Get Ready for the 2012 Professional Services Maturity™ Benchmark

The times they are a-changin’
by David Hofferberth and Jeanne Urich, SPI Research

As we begin the initial research into our fifth-annual Professional Services (PS) Maturity™ benchmark, the world is at a critical juncture. Many of the political leaders who were in place in 2007 when we first began the PS Maturity™ survey are no longer around.

We’ve lived through the worst recession of our lifetimes and appear to be on the brink of another one. Continuing chronic unemployment in the US and Europe signals the slow to no growth underlying the economy. Yet throughout this turbulent time, professional services have remained recession-resilient if not recession proof.

According to Gartner’s July 2011 IT spending report, IT and Telecom services represent more than 70 percent of all IT spending with huge global revenues in excess of $2.5 trillion. Although the pace of service revenue growth has slowed, unlike most other industries, service revenue year-over-year revenue growth has only declined once in the past ten years (2008-2009).

Table 1. Gartner IT Spending by Sector, Worldwide, 2008-2015.

Source: Gartner IT Spending Report, July 2011.

The economic crisis has made governments reassess the need for outsourcing, and many are now developing policies to promote bringing (profitable) work back home. Professional service organizations (PSOs), now, more than ever, must adapt their workforce to meet both political and economic constraints and opportunities.

Leading PSOs have developed their talent strategies based on a distributed global workforce, which reduces overhead costs in terms of office space and travel, and allows them to hire the best talent regardless of their physical location.

What’s changed in the past five years?

A lot! When we first began this process, the services economy was growing at a record pace, with most firms exceeding 15 percent compound annual growth. This era was followed by belt-tightening and flat-to-negative professional services growth in the depth of the recession. While in most industries flat growth occurs from time to time, in professional services, it is a new phenomenon.

Manufacturing finally got it, services rule! Leading manufacturers, especially technology oriented ones have turned towards services as a way of increasing revenue and client satisfaction. Several notable acquisitions include HP of EDS and IBM of PWC. This trend will continue as services provide greater value to customers, which results in better products going forward.

The past five years have also seen the emergence of cloud computing, which lets PSOs reduce internal IT costs and gives them an easier way to communicate and collaborate with their workers. One key factor highlights this trend: you may never meet some of your most valuable PS resources — your people.

The highly distributed workforce allows your organization to hire people centrally located to your client base. This trend gives them greater personal access to clients, which should result in higher levels of client satisfaction. However, the tools, such as cloud computing based applications, will become increasingly important with employee distribution.

What will the next five years bring?

As the economy improves, employee turnover will become an issue, and new firms will spur. Client organizations have enjoyed several years of competitive pricing, but as the rebound grows, many PSOs will raise prices or eliminate low margin practices to meet increased profitability targets.

Cloud computing remains in its infancy and will become a dominant platform for years to come. Smaller PSOs will be able to take advantage of the cloud, as cost savings and reduced need for internal IT staff will make a strong back- and front-office affordable for all. The move to cloud computing has made it much easier for software solutions providers to offer greater integration across their portfolio of applications.

As our research has shown, this integration offers PSOs greater visibility across their organizations, resulting in more informed decision-making and higher profit levels.  And the release cycle of new innovations is much more efficient when running on the cloud. It is no surprise that every leading solutions provider has a cloud strategy for the next decade.

“Analytics” is still an important buzzword in technology circles, but without applications like business intelligence embedded in the application, few will take advantage of it. But this too is changing, as many vendors have realized they must offer integrated analytical capabilities out of the box.

Join the research, it will be worth it

This is our fifth annual benchmark survey. We now have several years of trends to analyze. Considering how the economy has fluctuated over the past few years, this analysis should be valuable to your organization. Over 600 billable services firms use the Professional Services Maturity Benchmark™ as a key reference for measuring and monitoring performance. It has also become a critical component of annual business planning.

The benchmark provides key insight into many of the questions your organization might have, some of which include:

· Do you know how your organization stacks up against objective industry metrics?

· Do you have the industry data you need to support your strategy?

· Can you quantify your organization’s strengths and weaknesses?

· Do you know where you should invest to yield the highest impact?

To participate, please go to:

http://www.spiresearch.com/survey/2012psmb/2012psmbPSJ.htm

As over 600 organizations already know, you will receive a free copy of the 2012 benchmark when it is published (a $995 value).

The benchmark is changing

Based on four years of feedback, we have included additional questions that look at the issues your organization faces as it prepares for a changing global economy. We will include an extensive array of critical key performance indicators and show how they have changed in the past five years. And our professional services maturity model will show the benefits of moving from level-1 to level-5. Please join us in this exciting research.

About the authors

Jeanne Urich, Service Performance Insight Managing Director, is a management consultant specializing in improvement and transformation for project and service-oriented organizations. She has been a corporate officer and leader of the worldwide service organizations of Vignette, Blue Martini and Clarify, responsible for leading the growth of their professional services, education, account management and alliances organizations. She is co-author of the PS Maturity Model 2011 Benchmark report. Contact Urich at jeanne.urich@spiresearch.com or (650) 342-4690.

Dave Hofferberth, Service Performance Insight Managing Director, has more than 25 years of experience in information technology, serving as an industry analyst, market consultant and product director. Hofferberth focuses on the services economy, especially on white-collar productivity issues and technologies that help people perform at their highest capacity. Hofferberth’s background includes the management of application development teams and analytical tool development to support business decision-making processes. He is also a licensed professional engineer. Contact Hofferberth at david.hofferberth@spiresearch.com or (513) 759-5443.