Top 5 Most Actionable KPIs for the Growing Consulting Firm
Whether you’re a small or large consulting firm, at the end of the day growth is likely one of your firm’s priorities, through either acquisition, new services, repeat clients, and/or expanded projects. So how do you know when it’s precisely the right time to put firm expansion tactics in to place? The answer is, you probably won’t know. Unless you have visibility into the right set of actionable KPIs.
To gain visibility you must first have access to the most accurate, integrated information, collected from across all company’s functions. The data can’t have been sourced from just one department, like your finances team for example, as that wouldn’t provide a comprehensive view of your firm’s repeatable successes in sales and marketing, resource management and engagement execution.
Dave Hofferberth from Service Performance Insight (SPI Research) recently joined us for a webinar to help firms identify the best engagement KPIs for growth. SPI Research is best known for providing the consulting industry with actionable research via its Professional Services Maturity Model™, developed as a strategic planning and management framework used by more than 25,000 consulting and professional services organizations.
In our webinar, Hofferberth identifies about 18 KPIs to watch in the engagement phase alone, and drills down into the top 5 KPIs that firms should focus on first when planning for growth. These include:
- Maximized Sales Backlog. Your firm’s services, resources, and business model are just 3 of the things that make your firm unique. Therefore, use sales backlog KPIs to identify the types of projects you your firm delivers with the highest bid/win ratio, employee utilization, and on-time/budget delivery. Then look to prospective clients that mirror your firm’s best performing engagements to leverage these KPIs for growth.
- “Project Management” Indicators of A Structured Delivery Methodology. Using a structured methodology allows your firm to build in time and cost constraints, eliminate less valuable tasks, manage scope creep, and create efficient repeatable processes. So measure these KPIs early and often, and repeat the most successful structure used. Mature organizations keep this KPI over 90%.
- Maximized Billable Utilization. While this is an obvious KPI to watch, the factors that feed this KPI are not so obvious. Optimizing the workforce to reduce or eliminate excess skills, continually monitoring hours by task, and following the engagements hour by hour (to avoid non-billable work) are the best ways to keep this KPI up over 75%, and keep it there.
- On-time Project/Engagement Delivery. According to the Benchmark, this KPI has hovered between 71 – 82% in the last 5 years in firms under 500 employees, and between 79 – 83% for firms over 500. This KPI is highlighted as one of the most actionable KPIs for firms of all sizes. While the statistics are in a similar range, it is noted that the delivery challenges of smaller versus larger firms are quite different.
- Minimize Project Overruns. Getting visibility into this KPI requires real-time visibility into all costs associated with your engagements, the ability to identify discrepancies instantly, and ensure employees are focused on their well-defined billable tasks to deliver projects on time and minimize scope creep. Keeping project overruns below 10% is the best way to grow quickly.
Hofferberth stresses that while measuring performance is critical, the focus of a growing firm should always be on performance improvement, or “getting the red out” of these KPI measurements. The high-priority items should be where performance needs the most improvement, not just the low-hanging fruit.
To learn more about the Top Growth KPIs for your firm, and how to leverage technology to access and action them, watch the on-demand webinar, and download the Professional Services Maturity Benchmark Study today.