What is Professional Services Automation (PSA) Software?

Professional Services Automation (PSA) software helps professional services organisations quickly identify opportunities to win, serve and retain customers by automating pipeline management, resource planning, expense and cost tracking and project financial management.

What is the difference between PSA Software and ERP Software?

Professional Services Automation differs from Enterprise Resource Planning (ERP) in that a full project ERP system manages all aspects of projects, including accounting functions. A PSA solution handles front-office functions of the business and projects; it does not typically include accounting tools (such as a general ledger), but it can integrate with accounting tools.

The definition and functionality of PSA solutions continue to evolve and the lines between ERP and PSA are becoming more blurred. The term PSA therefore will often be used to describe an ERP for Professional Services..

Project-based organisations have distinct requirements, and they need to view their business in three dimensions: accounts, organisations (departments or business units) and projects.

The very thing that makes project work enjoyable—the variety of doing lots of different things for lots of different clients—makes running a project‐based business challenging. You need to manage resources wisely, ensure your people have the right amount of work, monitor project progress and cost, track financials to bill accurately and get paid promptly and collect information that helps you decide which opportunities to seek and how much to charge.

What’s more, customising generic business and project management tools often results in poor visibility, manual reconciliations and assumed calculations that aren’t tied to the right projects.

PSA software handles these challenges. The key benefit of PSA solutions is that every transaction is tied to three things—an account, an organisation (the person or team doing the work) and a project (the product or service delivered to clients that is the source of billings and revenues).

By connecting corporate information and project information on one platform, you gain unparalleled visibility and control, and you can make decisions based on current, real-time data rather than managing through a rearview mirror.

PSA software provides a number of key benefits that support each step of your project lifecycle:

Develop Business through Opportunity Management: Most customer relationship management (CRM) tools are designed for businesses that sell products; they won’t work for project‐based businesses because often a project’s key item is people. PSA with true project-based CRM helps project‐focused professional services organisations understand their market and identify, manage, track, forecast and capture opportunities.

Increase Win Rates: When you know which projects are most profitable, you’ll have a more efficient business development process. Better information lets you focus on projects and clients that best match your skill set, increasing win rates.

Boost Profits Through Better Information: In today’s business landscape, pricing is incredibly competitive because more businesses are competing for fewer jobs, and competitive prices breed tight profit margins. A PSA system helps you create accurate forecasts that maintain margins and support profitable bids.

Develop and Use Resources Wisely: Your workforce is your organisation’s biggest asset. PSA software enables you to optimise utilization by helping you identify resource needs, find and develop the right talent and use resources effectively on revenue‐generating work.

Accelerate Cash Flow: Payments arrive sooner with the right PSA system. You’ll quickly create accurate invoices when labour and materials costs are connected to the right level of a project. Transactions validated for accuracy make invoice creation more automated, predictable, and accurate, so customers are likely to pay on time, accelerating cash flow.

Manage Projects and Materials: Project planning and budgeting help project managers gain visibility into projects, better equipping them to stay on task and on budget.

Collaborate Socially: Social collaboration tools help your team work efficiently, share updates with clients, brainstorm ideas for dealing with a tough situation and more.

Gain Visibility and Control: If your existing solutions are siloed, it can take days or weeks to get accurate information about schedules, costs and profit by project or program. This often results in missed deadlines, cost overruns and backlogs that potentially risk the organisation’s profitability. The right PSA solution gives complete and timely visibility into project status, entire project portfolios and risks and opportunities. With timely information, you can take proactive steps before issues cause problems.

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Effective Professional Services Automation software includes these key features, many of which maximise productivity and revenue:

• Customer relationship management (CRM) users create campaigns and track prospect and client progress through the sales pipeline. Identifying weak links in the sales cycle and clients who tend to return is invaluable in planning future projects. Proposal automation streamlines pursuing and winning projects, reduces costs and enhances proposal quality.
• Project management centralises and integrates project initiation, planning, execution, and close. Reports communicate timelines, budgets, activities and their logical order, and resources to perform activities. Time and expense tools integrate with client AR systems and accommodate varying billing requirements to optimise invoicing, billing, proposals and contracts.
• Human resource management (HRM) handles recruiting, onboarding, training, career development, resource planning/management, and payroll. HRM helps project managers delegate workloads and measure seasonal fluctuations, reducing resource issues and increasing productivity.
• Project accounting can be included as part of a PSA solution, or you may want to integrate with your existing accounting tools. Reviewing and managing the entire project portfolio helps you strategically direct the business.
• Invoicing and billing: Capture and tracking functions keep tabs on time and expense data.
• Collaboration tools link people for sharing conversations, tasks, events, and files.

Implementing PSA software should be a no brainer for organisations looking to operate at a higher level than the competition, increase productivity and better understand what makes your business successful.

The decision about which PSA system to implement is more important than ever, because you’re not just buying a tool; you’re choosing a trustworthy partner who will collaborate with you through the digital transformation of your business. Whether you’re seeking a new PSA system or re-evaluating vendors for an upgrade, consider these criteria:

1. A comprehensive, purpose-built solution: Your solution should be designed with your industry in mind, not a generic solution requiring customization to your requirements.
2. A respected industry reputation: Is your vendor a respected leader in your industry? Look outside of the product and observe the vendor’s influence in the industry.
3. Scalability: Look for a solution that can easily accommodate your company’s growth strategy.
4. Integration with your existing accounting and/or CRM tools: Confirm that the tool can be integrated with existing tools, if you wish to retain them.
5. Transparent total cost of ownership: Recurring costs should be clear from day one. Pricing models should outline all details. Look for companies with flexible price plans that include full suite, PSA and back-office capability with complete core accounting.
6. Invested in customer care: Look for a vendor independently recognised as having superior and flexible customer service plans, your main line of communication after implementation.

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At Deltek our mission is to deliver solutions that help our customers connect and automate the project lifecycle that fuels their business. We believe that better software means better projects. Our industry-focused expertise makes your projects successful and helps you achieve performance that maximises productivity and revenue.

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Thanks to our Deltek Project Nation customers, we have been named best in Government Contracting and Professional Services! Our industry-specific solutions—Ajera, Costpoint and Vantagepoint—continue to be recognised in the Project-Based ERP Leader category.

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