A professional services team discussing the merits of professional services software.

As a fractional CFO, I have noticed a common challenge among professional services companies. When your people are your product, inefficiencies or management issues related to service delivery become crippling as you grow, resulting in cash flow problems and less profit. That often leads to a rush to install technologies like Professional Services Automation (PSA) solutions. However, although professional services software sounds fantastic, I have joined several organizations that could have been more satisfied with the results. In helping them unravel these situations, I have gained some insight into why this happens and how to avoid it.

What is Professional Services Automation (PSA) Software?

There are many technologies for simplifying project management, ranging from to-do apps and point solutions to massive enterprise-level packages with every bell and whistle you could imagine. Full-featured Professional Services Automation software stands out for its potential to streamline the entire customer engagement lifecycle, including proposals, resource management, project management, time tracking, invoicing and payments, project accounting, and more.

Popular purpose-built Professional Services Automation (PSA) solutions include Kantata (formerly Mavenlink), Netsuite PSA, and Workday PSA. However, some companies prefer using more generalized solutions, like Harvest, Monday, or Asana.

By implementing PSA tools, companies can create efficiencies and gain better insight into each engagement’s financial management and viability. That empowers them to make better business decisions.

Why Do Companies Struggle With PSA Systems?

Although PSA solutions offer many desirable features, most companies use them as a centralized information hub by integrating them with other applications, like QuickBooks, Enterprise Resource Planning (ERP) software, and Customer Relationship Management (CRM) systems. Therefore, you must know what you are doing to set them up properly. First, you must capture the correct information. Then, you need to ensure that data flows between the systems and that people know how to use them.

For example, I have worked with a few companies that had to upgrade old financial solutions to get the data necessary to realize the benefits of PSA software. But that step alone can be a considerable challenge. Seemingly simple systems, like QuickBooks, work great for many things but are not always intuitive to set up or use, and some of their features (like payroll) leave a lot to be desired.

Furthermore, QuickBooks, in particular, offers little support. They assume you will hire an expert to advise you on what is best for your situation and set it up for you. So, sometimes, organizations encounter these barriers and get frustrated or even stall out.

Another challenge is that people don’t always welcome the changes necessary to adopt these technologies. Sometimes, companies choose a solution and impose it on their employees, but that rarely goes well. Modern organizations often have diverse teams with various skills and experience, and each person prefers doing things their way. Technology can make our lives better, easier, and more productive, but it doesn’t always work that way out of the box. You need a plan to get everyone aligned and the solutions working so you can move forward together.

Yet, It Is Worth It!

Examining data from professional services software.

I have been working with one professional services organization that is doing well and growing in capacity but needs to overcome some hurdles to scale. This company uses QuickBooks to track its finances, Gusto for payroll, and Harvest for project management. However, before we started working together, no one linked these systems. Data did not flow from one to the other, so they didn’t have a single source of truth or clear visibility into the profitability of their projects.

We helped them organize their hourly data by department so they could see the direct and indirect costs associated with each project and better understand their resource utilization rates. They connected Gusto to QuickBooks and QuickBooks to Harvest, which helped them update their chart of accounts to improve their financial data, giving them deeper visibility into their financials and the impact of each decision.

Growth is great, but hiring too fast can lead to cash flow issues, so this company was wise to ask for assistance. Our changes helped them become more confident in their data, and now they know which projects are profitable, which are not, and why. That knowledge empowers them to make better decisions during the early stages of each engagement, choosing clients who are a better fit and negotiating better deals. It also helps as each project unfolds, making interacting with clients and addressing their requests easier.

3 Tips for Choosing and Implementing Solutions for Your Environment

Are you considering a technology system change? Here are three essential tips to help you choose and implement solutions that will deliver the results you need for your professional services business.

1. Clarify the Job You Want Your Solution(s) to Do for You

In my experience, companies that buy expensive solutions typically only use about 10% of the capabilities and then become lost in the features they don’t need. So, when I work with clients, I recommend we start with their business objectives and then work backward. Are you planning to triple your revenue in five years, acquire another company, or pursue an exit strategy? Whatever your plans, determine what capabilities you need to make them possible.

Then, create a list of your must-have features and be super specific. Do you want something that can help with time and expense management? Great. But then what, exactly, do you need to make better decisions? Do you want to split time between billable and non-billable hours? Do you need to assign data to specific projects to determine profitability? These questions will help you understand if you want to go with one provider or use a few best-in-class but simpler solutions and integrate them.

2. Avoid Customization

Although I recommend finding an expert who can help with implementation, there is little need to customize in most cases. Every company is different, that’s true, but once you go down the custom route, it gets complicated. You become dependent on people with specialized knowledge; it becomes hard to move to new solutions and even harder to adjust if your revenue model changes.

Do everything you can to keep it simple. Learn to see the parallels with other industries with similar project lifecycles so you can adopt standardized methods and avoid unnecessary complexity. For example, avoid creating too much granularity on your staff’s non-billable time. At the outset, this might seem like a great thing to track, but it can become confusing and often serves no real longer-term purpose.  

3. Find an Enthusiastic Executive to Champion the Project

Executive explaining benefits of technology change.

When companies implement new solutions, people must change, yet we all know change doesn’t come easy. Therefore, it is critical to have buy-in from the top down. Your CEO must be 100% behind the project and willing to ensure that everyone understands why the firm will spend time and energy on it and the benefits to expect.

Also, you need a PSA “champion.” Choose an energetic, tech-savvy executive who likes change and is willing to spearhead the project—one who will be patient and flexible in their approach. They will need help, of course. They may need to hire an expert to help with implementation and others to handle documentation and training. But they must be someone with authority that people trust because even when we all know that things must change for us to move forward, there will always be some resistance.

Professional Services Software: The Bottom Line

The professional services industry has unique needs for managing business processes, so finding specialized solutions makes sense. Yet, it is best to avoid overcomplicating things. Choose a project champion who can help your organization navigate change, keep it simple, and find solutions that solve real needs, expanding as you grow.

At The CEO’s Right Hand, we have helped many professional services companies select and install solutions to support their business and financial goals. Reach out today to discuss what we can do for you.