about this suggestion but more and more this is the direction we point our customers. For years, project duration has been one of the key metrics to indicate the success and efficiency of a services team: the project was scoped for 60 days and the project was delivered in 60 days – this was a successful project! But to go back to number one: did the customer outcome get delivered, or just the project? This is where time-to-value (TTV) comes in.
There’s too many differences between TTV and project duration: the beginning point and the end point. Project duration is measured from the kick off date to the date of project completion. TTV is measured from the contract start date to the point the customer and vendor have decided is the first point of value. Right off the bat, TTV will be longer seeing as the project kick-off could be days or weeks after the contract is signed. Teams are hesitant to do this because on the surface, they are getting worse.
This is where the end date comes into play. The end of the TTV measure is mutually agreed upon between the customer and the delivery team. This can very well be the project end date if the implementation is simple – but oftentimes it’s at go-live and there’s still 3 additional weeks for the services team to make sure things are running smoothly. Or it can be when administrators are onboarded but end users are still waiting. The reason this is flexible is because every customer is different, which means services teams can be flexible as well.
There’s a chance TTV will be longer than project duration, there’s also a chance of the opposite. Our suggestion isn’t to choose the one that makes the services team look better – we suggest using TTV because it communicates to the customer that the services team’s end goal is their success. To simply focus on project duration is to ignore the customer and focus on internal metrics. This helps our numbers, but might end up hurting the customer.
These three changes are meant to be quick, internal, or procedural changes because the result will be noticeable in a short time frame. There are several other ways to make a professional services organization more efficient, but these can be done without additional software, resources, or time. All that is needed is a hard look into the status quo and asking, “is this working for us, or for our customers?” If it’s not the latter, changes need to be made.
If you’re curious about how to implement these suggestions today, one of our solutions consultants would be happy to walk you through the necessary steps or to show how a tool like Cloud Coach can automate, standardize, and scale these practices.