Professional Services Automation: The Next Generation of Project Management Software
Everyone in the IT business knows that it takes a substantial amount of daily, resource-consuming effort just to keep systems up and running to avoid business disruptions. And beyond routine maintenance and upgrades, most IT organizations are also involved in major initiatives, whether it be new ERP implementations, decision support systems, or the Web-enabling of legacy applications. The shortage of trained IT professionals is equally vexing for professional service organizations (PSOs), where the lack of resources blocks growth and limits profitability. New solutions in integrated project management software, such as professional services automation solutions, are able to creatively and strategically address the resource challenges (as well as other challenges) facing PSOs today.
The Labor Crisis Sets the Stage
A new study from META Group bares what IT professionals have long known through day-to-day experience: There is currently a huge disparity between supply and demand in the IT labor force. In 1999, an estimated 400,000 IT positions were expected to go unfilled in the United States alone.
According to Maria Schafer, Program Director for META Group Publications, there are structural factors that more or less guarantee the shortage will persist. "Y2K issues initially acted as a catalyst for raising awareness of the IT labor shortage," she says. "However, other factors, such as large-scale implementations of enterprise resource management software packages, and the declining number of IT graduates over the last 10 years, have exacerbated the difficulty of meeting the demand for IT staff."
Recent research indicates that resource utilization among PSOs averages 60 to 65 percent. This means that approximately 35 percent of a resource’s time is not used to the benefit of the organization. Just a few minutes of calculation will demonstrate that relatively small increases in resource utilization could produce dramatic results. For example, if a PSO with 125 individuals (billing at $225/hour) logging an average of 1,350 project-related hours per year could increase resource utilization only 3 percent, the result would be just over 5,000 extra productive hours – the equivalent of hiring a new four-person team full time. More significantly, the impact would represent over $1 million to the bottom line.
With the right tools, such increases are definitely achievable. The reason for this utilization "ceiling" can be traced in large measure to the sheer difficulty of managing large IT organizations, particularly when employees are scattered all over the world and multiple platforms are involved. IT organizations and PSOs have struggled for years to manage service functions with traditional project management applications or even spreadsheets – applications that were never intended to meet the unique needs of service organizations. While it seems obvious that software written to manage the construction of oil refineries wouldn’t be optimal for managing new ERP implementations, these have been the only tools available, until recently.
The Advent of PSA
Now, a new category of applications known as professional services automation (PSA) solutions has emerged, and holds out the promise of resource optimization – not mere utilization. Products in this category help PSOs in the following areas:
• Resource optimization – which includes assigning the right people to the right project and then tracking their activities.
• Managing the mission-critical processes of the engagement life cycle.
• Capturing and leveraging corporate intellect – the "What went right and wrong?" through centralized access to history, including structured notes.
For PSOs, PSA solutions can also improve profitability and cash flow by providing strategic management throughout an engagement, and speedy and accurate billing once an engagement is completed.
Without a doubt, these benefits closely resemble those promised by conventional project management tools, such as Microsoft Project. In fact, more than half the products in the category use Microsoft Project as a front-end user interface. But, while some PSA solutions can fairly be described as enhancements that are just a step above Microsoft Project plug-ins, others add functionality that goes far beyond what Microsoft Project offers.
PSA solutions differ from conventional project management tools in two fundamental ways. First, they focus on resources rather than tasks. Unlike conventional project management tools, PSA solutions are able to take numerous attributes into account when describing a resource, rather than being restricted to job title and hourly rate.
Second, the feature sets of PSA solutions include functionality that targets the specific needs of professional service organizations, such as the ability to track global resource utilization and availability for multiple projects.
As is the case with any new category, the products being offered vary greatly in breadth of features, details of implementation and price. What follows is a superset of the capabilities now available on the market. These capabilities fall naturally into three categories: resource utilization, engagement management and leveraging corporate intellect.
Matching Resources to Tasks. PSA solutions allow each resource in an organization to be described using a variety of attributes. In practical terms, this means that managers can search an enterprisewide talent pool for people who meet the multiple criteria needed for a particular project (e.g., experience with a specific platform or environment, seniority level, location, hourly rate and, often the most important attribute of all, availability). With the right PSA solution, it is easy to match appropriate resources to tasks. Some PSA solutions even allow individuals to have different hourly rates, depending, for example, on which project they’re working on or what sort of work they’re doing.
True Utilization and Availability of Resources. With project management tools, individuals can only log their hours against existing projects. As a result, it is cumbersome (if not impossible) to account for meetings, training time, vacations and other non-project-related hours – activities which can account for as much as 35 percent of all work hours. The inability to track non-project hours can also present a distorted picture of a particular individual’s availability. Suppose an individual is working on a week one task that has been allocated 40 hours, but she finishes it in 24 hours. At the beginning of week two, the person managing the project could easily get the impression that the week one task was not finished, and was in fact two days (16 hours) behind schedule!
When individuals’ true utilization is known, their true availability is also known. Managers can make more informed decisions and manipulate resources much more efficiently. PSA solutions allow for this kind of visibility – which is critical for running a business.
Centralized Planning. With all of an organization’s resources located in a central repository, managers can see how decisions about one engagement affect all the others. They can populate engagements on a trial basis and quickly understand the implications for other upcoming opportunities. Another valuable feature is the ability to merge an internal corporate PSA database with the PSA database of an external consultant for integrated resource management – with limited access privileges for both groups.
Full-featured PSA solutions are as useful during the implementation phase of an engagement as they are during the process of scoping and assembling the best team. The most powerful PSA solutions enable managers not only to adjust to changing conditions, but to do so on a "real-time" basis.
Incremental Planning. Every experienced project manager is familiar with the phenomenon that one executive at a well-known computer corporation referred to as "picture planning." This is when the original plan serves as a rough guide for approval by upper management, and then becomes a decorative "picture" on the wall, while the real planning takes place in an informal, ad hoc fashion. One reason for this situation is that most conventional project management tools can only display "planned" and "actual" data, and not what’s really needed: a revised schedule based on up-to-date information about the status of all tasks. The ability to revise a schedule as the project progresses is a valuable feature offered by some PSA solutions. This allows project leaders to make use of sophisticated planning tools throughout the project’s life cycle, and not merely at its inception.
Integrated, Web-Based Data Collection. Rapid, accurate collection of time accounting data is crucial to successful project management, but until recently there have been no elegant solutions that integrate the power of strong project management tools with simple data entry and centralized storage. The Internet has made this possible.
With Web-enabled PSA solutions, the individuals who do the work can enter their hours and activities directly, using intuitive interfaces that have virtually no learning curve. Some PSA solutions allow outside contractors and employees to enter data into the same database for easier total-project analysis. Unfortunately, PSA solutions cannot compel programmers to fill out their time sheets on schedule, but they can limit the range of plausible excuses.
Leveraging Corporate Intellect
Capturing Best Practices. Full-featured PSA solutions enable the capture and retrieval of best practices templates and information. The most obvious capability offered is the ability to evaluate the estimates versus actuals of similar projects for the purpose of better scoping. A good PSA solution can also simplify the mechanics of creating a scope-of-work estimate with mix-and-match templates.
Capturing Detail. The greater the level of detail that’s visible, the greater the value of a PSA solution. A system of structured notes, for example, can include metrics that define success or client satisfaction, and further, link that success/satisfaction to specific factors, such as assigned personnel, work practices or any other important factors.
PSA technology can indeed help organizations cope with the IT labor shortage – while conferring many other significant benefits in the process. The fact that many PSA solutions use a familiar front end means that there is no steep learning curve, an important plus in times where new technology is being introduced at a rapid rate. While the investments in both cost and time are not trivial, the rewards can be great.
About the Author: Michael Rosinski is Vice President of Worldwide Sales and Marketing at Augeo Software (San Jose, Calif.).