How to scale professional services: 13 critical focus areas

Technology holds immense potential for helping scale professional services organisations, promising solutions to complex challenges and opportunities to enhance operational efficiency, performance, profitability, and client outcomes. We will delve into the intricacies of day-to-day operations, high-level goals, and the obstacles hindering success.

While business leaders acknowledge this potential, they often grapple with defining high-level goals and specific use cases. It’s not uncommon, threfore, that they fail to understand what it takes to get from their current state to an ideal future one.

We’ll explore 13 high-impact use cases – using real-world examples to ground abstract concepts in reality.

What to focus on when scaling your professional services company

When talking about technology adoption, the significance of culture cannot be overstated. Upgrading technologies and processes isn’t just about enhancing culture; it’s about transforming it into a valuable asset with measurable impacts on your business.

And what’s more, technology adoption isn’t always about grand ERP implementations; sometimes, it’s a simple solution that can make a significant impact. Take, for instance, the implementation of Microsoft Teams. This tool facilitates seamless access to critical resources,  seamlessly integrated into the daily workflow.

Investing in technologies that enhance employee capabilities for better client outcomes is essential. However, the effectiveness of these investments hinges on mastering the human side of culture – developing policies, programs, and a supportive environment that empowers teams to thrive.

In contrast to traditional accounting, which monitors the overall financial performance of a business, project accounting zeroes in on the transactions and activities occurring within the lifecycle of a specific project. While both play crucial roles, for businesses where projects are the primary profit drivers, precise project accounting becomes a matter of critical importance.

Project-based work inherently involves unpredictability, and establishing a robust project accounting strategy, harmonising financials with the entire business, becomes a vital initial step in gaining control of the bottom line.

Complex projects entail numerous moving parts, making it challenging to generate accurate estimates, timelines, and budgets, let alone deliver projects on time and within budget. Ensuring project profitability requires insights from the entire business, a task made difficult with legacy tech or fragmented solutions.

The foundation of accuracy lies in a unified ERP system with integrated project accounting capabilities, facilitating the documentation of billable hours, project activities, and expenses while ensuring everyone is on the same page.

For instance, consider the experience of Cafico International, an experienced, independent trust and corporate services provider. Opting for pryme Matters built on Microsoft Business Central, Cafico International gained a fully integrated business system, allowing scalable future growth.

Resource planning is a crucial process involving the identification, forecasting, and allocation of resources to projects at the right time and cost. Problems arising from overestimation lead to unnecessary resource expenses and impact utilisation, affecting the team’s ability to take on new projects without burnout. Underestimation, on the other hand, results in bottlenecks, missed deadlines, and eventual margin erosion.

Commonly, resource planning issues trace back to disconnected systems and inaccurate or disorganised data. That’s why when Geoinfo decided to move from Navision to Business Central, they looked for an integrated tool to help them manage their 25-man IT consultancy team. The Danish distributor of the world’s leading mapping and analytics software ArcGIS needed a solution that would help them implement the resource planning within the ERP.

Inaccurate time-tracking processes pose a significant threat to the bottom line and overall business health for professional services firms. This encompasses revenue leakage, delays, diminished profitability, and reputational damage. When professionals fail to log billable hours accurately or submit reports promptly, it negatively impacts scheduling, forecasting, and the ability to deliver projects on time, affecting the reliable generation of profits.

An ERP system covering time-tracking, expense management, project management, and core financials provides 360-degree visibility across the entire portfolio, offering a detailed breakdown of how employees spend their time.

Using multiple apps or analog spreadsheets for time tracking and storing data across various files and folders makes it challenging to find and use critical data. Cafico International replaced three separate systems bringing all business operations into one central hub. This consolidation allowed them to manage billing, time keeping, and accounting seamlessly, gaining deeper insights and enhancing flexibility.

Standalone systems that employees dislike using can lead to information silos, inaccurate data, errors, and inefficiencies. That’s why Sean Lobby, the Head of Operations at Cafico International, highlights the importance of a user-friendly interface, and a familiar look and feel.  “It’s so easy that people were actually entering their time even before doing the training”, said Lobby referring to pryme Matters.

Project-based work inherently thrives on collaboration. What historically took place in person has been replaced by digital collaboration, urging a shift from temporary fixes to permanent, digital solutions that enhance the human experience and actively create value.

Internally, fostering collaboration involves eliminating barriers to critical data, files, and institutional knowledge while integrating essential tools seamlessly into daily workflows.

External collaboration with clients poses its own set of challenges, requiring accessible real-time communication. Supporting fluid communication across channels becomes a top priority for service-based firms, acknowledging that profitability relies on effective communication and interpersonal relationships.

However, technology is merely an enabler. The focus should remain on making processes easier for end-users, whether they are in sales, finance, or external clients and partners.

Business productivity is not a one-size-fits-all concept; it involves implementing tailored solutions aligned with strategic goals, client expectations, and end-user needs. Utilizing technology is a key aspect, aiming to eliminate waste, refine processes, and enhance overall business performance. This may involve automating manual processes or equipping teams with the necessary tools to excel in their work.

Tech investments should align with long-term plans, enabling organizations to anticipate new needs, pivot in response to unexpected challenges, and adapt to relentless and rapid change. The specific approach depends on industry-specific needs, and individual goals.

DLA Piper in Sweden, for instance, wanted to improve their financial system by implementing a truly integrated ERP system. “It’s not only the system, pryme Matters, but also the teamwork we had with pryme Global and Sopra Steria. Their understanding and knowledge of our business. That was really the big thing” says Lena Broman, CFO at the leading global business law firm in Sweden.

Capacity planning involves determining the maximum workload a firm can undertake and complete within a specified timeframe. It hinges on assessing whether the necessary resources and skills are available to fulfill this workload, ensuring that the firm not only meets customer demand but also achieves critical objectives. This strategic process is vital for aligning sales and delivery, preventing peaks and valleys, and making informed decisions for the future, including strategic investments, hiring, and taking on new projects.

Despite its significance, tailoring each project to the client’s unique needs, pain points, and goals poses challenges.To address these challenges effectively, a unified ERP system, and on-demand access to insights from ONE data source are essential. Custom reports in Power BI to track opportunities and backlogged projects in one central location enables a better understanding of how to allocate resources based on projected demand, considering committed projects in the backlog and identifying deals likely to close in the near term.

Resource utilisation serves as a key metric, measuring productivity and performance over a specific available time, commonly referred to as capacity. This metric enables the calculation of time spent by employees on billable work compared to non-billable tasks like data entry or document management. Streamlining administrative tasks directly impacts the bottom line, freeing up resources that can be redirected to foster growth and enhance profit margins.

Resource utilisation, facilitated by a unified system and appropriate tools, allows project managers to strategically assign individuals to projects using data-driven insights, skills matching, and automated governance and controls.

In contrast, fragmented systems and inaccurate data hinder project leaders from accurately assessing resource availability for new projects. This often results in uneven workloads, leaving some resources underutilised while others face burnout, adversely affecting the overall bottom line.

Achieving cohesion relies on having a unified cloud ERP with integrated project management capabilities and AI-driven insights. Additionally, an integrated time-tracking solution plays a pivotal role as billable hours directly impact utilization, influencing planning, forecasting, and overall business operations.

The scheduling process is intricate, laden with unexpected challenges and intricate calculations, to ensure the right people with the right skills are assigned to each project while maintaining manageable workloads.

Avanced Projects for D365 Business Central caters to SMBs, offering advanced financial, project, and resource management tools.

Revenue forecasting serves as the cornerstone for strategic business decisions, ensuring long-term profitability, market expansion, and competitive resilience. Recent strides in AI and predictive analytics are transforming revenue forecasting into a data-driven, scientific practice. The integration of human expertise and intelligent machines is evolving to meet the challenges posed by the inherent unpredictability of project-centric endeavors.

The uncertainty of having a specific amount of cash in the future becomes particularly problematic when making informed decisions about substantial expenses like transformation projects, acquisitions, and talent development.

Revenue forecasting extends its influence across resource planning, utilization, project accounting, and scheduling.

In the industry of professional services, staying ahead demands increased operational efficiency, optimized billable hours, expense reduction, and data-driven decision-making. Given the complexity of these tasks, automation has become indispensable for businesses, not as a replacement for human expertise but as a tool to augment capabilities.

Automation tackles repetitive, low-value tasks, responding to new conditions and threats. Commonly automated processes include data entry, document management, invoicing, and accounts payable. These automations empower professionals to save time, cut costs, and mitigate risks such as regulatory violations.

Maintaining a vigilant focus on profit margins is paramount for professional services firms, offering invaluable insights into overall business health. The journey to improve project profitability commences with establishing a unified source of truth across all business units, projects, clients, and processes.

A comprehensive understanding of margin per project and total portfolio margin is essential. Key aspects to cover include:

  • Finance & Project Accounting: Combining high-level financials and project data allows users to track project spending against the original budget.
  • Project Data: Ensure the solution provides a high-level summary of all project data, allowing users to drill down into individual data points related to project tasks, clients, invoicing, transactions, resource efficiency, earnings, billable hours, expenses, and inventory.
  • Forecasting: A global view of past and present project and financial data enhances forecasting capabilities. Income analysis can be employed to build forecasts for projected cash flow, expenses, budgets, turnover, and pipeline performance at both the individual and multiple project levels.

For project managers, gaining immediate insight into project status and resource availability is paramount to ensuring on-time and on-budget project delivery.

Having all data consolidated in one place, whether it’s finance, project accounting, or sales, empowers business leaders and project managers to analyze profit margins and project profitability in real-time.

In the early stages of a project, end-to-end visibility aids in defining stakeholders, scope, deliverables, roles, and processes. As projects progress, live dashboards and real-time reporting tools offer insights into the ongoing status. Project managers can make swift decisions about staffing, scheduling, and utilisation rates by assessing resource availability instantly.

“We needed a system that could provide us with better quality data, and better visibility into both clients and matters”, says Marcus Eyre, IT Manager at DLA Piper in Sweden, referring to pryme Matters built on Microsoft Business Central.

Check out our ERP guide and discover how to scale your professional services firm. 👇

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