How to
prepare for
growth
As the global economy recovers there will be many
opportunities to exploit the favorable market conditions.
This eGuide compiles insightful blogs and leading expert
views on the things to consider before embarking on a
program of rapid growth in your consulting firm.
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Deltek people understand technology and how it
can deliver business insight, helping you deliver rapid
change, improve operations, increase accountability
and achieve greater profitability.
Getting yourself ready is more than just producing
new sales presentation decks. If you are to ensure that
the growth being experienced in the market translates
into improved profitability, then there are some basics
you need to implement first.
In the following sections we look at the three things that
you need to consider before adopting a growth strategy;
how to make the best use of resources; how to reduce
risk through better project control, and how to measure
the right metrics for operations.
Expert advice
What If
You Knew When to
Grow
Your consultancy has to pick its moment for growth
with great care. Rapid market expansion can
create fantastic opportunities, but the long-term
development of a profitable business depends on
winning the right clients that are the best fit.
Neil Davidson, VP Enterprise, Deltek
I help clients deliver meaningful margin improvement for
their business. I’ve had the privilege of gaining this insight
over 15 years working with the best, global professional
services enterprises in the world.
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When is the right time to grow?
when you know,you know
Originally published February 2015
QUICK STAT:
“Consulting firms in
North America and
Europe are bullish for
the future, as revenue
is up by 41%”
Managing Your Consulting
Firm for Growth, IDC.
Identify the correct
time to grow your
business using
precise, real-time
data from your
ERP software.
Operations people are under constant pressure to squeeze additional
profitability from projects. As well as
finding savings by streamlining processes, they have to advise when the
time is right to grow their business.
Your ERP software should be your
first port of call to provide the
information you need. The following
three pieces of information – which
should all be readily available from
your ERP software – will help you to
grow your business profitably.
1. Employee utilization
How well used is your workforce?
Ideally, your workforce’s time is
meticulously planned to ensure
that you can bill for as many
hours as possible.
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“A third of businesses cite
more effective and efficient
project execution as a top
business priority”
Using the statistics from your
ERP software, you can improve
billable utilization by seeing
where employees are being
under- or over-utilized. With this
information you can reassign staff
to other projects and understand
if you have the right resources or if
you need to employ contractors.
3. Check the financials
This information should help you
accurately identify the skills that you
need to add to the team to achieve
profitable business growth.
Growth should only ever be
considered when there is strong
sales performance; healthy repeat
business, and positive cash flow.
2. Projects at risk
So use data from your ERP software
to confirm the financial health of your
business. Without healthy financials
in place, investment in business
growth is more risky and could
jeopardize existing operations.
Increased profitability relies on
delivering projects on time and on
budget. If you can deliver projects
early and under budget, you may
be able to boost profit further still.
However, if your business is already
running at anywhere close to full
capacity, you will find it increasingly
hard to deliver on time.
Data from your ERP software
should help you decide whether
the problem is down to a lack
of resources, or fundamental
project management failings. For
example, if projects don’t start
at the planned time, find out if
it’s because resources weren’t
available. In that case, there is a
clear indication that you need to
grow your team.
– Managing Your Consulting Firm,
IDC InfoDoc, 2014.
What does this mean for you?
These three key tips are expanded
on in the following sections where we
consider five ways to increase billable
utilization, three project control
tips that will help you outpace your
competitors, and which financial
benchmarking metrics to measure for
continual improvement. Reading these
articles will give you a good working
knowledge of the main issues facing
agencies when it comes to growth so
that you know what to look out for.
The three items to check before
giving a green light to growth are:
1.Whether employee resources
are being used correctly.
2. What the risk level of each
project is.
3.Whether your ERP software is
fully aligned to all operations so
it gives you the data you need
With the right tools in place you
will be able to make accurate
recommendations to successfully
and profitably grow your business.
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5
Ways to Increase
Billable utilization
Originally published February 2015
QUICK STAT:
“Only 34% of firms have
utilization rates above
36% – and 25% report
utilization rates of
50% or lower”
Fragmented Processes
Jeopardize Project
Firm Buoyancy, Forrester.
Discover how to use
ERP software as an
effective long-term
strategy to increase
billable utilization.
data from all aspects of their business
to focus on improving billability.
The Professional Services Journal
(PSJ) report that, when the market
tightens, project-based firms –
including architecture, engineering,
marketing, PR, legal and accounting –
have two basic choices to
increase profitability:
1. Make time capture
more accessible:
Focus externally to improve sales and
marketing effectiveness, or turn
inward and look for ways to reduce
costs and increase profitability.
Firms that have conducted costcutting in the short term are now
looking at new ways to optimize their
business. This includes improving
billability and revenue.
What is the best way
to go about improving
billable utilization?
With project-based Enterprise
Resource Planning (ERP) software,
Professional Services firms have a
platform which enables them to use
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These five steps, taken from the
Deltek 2 Minute Expert Series,
demonstrate how project-based ERP
software has the power to help you
better track time and output, and, in
turn, improve billable utilization.
Five steps to
improving billability
Lost time costs money – a fact of
life for many Professional Services
firms like yours. So make it easy for
your employees to log their time,
and invest in a system that they can
access from anywhere, and from
their phone, tablet or laptop. This will
encourage them to keep regular and
consistent, up-to-the-hour records,
and also helps eliminate excuses for
failing to log those vital hours that
would otherwise remain unbilled.
2. Set targets for your employees
Use the information your ERP system
provides to set clear, measurable and
aspirational targets for your billable
employees. This will benchmark
their achievements and ultimately
encourage greater productivity.
3. Identify the right talent
Employees vary in their abilities.
What can be achieved by one person
in a day could take the next person
just half a day. Knowing where an
individual’s strengths lie is a potential
source of additional revenue, and
could mean the difference between
coming in on budget or over-running
at additional expense.
4. Automate and integrate
When time is money, what could be
more effective than integrating your
time capture processes with other
business functions, such as invoicing
and business intelligence? There is a
fine line between profit and loss, and
an automated system could increase
efficiency just enough to tip the
balance in your favor.
5. Plan and prioritize
What does this mean for you?
These five steps to improving billable
utilization are just the start. Even
when you address all these areas,
there are still further issues. For
example, customers may have become
accustomed to receiving a certain
level of service, yet not actually paying
enough money. How do you bring such
clients around to the fact that you’ve
been under-charging them and now
have to raise your prices? Moreover,
how do you communicate to employees
the importance of this initiative, and
that they have to embrace change for
the good of your consultancy?
Thinking carefully about your critical
path before you start a project will
make sure you use your valuable time
and resources in the most lucrative
way. It may, for instance, help you
to identify some innovative ways to
make savings, perhaps with ‘to-do’
lists that help you to keep on track
with your goals. If you plan in this way
you will streamline your efforts for
maximum effect.
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Three Project Control Tips That Will
Help You to Outpace Your Competitors
Originally published September 2014
QUICK STAT:
“28% of firms report
that it takes days to
generate P&L and
income statements”
Fragmented Processes
Jeopardize Project Firm
Buoyancy, Forrester.
Market conditions
are blossoming
in the consulting
sector these days.
But what does it really take to be
profitable today? IDC looked into the
current market conditions for the
consulting sector and the trend is
clear: profits are growing and
revenue is up 41%.
So here comes the million dollar
question: how do you take advantage
of the opportunity and outpace your
competitors? Based on IDC’s survey,
there are two obvious suggestions:
improve your project control and gain
better visibility.
This piece is chiefly about improving
project control. Let’s suppose you
see an uptake on projects coming in
and your revenue is up. Yet some of
your consultants are over-worked,
others are unhappy because they
don’t get to excel in the areas where
their true expertise lies and, on top
of that, you’re not really sure what
makes your firm perform this well.
Start by looking at how you run your
projects. How is each project
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performing? And how can you
take what you learn from one
project to the next?
Action points
The IDC research report gives us
a few action points on how to best
control your projects and ultimately
run your business in a profitable way:
1. Use detailed project analytics
These can help you develop your
business to meet both your clients’
and prospects’ demands and, at the
same time, leverage your consultants’
skills. Why? A typical consulting firm
applies the expertise of its employees
through all the phases of a project,
from the early, blank-slate phases
until the client’s visions are realized.
Throughout this process it is essential
to constantly keep an eye on the
detailed analytics of the project to
ensure that the business metrics
are still sound.
2. Understand your metrics
and business drivers
Make sure you are always well aware
of, and constantly optimizing, things
like utilization and project profitability.
Why? Well, for example, do you know
which three of your customers,
projects and employees are currently
your most, and least, profitable?
Business managers who cannot
answer these simple questions are
not truly in control of their business.
3. Build a metrics-driven business
Make sure you have an integrated
solution that gives you a single
version of the truth, and provides
management with real-time access
to data so they can make better
decisions based on facts.
See how this was done in real life:
watch this video where consulting
firm COWI describes how they have
improved their operating margin
from 1.7% to 5.5% in one year.
Watch here
Controlling your projects is key to
success in a consulting firm. After
all, your projects are your bread
and butter. If you know how to run
a truly metrics-driven business you
will outpace the competition and be
at the forefront of the prosperous
business outlook. The best advice
is to embrace these actions, and do
it now. Conditions are getting better
every day and it’s better to start
increasing your client numbers today
rather than tomorrow.
What does this mean for you?
Taking proactive control of projects is
essential to outpace your competitors.
Project firms can improve project
execution and profitability by
streamlining the back office. The
increasing complexity of projects
and diversity and specialization of
resources they need to staff their
projects is a strong source of concern
for consulting firms. The positive
effects of high utilization rates are
often matched by the challenges of
recruiting and hiring specialist talent,
and in successfully matching specialists
to engagement opportunities.
The next step you should take after
improving your project control is
gaining better visibility to make better
business decisions.
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Financial Benchmarking: Which Metrics
to Measure for Continual Improvement
Originally published August 2014
QUICK STAT:
“Half of project firms
are adding more
business-outcomelevel metrics to their
IT services contracts
to improve the quality
of delivery, drive
greater financial value
and improve their
business outcomes”
Fragmented Processes
Jeopardize Project Firm
Buoyancy, Forrester.
Discover how to
improve forecasting
accuracy for finance
managers using the
right metrics and
ERP software.
Finance managers are experts at
forecasting, but their systems often
make achieving any decent level of
predictive accuracy quite difficult.
With the continuing growth of data
volumes, it’s also becoming harder
to know which metrics to use, as
well as how and where to get them.
This article explores how financial
managers can organize their data
and use Enterprise Resource
Planning (ERP) software to improve
forecasting accuracy.
Professional services organizations
use a range of metrics to measure their
success and grow their business for
example, on-time completion rates,
analyses of whether each project is
completed within budget, whether they
use resources efficiently, and more.
ERP software that’s tailored to your
own firm can better determine where
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to allocate your financial and human
resources in order to achieve higher
levels of efficiency and profitability.
As a finance manager you also need
to consider the most appropriate key
performance indicators (KPIs). Here
are some that are worth considering:
•
•
•
•
Days Sales Outstanding (DSO),
which determines how well a
company’s accounts receivables
are being managed.
Sales revenue and sales
conversion rates. These may
also be known as proposal ‘win
rates’ as defined by completed
sales transactions. You should
also consider sales and project
costs to determine returns on
investment (ROI).
The availability, cost, placement
and utilization of labor.
Projects that are at risk of failing
or being late. These projects
may add increasing costs over
an extended period and this will
reduce their profit margin.
Once you’ve determined your
metrics, you can design or set up
the format of your ERP software’s
dashboard to reflect what you wish to
measure and forecast.
•
•
•
What level of detail is required?
It’s important to keep the
dashboard simple by avoiding
any unnecessary bells and
whistles.
How much information is really
needed? Too many metrics
and too much information can
become too hard to handle.
They can also lead to confusion
and poor forecasting. Different
individuals may also want to use
different types of data, metrics
and visual references. So it’s best
to establish a standardized and
consistent format.
How timely is the information?
The data needs to be constantly
refreshed to gain any level
of accuracy.
ERP software that offers dashboard
and analytics capabilities which
help to answer these questions will
enable finance managers and other
executives to make increasingly
accurate forecasts of where and
how to spend their budgets and
other resources – including staff.
With a dashboard ERP and some
up-front consideration of process
and metrics, Enterprise Resource
Planning software makes forecasting
much simpler.
What does this mean for you?
The number of key business metrics of
revenue and growth is increasing for a
large number of firms, supported by
more proposals, more projects, more
deals and higher utilization. Keeping
track of your operational systems
with the right metrics has become
more important than ever. Other
key performance indicators to track
are: average project size, numbers of
proposals submitted and accepted,
profit margins, hourly bill rate and
consulting headcount.
Ask yourself the following questions:
•
What charts, tables and
visualizations would give your
executives the best and most
accurate forecasting of your
financial performance across
the enterprise?
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THE
Conclusion
What does this mean for you?
QUICK STAT:
“13% of firms charge
out less, on average,
than the pay on their
fully loaded payroll”
Fragmented Processes
Jeopardize Project Firm
Buoyancy, Forrester.
Agencies need integrated project
lifecycle management to thrive. Most
firms win less than half of the project
sales opportunities that they pursue,
and almost half of leaders claim that
the most significant challenge is
matching skills to project requirements.
They are unable to effectively record
billable time and expenses and struggle
with the challenge of applying the
correct policies to each engagement.
Many project firms struggle to find,
retain and match the right skills mix
for clients’ complex requirements, yet
expect to continue enjoying relatively
attractive rates of utilization and
margins. Effective project-based
enterprise resource planning solutions
from Deltek can help your organization
overcome these challenges and get
itself on the path to stronger growth.
JOIN THE
CONVERSATION
TO FIND OUT MORE VISIT WWW.DELTEK.COM/WHAT-IF
To learn more about how project-based ERP can
help your business contact: [email protected]
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