Choosing the wrong one could lead to project failure
Companies hire a professional services provider to develop and implement a new strategy, expand or improve operations, or begin a new business line. How can they ensure they pick the right provider? Ideally, companies look for professional services organizations that have higher service maturity levels. They tend to have the best people, processes and technologies to help companies transform.
We recommend that clients select a high-performing PSO for the following reasons:
- They are aligned for success with their people focused on specific services that will help the client organization succeed.
- The services they sell align with the needs of the client organization.
- They assign the best people with high skills and work ethic who will work toward high client satisfaction.
- They structure business processes to ensure quality and timeliness in the delivery of services.
- They’re financially stable, which ensures they can be a long-term partner.
When asked, we always tell potential client organizations to look for firms that are Level 4 and Level 5 performers. That way they get solid services providers who can deliver work expeditiously without overcharging.
What to look for in a PS provider
The Professional Services Maturity Benchmark and PS Maturity Model determines how well PSOs operate. The analysis is based on many professional services vertical markets including IT and management consulting, advertising, accounting, legal and services divisions within product-based organizations.
What’s the extent of their service offerings? Some firms offer only high-level services such as strategy consulting. Others run the gamut from staff augmentation and managed services to IT and strategy. The following sections highlight the attributes client organizations should look for based on our Professional Services Maturity Benchmark.
Leadership cannot be underestimated. Strong leadership means strong employees, services, policies and processes. It’s critical for leaders communicate a clear and consistent vision and strategy across the organization. They embrace innovation as it leads to better and more comprehensive services. Their employees feel confident about the future, and this confidence is evident when they deal with clients. Leading professional services providers embrace change, and adapt well to evolving business conditions.
Look whether the PSO has moved into other strategic areas, which could ultimately improve their clients’ operations. Professional services is a fast-growing market with greater geographic coverage and service lines. Does leadership adapt to the fast-paced changes within the industry such as technology adoption, regulatory compliance and new customer preferences?
Look for specialized firms with strong competency in the services delivered. Check client references. Verify that they have done before with solid references behind them for the types of work they propose.
A mature PSO can package services and demonstrate the value they deliver with specific timelines and service level agreements. They propose clear project plans, and provide some guarantee for completion and cost. Too often, projects change in scope and magnitude, and break budgets. This variance creates conflict between PSOs and their clients. This could cause projects to fail and be detrimental to the long-term relationship.
Every client organization believes they have unique needs, and this is true to a degree. However, in the long run, the approach taken by the PSO that offers consistency with flexibility will serve clients better.
Human capital alignment
No doubt, it’s all about the talent in professional services. More mature PSOs have strong resumes, work experience and knowledge that matches the client’s needs. PSOs need to ensure employees undergo extensive training to keep them current with the latest tools and methodologies. This allows them to grow and expand their capabilities. On average, leading PSOs send consultants to at least 10 days of training per year.
Retention is critical. While attrition is rising in the professional services market, the best firms minimize it because it’s a red flag. Every PSO has some level of voluntary attrition, but when it rises above 10 percent in today’s environment, there may be bigger issues with the provider. Attrition generally means consultants are underpaid or underappreciated causing morale to suffer.
Services execution is where the rubber meets the road in professional services. It starts with good people. The best firms tend to sell longer projects, in terms of man-months, which generally means they have the expertise and personnel to deliver more complex projects. Leading organizations have structure or standardized methodologies to make sure the organization consistently delivers high quality work.
Leading firms optimize resource management, which means employees are highly billable and utilized. This environment essentially forces the PSO to complete work on time to help drive client satisfaction. The best firms effectively manage change during projects, incorporate quality processes and utilize knowledge management to ensure success.
Finance and operations
Large firms do not necessarily indicate they’re successful. But financial stability is vital as PSOs can affect a client’s strategy and tactics for years to come. Astute clients conduct due diligence on the PSO to ensure they are financially stable.
Most professional services organizations focus on three key areas: client satisfaction, revenue growth and profit. Those goals should not frighten clients. Along with client satisfaction, revenue growth and profit are important. They show the health of the provider and its ability to grow geographically and implement new service lines.
The value delivered to the client organization is crucial, just as much as it is for the PSO. It must be a win-win situation for both in which the PSO grows and its clients become references and successful. Failing serves no one.
The best firms maximize information technology to run business more efficiently. Our research shows this issue has become increasingly important. We’ve found that PSOs who leverage information technology in their business solutions tend to see greater success with higher levels of quality than those using manual processes.
Core information systems in professional services such as enterprise resource planning (ERP), client relationship management (CRM), professional services automation (PSA) and human capital management (HCM) keep the organization efficient and profitable. They must have a strong knowledge repository for all workers to use and share it with the client in a collaborative framework.
The professional services market is getting crowded, but a client’s success requires finding the best provider for them. A PSO’s reputation is important, but the interpersonal relationships between client and PSO are equally essential. Clients prefer to work with people they like. Sometimes, this situation is not possible, but achieving overall client objectives always will be.
Building a brand and reputation can be difficult. Tearing it down takes little effort. PS executives must continually work to ensure their clients are repeatedly satisfied. This success shows other organizations that the firm delivers time and time again.
Get the Professional Services Maturity Benchmark to find out which organizations are top performers.