CXO

Consulting firm gains greater efficiencies, strong ROI using PSA software

Though tech spending is tight, enterprises are still grabbing new technologies that drive business efficiencies. That's exactly what one global consulting-driven enterprise gained when it pulled in a professional services automation application.


Despite 2002 being a restrained year for IT expenditures, one type of enterprise software, professional services automation (PSA), appears to be growing in popularity. PSA technology provides business process integration and operational visibility. It’s gaining attention these days as a way to gain great efficiencies, especially in tracking projects and the status of consulting business units. The projected return on investment—cited at 98 percent by analysts—can’t be quickly dismissed.

The greater business visibility and strong ROI are exactly why Dallas-based EXE, an international manufacturer and consulting company of supply chain software, sought a PSA solution. The organization wanted a better handle on the mushrooming amount of information streaming in from EXE's global consulting groups, explained Peter Walsh, VP of EXE’s Global Support Service. With offices in North America, Europe, Asia, and Australia, the company needed customized project management and reporting software.

Globalization prompts new tools
While many enterprises attempt to stretch ERP and CRM solutions to meet their data management needs—or even build homegrown applications, as EXE did—the efforts often fall short due to unique issues that come with corporate globalization.

EXE, for example, needed software that would support several languages (English, German, French, and a double-byte character set that enables people in Japan to read Kanji characters). The chosen PSA solution would also have to accommodate the wide variety of currency types that came with different global operations.

"In-house technology was hard to scale and end users couldn't access as much data," explained Steven Renfro, EXE’s IT project manager. The data that could be accessed via the homegrown apps, such as staff utilization, project accounting, and invoice cycle time information, still took days to collect and consolidate in spreadsheets. By the time reports reached corporate decision makers, the data was often days or weeks old, added Renfro.

EXE’s new PSA software, an ASP product from Changepoint, allows consultants to input project details in a uniform, Web-based system. Managers can then retrieve all the data in real time to get a picture of staff utilization, project status, and global consulting business metrics. This gives managers and top company brass a clear view of company performance. Before PSA software, managers had to make hunches about staff utilization because they didn’t have up-to-the-minute business data on the state of global operations.

In addition, EXE's finance department can now view invoice information in real time—well before they send invoices to clients. This capability allows finance to troubleshoot any issues with consultant rates or time spent on a project prior to the time that the customers see their invoices for service.

Investigating the PSA options
In searching for a solution, EXE had plenty of choices—some 70 vendors are in the marketplace, according to David Hofferberth, research director of Aberdeen Group’s PSA practice.

Hofferberth is the author of a recent Aberdeen report, "Professional Services Automation: Technology-Enabled Integration of People, Process and Capital Assets." The report is available free in abridged version here.

Current PSA solutions are tailored for specific industries and needs, including businesses in management consulting, architectural engineering, research, media, and public relations. For example, the PSA tool from Deltek Systems, Inc. serves management consulting and architecture and design companies. Elite Information Systems' PSA offerings include packages for law firms. OpenAir, with its Web-native solution, may suit smaller enterprises in IT consulting, management services, or the insurance sector, said Hofferberth.

After evaluating several products and contemplating building a new homegrown application, EXE chose Changepoint’s ASP, a Web-based solution, for its scalability, ease of deployment, and adaptability to a global workforce.

Familiarity also played a factor. EXE had been using an earlier version of Changepoint PSA software that ran on Lotus Notes. The product ran a similar set of the current version’s features, including invoicing information and project tracking, but EXE's globalization introduced offices that couldn't support the earlier product because they weren’t using Lotus Notes. The new Web-based version allowed EXE to standardize reporting systems across its worldwide workforce. The Web version is based on a Windows 2000 or NT platform. It’s also browser based, so new rollouts don't have to be installed on local PCs.

The product implementation
The implementation, a collaborative effort by Changepoint and software hosting company Corio, took 18 months. EXE said using a software hosting company was a cost-saving measure to avoid huge purchases of hardware and data backup systems.

First, the team deployed and tested the software in the United States. It then installed the software in 14 offices worldwide. Each deployment included an assessment of the bandwidth capabilities at the local offices. Engineers also had to determine whether the local language version was intelligible to the people who had to use it.

During the deployment of the new Changepoint system, the old Lotus Notes-based Changepoint software continued to run and was pulled at the launch of the new Web-based version.

EXE declined to reveal the project cost, which was built in to the cost of the software license. The cost also included training lead trainers, who then trained individual staff members. According to Changepoint, an average user deployment costs $1,000 to $1,800—depending on the scope of work and the PSA modules selected. The implementation costs range from 20 to 35 percent of the license cost, according to the vendor.

The project ROI
Since deploying the product, EXE has seen myriad business related improvements. While he couldn’t cite specific figures, Walsh said the technology has improved EXE’s ability to churn invoices, and the organization has seen an increase in staff utilization on customer projects.

According to Aberdeen analyst Hofferberth, the invoice improvement can save the average company $58,000 a year in debt financing. The Aberdeen study also reported an 8.1 percent improvement in utilization when PSA technologies are used.

The top ROI for EXE, however, is having closer control and a deeper view of business within its global consulting units.

 "We don't need to use those gut feelings anymore,” said Renfro. "We know what projects those people are on and are better able to utilize them.”

The greater level of efficiency and better business information visibility are cited as main reasons more enterprises are pulling in PSA technology. The PSA marketplace is expected to grow 40 percent this year to $810 million, according to the Aberdeen report.

According to analysts, the PSA applications are filling a gap that longtime technologies (ERP and CRM) have failed to address. ERP vendors have primarily built products that collect data and generate reports on widgets rather than people. CRM makers have made tools that helped to automate the sales process and customer service interactions.

PSA applications, on the other hand, provide information about consultants, tapping real-time data from the sales pipeline, the project teams, and finance, in the process enabling companies to boost productivity, efficiency, and profitability.

The handsome ROI, about 98 percent per year, starts about three months from launch, when product costs have been recouped, according to Aberdeen.

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