Work Together To Improve Your Margins

Posted by Onno Van der Valk, Senior Director of Finance on October 21, 2014

improve profit margins and reduce costs

Use teamwork to achieve greater visibility of projects and reach your common goal.

Professional Services companies who generate revenue through managing and delivering projects for clients need access to clear information about all projects and resources in order to grow. Therefore, improving profit margins should be a goal that is shared and understood across the whole company.

Enterprise Resource Planning (ERP) solutions can allow every function – from finance to marketing to consulting - within your Professional Services organisation to work together rather than sit in their own functional silos. A joined-up, inter-departmental approach is a prerequisite to making sure that projects are successful, while reducing costs and improving profit margins.

By working together with the support of a project-based ERP system your Professional Services organisation can gain a clear picture of how other departments are operating and their impact on either a project’s performance, its impact on a specific department and on the enterprise as a whole. With this greater visibility, you’ll be able to make strategic changes and increase your profit margins as a result.

One version of the truth

You can use your Enterprise Resource Planning solution to get one version of the truth for each aspect of your projects which will enable you to put together an actionable plan to improve profit margins:

  • How many projects have been completed: when you know that projects have been successfully completed it becomes possible to move resources to other projects. There is no point in allowing resources to sit on the bench; they need to work efficiently to increase your profit margins.

  • How many projects are late, running up additional expenses that weren’t forecast and which are likely to reduce a project’s profit margins. Your Enterprise Resource Planning solution will give you better foresight so that you can identify potential issues with scope and delivery in order to keep a project on track, rather than having to act reactively once a project has become delayed.

  • Pitches and bids that have been completed or failed. By understanding the number of pitches that have been completed or failed, it becomes possible to adopt more efficient and effective processes, offer additional training or more appropriately allocate resources to increase the success rate of any deal. There may be more than one department involved in the process that determines either the success or failure of the deal – it won’t always be down to one person’s performance.

  • The need for more resources in order to complete a project. Battles can’t be won if the troops are starving. In the same way each team, department and project will need access to the appropriate level of resources to complete a successful project.

  • Effective reporting systems: Shared dashboards can be created and used to simplify an ever growing amount of numerical data. This allows managers in roles such as operations, delivery and finance to generate insightful reports to enable discussions about their performance and resources. You can play a role in ensuring that change sits at the heart of your organisation, whenever the reports reveal that it is necessary. You should only adopt changes when the case for it is established.

A broader picture

The collation of such data can also offer a broader picture of how the complete enterprise is performing. Subsequently, you can play a greater role by sharing this kind of data to inform employees of what might need to change in order to make ongoing improvements to the business. You can lead change by acting as a change agent and organising regular meetings with your staff to discuss the firm’s performance. Explaining where departments, or the company as a whole, needs to adapt in order to control operating costs will permit you and your company to increase its profit margins.

Focus on Small Steps

One of the best business practices is to focus on one thing at a time. Human beings aren’t machines, so the best results are achieved by taking small steps - by concentrating on one task at a time. It’s better to do a good job that will greatly benefit your business than complete one badly because there will inevitably be an impact on your revenues and profitability. Also, a failure to allocate resources or to expect too much, too soon from your teams can de-motivate them and reduce their willingness or ability to efficiently work together.

Integrated Enterprise Resource Planning solutions can, for example, provide you with the financial and resource availability information to enable you to avoid these situations. This can be used to benefit your employees as you begin to focus on projects and tasks that are likely to make a difference to your company’s revenue and profit margins. Your teams will also know more about how they can work successfully together in order to achieve your Professional Services organisation’s project-related and financial goals and objectives.

Making a difference

In summary there are six ways project-based Enterprise Resource Planning solutions can make a difference:

  • Help companies to win more deals
  • Use resources more effectively
  • Generating higher profits
  • Boost revenue and cash flow
  • Make compliance automatic
  • Gain visibility and control