Firms that optimize their resource management achieve a range of performance advantages—including customer satisfaction, employee retention, revenue, and profitability—according to a recent survey of almost 1,000 professional and business services executives.
Call it an inflection point: After years of humming along with a relatively steady customer base and talent pool, professional and business services had their usual ways of resource management upended by the pandemic.
“Life turned upside down overnight, and firms found themselves scrambling to dynamically change—what their customer base is, what they’re trying to support, whether to reevaluate the resources they have,” says Bryan Ball, vice president and group director, Aberdeen Strategy & Research. “To do that, and to do it well, you’ve got to be measuring and tracking at all levels. It sounds simple enough, but a lot of firms don’t have those things in place.”
Aberdeen recently analyzed interview responses from nearly 1,000 leaders at professional and business services firms globally. Its recent report, “Improving Business Agility Through Resource Optimization,” details not only today’s industry challenges—increased competition, cost variability, widespread talent shortages—but also sheds light on how some firms manage to thrive, challenges be damned.
Best-in-class firms (the top 20% of respondents based on company performance) have better resource management and are more likely to deliver projects on time and on budget. They also have higher improvements in utilization and productivity rates, and their profitability represents a larger share of their revenue.
Optimizing resources impacts business performance in any industry, of course. But the connection is particularly acute in professional and business services. “For these firms, their number one asset is their resources,” says Patrice Cappello, managing director, professional services industry, Workday. “When they have the business but don’t have the people to deliver it, that’s a huge problem. And that’s a reality facing executives across the industry.”
As firms look to shore up their resilience and future-ready their resource management, they’d be wise to borrow a page from the playbooks of peers already demonstrating a competitive edge.
Decentralized resource management has long been the norm in professional and business services, with local offices or even teams tracking and deploying talent. As during the pandemic, embracing remote work broadened the resource pool once it wasn’t limited by location.
“When they have the business but don’t have the people to deliver it, that’s a huge problem. And that’s a reality facing executives across the industry.”
Patrice Cappello
Global Head of Professional Services Industry Strategy
Workday
But the recent and unrelenting need for swift decisions and strategic pivots has hammered home the inadequacies of applying a fragmented, limited lens to resourcing.
“You have to have data so you can make decisions. Otherwise, you’re just guessing,” Ball says. “Without visibility across the enterprise, firms are more likely to misallocate their people. And it’s not enough just to know an employee is a technology person or a finance person. You have to get down to the specifics.”
Top performers gain that rich, real-time resourcing visibility through technology, the Aberdeen study finds. They reduce wasted time by using centralized databases and dashboards that provide real-time visibility, so firms can quickly reforecast while delivering on time. They invest in holistic, cloud-based professional services automation (PSA) software to bring resource planning activities together on a single platform. And they have better visibility into talent demand and supply.
When analyzing the traits and practices of best-in-class firms compared with their counterparts, Aberdeen found several standout differences. For instance, top firms are:
43% more likely to have a standardized process for managing new requests, which avoids duplication of efforts and improves efficiency, productivity, and the time to decision.
50% more likely to collaborate with peers in real time on reports and dashboards. This allows all stakeholders to get on the same page and make data-driven decisions about project needs and available resources, even as project conditions change.
67% more likely to allocate resources during the proposal phase. This enables partners to price projects based on the availability of necessary resources, and it reduces the variability of project costs by accounting for all requirements before the project starts.
Professional services firms are struggling to square their outdated financial processes with this modern moment. When asked about the top pressures currently affecting their financial planning processes, 1 in 3 firms surveyed by Aberdeen pointed to market volatility creating the need to dynamically account for change. And nearly as many (28%) cited long and resource-intensive budgeting and forecasting processes as a top pressure.
“Without visibility across the enterprise, firms are more likely to misallocate their people.”
Bryan Ball
Vice President and Group Director
Aberdeen Strategy & Research
But here, too, top firms outpace the pack. Compared with other companies, a larger portion of top performers power their financial planning with back-office technologies. For example, over three-quarters have data discovery and visualization tools (compared to less than two-thirds of other firms), and 80% have a planning, budgeting, and forecasting application (compared to just 63% of all others). Best-in-class firms are also significantly more likely than all others to use predictive analytics and to have an enterprise performance management application.
No doubt, modern tools can lap outdated legacy systems. But just as crucial: Best-in-class firms understand how to maximize the value of these investments by putting them to work. They continuously conduct and improve their financial planning—across the entire portfolio not just at the project level. “Best-in-class firms do both their financial planning and analysis (FP&A) and workforce planning as an ongoing business exercise, not something they do just at the end of the year,” Cappello says.
With technology that unifies data across different business areas and processes, firms are also able to model resourcing scenarios and kick-start profitability analysis as early as a project’s pursuit phase, “so they know whether to turn away work that won’t deliver profit,” Cappello says. By contrast, paper-based and back-of-the-napkin resource calculations might not reveal such red flags until the project is well under way.
Talent shortages are widespread among professional and business services firms. Yet the best in class are 12% more likely to have maintained or improved retention levels over the past year and 11% more likely to have few or no problems attracting and recruiting talent, the Aberdeen report finds.
Best-in-class firms (the top 20% of respondents based on company performance) have better resource management and are more likely to deliver projects on time and on budget.
While there are many factors at play in a firm’s ability to attract and retain talent, Ball says that technology can be a key differentiator in today’s talent landscape. Workers, now accustomed to user-friendly interfaces and instant access to information at any time, increasingly expect the same from the systems they use at work. “If they have an employer with outdated technology, they’ll just leave,” he says.
Effective, easy-to-use tools not only help workers stay put but also do their jobs better. “It’s very, very frustrating when an employee is out delivering a project and gets a once-a-month update on how profitable the project is,” says Cappello. “What can you do about it a month later, versus being able to course-correct in real time with the right tools?”
According to the Aberdeen report, top performers’ software is easier to use, their systems can better support changing needs, and their employees use the software more effectively to get the intended return on investment. Plus, top performers are more likely than other firms to give their people the ability to approve and reject plans on a mobile device.
Aberdeen’s analysis is resoundingly clear: Best-in-class firms that optimize their resource management see a range of performance advantages—including greater improvements in customer satisfaction, employee retention, revenue, and profitability.
But even as they outpace their peers, these firms are actively looking for ways to improve. More granular skills matching, enhanced reporting capabilities, and the broader adoption of agile methodologies are just three areas of interest, the report notes.
That instinct for improvement underscores the new reality for professional and business services: To keep pace—and stay competitive—as the future unfolds, firms must embrace adaptability at their very core.
For more insights on how professional and business service firms can prepare for the future, read “Improving Business Agility Through Resource Optimization” or visit our website.
Only 38% of professional services leaders say their organization is digitally well equipped to ensure business continuity in times of crisis.
Professional services firms see benefits in cloud technology, which makes their systems faster, more nimble, and more responsive.
More Reading
Washington University’s Jason Burg discusses how the prestigious St. Louis institution empowered its people with data-driven insights, setting the stage for strategic change and transforming the student experience.
How does AI technology help foster a more human-centric future of work? Workday leaders Dave Wachtel and Kathy Pham join Steve Boese and Trish Steed to discuss AI’s impact on HR on a special episode of the HR Happy Hour podcast series, recorded on the Workday Forever Forward bus.
In an era of constant change, staying ahead of the curve is crucial. In this installment of the podcast series Shift: Moving Financial Services Forward, we talk with Circle’s chief people officer about the talent management challenges shaking up the financial services industry.