Are KPIs Driving You To Despair?

Posted by Deltek on June 27, 2015

Feeling like you’re caught with your pants down when you’re asked tough questions by the board?

Running a Professional Services business is complex. It’s much more like being in the fish business than the wine business. You can’t sell today’s billable hours tomorrow, just like today’s fish can’t be sold next month. Therefore, it’s imperative to understand the Professional Services key performance indicators you should be tracking to keep your business profitable.

Professional Services organisations deal with a high degree of project variation and complexity. As a result, no two organisations will want to track metrics in exactly the same way. Hundreds of metrics exist for Professional Services organisations to track, analyse, and strategise around. 

So how do you choose the right ones?

Problems with tracking Professional Services KPIs

Many Professional Services organisations have a good idea of the key performance indicators they want to track but find it difficult or impossible to do so because the systems managing their business are typically a jumble of disconnected, stand-alone systems.

Imagine trying to evaluate the “Average hourly rate achieved” for clients as a KPI - if certain client details are in spreadsheets or a standalone CRM system, services rendered details are in an engagement-management tool, and financial details are stored in the financial system. The same difficulty arises in trying to track many other PS relevant KPIs such as utilisation rates (by employee, project, and firm), project EVAs, overhead breakeven rates and more. When you’re dealing with standalone systems, "connecting the dots" across all this information is complicated and time-consuming, and the final calculation may wind up highly debatable across the firm.

It is also extremely challenging to track KPIs relevant to your Professional Services business if your ERP system is not optimised for the way a Professional Services organisation works – on a project basis. For instance, if your ERP system does not allow you to split time between project phases, apply multiple billing types to project phases, track work-in-progress and calculate direct and indirect costs – your data accuracy will be questionable and your ability to easily report on meaningful KPIs will be next to impossible. The real effectiveness of tracking KPIs depends on your ability to systematically capture and access timely data in a way that is relevant to your business.

The Solution – Project-based ERP

Project-based ERP provides the flexibility to create and monitor your firm's KPIs by producing data that can be captured and measured across projects in a consistent way. Data is captured in the ERP systems central repository and allows for full transparency and more accurate reporting in a way that is relevant to your organisation.

With the ability to take information from every project, project-based ERP gives you the ability to capture the necessary information from each and every project at a very detailed level. Role-based, customisable dashboard reporting enables everyone to be accountable for their own KPIs - making them effective and easier to manage.

Project-based ERP will enable you to track PS relevant KPIs that show you areas where you may be performing lower than the industry norm and where you can improve. This will help you gain a better understanding of gaps you have in resource management and what steps you need take to drive higher organisational efficiency.

Connecting your business on a single management, project-based ERP system will make it much easier for you to analyse and share performance measurements with people that need it. Data is current, connected, and easily accessible - making performance measurement not only easier, but also more consistent and more likely to be embraced across the firm.