KPIs for Professional Services Organizations
description
Transcript of KPIs for Professional Services Organizations
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2011 Cardinal Point Solutions - Proprietary and Confidential
Killer KPIs for
Professional Services Organizations
Raman Singh Oracle
Bill Gibbard Cardinal Point
Jeanne Urich SPI Research
Oracle OpenWorld October 4, 2011
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2 Copyright 2011, Oracle and/or its affiliates. All rights
reserved.
Confidential Oracle Internal
Program Agenda
Brief Industry Perspective
Killer KPI Discussion
Killer KPIs
Performance Levers
Benchmarks
Turning Data into Intelligence
Where to Go for More Information
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3 Copyright 2011, Oracle and/or its affiliates. All rights
reserved.
Confidential Oracle Internal
Common Characteristics Of Successful Professional Services Firms
Source: SPI Research
Competitive Differentiators
Clear and compelling strategy
Focus on revenue, margin and cost
Optimized financial, contractual and IT operating processes
Attract, hire, retain and motivate high quality staff
Tools to schedule, deploy & measure quality of service delivery
Communicate effectively to generate and close business
Service Performance Pillars
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4 Copyright 2011, Oracle and/or its affiliates. All rights
reserved.
Confidential Oracle Internal
Why Killer KPIs Matter Examples Of What Companies Are Achieving
A 17 billion dollar organization increased sales force productivity
by over 100%
A 500 million dollar company improved its customer satisfaction
rating from 42% to over 80%.
A billion dollar company reduced its Days Sales Outstanding
(DSO) by over 50% from 70 days to under 40, and increased
speed for generating invoices 7 fold
A 100 million dollar organization grew revenue by 33%, and
gross margins by 35%. On the on-boarding side, it improved
effectiveness of new consultant recruits by 50%
Client Relationships
Service Execution
Finance & Operations
Human Capital
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5 Copyright 2011, Oracle and/or its affiliates. All rights
reserved.
Confidential Oracle Internal
Oracle In Professional Services
9 of the top 10 global IT services firms
run Oracle Applications
8 of the top 10 Best Firms to Work For
in Consulting Magazine run Oracle
Applications
27 of the top 35 most innovative
consulting and business services firms
run Oracle Applications
10 of the top 10 companies in the
business services industry by market
cap run Oracle Apps
16 of the top 20 most innovative
business services firms run Oracle
Applications
10 of the top 10 of the worlds top
outsourcing service providers run Oracle
Applications
Consulting Services Business Services
http://www.google.com/imgres?imgurl=http://www.devtechnology.com/images/EDS-HP.jpg&imgrefurl=http://www.devtechnology.com/schedules/edsites-2s.aspx&h=395&w=832&sz=80&tbnid=xegOj2lMRpblvM:&tbnh=68&tbnw=144&prev=/images?q=EDS+logo&zoom=1&q=EDS+logo&hl=en&usg=__UaQ711321tdzOqP19ievTTnnrYc=&sa=X&ei=QNswTf_qIpH4sAOU0In_BQ&ved=0CBkQ9QEwAQhttp://en.wikipedia.org/wiki/File:McKinsey_and_Company_Logo_1.svghttp://en.wikipedia.org/wiki/File:Ernst&young_logo.svghttp://en.wikipedia.org/w/index.php?title=File:Accenture2010.tif&page=1http://en.wikipedia.org/wiki/File:KPMG.svghttp://upload.wikimedia.org/wikipedia/commons/5/51/IBM_logo.svg
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6 Copyright 2011, Oracle and/or its affiliates. All rights
reserved.
Confidential Oracle Internal
Program Agenda
Brief Industry Perspective
Killer KPI Discussion
Killer KPIs
Performance Levers
Benchmarks
Turning Data into Intelligence
Where to Go for More Information
-
2011 Cardinal Point Solutions - Proprietary and Confidential
Best Practice Solutions for
Project-Centric Organizations
Oracle Fusion PPM
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OBIEE Project
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2011 Cardinal Point Solutions - Proprietary and Confidential
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2011 Cardinal Point Solutions - Proprietary and Confidential
Yes, right in your ERP!
Embedded Analytics
Alerts
Put your time and attention where it needs to be
Exception Based Reporting
Drill from the analytic to resolve the issue
Actionable Analytics
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SPISPIResearchResearch
People
People
Pro
cess
Pro
cess
CapitalCapital
Industry-leading PS ResearchCore to our portfolio
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SPISPIResearchResearch
People
People
Pro
cess
Pro
cess
CapitalCapital
Supply Resources Recruiting
Training and Ramping
Utilization
Retention
Revenue Sales campaigns, pipeline, service mix, client mix
Pricing, scope change, billable hours, labor mark-up
Demand Solutions Client Requirements
Solutions Portfolio
Marketing and Sales campaigns
Costs Service development investments
Billable and non-billable resources
Project costs
Overhead costs SG&A, IT
Best in Class PSOs Balance Supply and Demand
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SPISPIResearchResearch
People
People
Pro
cess
Pro
cess
CapitalCapital
Killer KPIs
Revenue Sales Pipeline
Backlog
Bid/Win ratio
Revenue per person
Costs
Fully loaded cost per person
Subcontractor expense
Overhead cost SG&A, IT
Discretionary spending
$
Best clients & services
On-time, on-budget
References
Days Sales Outstanding
Billable headcount
Billable utilization
Realized bill rates by skill level
Attrition
Workforce Plan
Client Relationships
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People
People
Pro
cess
Pro
cess
CapitalCapital
Performance Levers
Revenue
High quality leads
Robust Sales Pipeline
Top Clients, top services
Installed base up-sell
Accurate estimates
Billable Utilization Improve Rates
Limit discounting
Costs
Virtual Workforce
Billable to Non-Billable headcount
Loaded costs per person
Subcontractor margin
Discretionary spending
Limit Overhead
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SPISPIResearchResearch
People
People
Pro
cess
Pro
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CapitalCapital
Human Capital Alignment Top 20
Key Performance Indicator (KPI) Top 20 All Others Advantage
Executive real-time enterprise visibility 81.3% 64.3% 26.4%
% of Employees Billable or Chargeable 79.5% 69.9% 13.7%
Employee Annual Attrition 5.6% 6.9% 18.9%
Employee Billable Utilization 72.8% 66.9% 8.7%
Billable Hours per person 1,505 1,410 6.7%
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Attract, motivate and retain top talent
Virtual workforce
Career Building fast on-boarding and ramping
Reduce Attrition
Skill building, training, mentoring
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People
People
Pro
cess
Pro
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CapitalCapital
Service Execution Top 20
Key Performance Indicator (KPI) Top 20 All Others Advantage
PSA is Integrated 70.6% 42.4% 66.5%
Projects Canceled 1.1% 2.1% 45.3%
Projects Delivered On-time 86.0% 77.1% 11.6%
Frequency of Project Overruns 13.3% 17.9% 25.9%
Average Project Overrun 8.8% 12.6% 30.8%
A Standardized Delivery Methodology is used 81.3% 55.5% 46.4%
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Invest in quality control PMO, methodology
Complete projects on-time
Consider remote service delivery virtual workforce
Standardize project delivery
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People
People
Pro
cess
Pro
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CapitalCapital
Finance & Operations Top 20
Key Performance Indicator (KPI) Top 20 All Others Advantage
Year-over-Year change in PS Revenue 20.0% 6.3% 217.0%
Annual Revenue per Employee $215 $149 44.0%
Project Margin for Time & Materials Projects 44.3% 34.0% 30.2%
Quarterly Revenue Target in Backlog 53.7% 43.6% 23.2%
Percent of Annual Revenue Target Achieved 101.3% 88.7% 14.2%
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Focus on high-growth markets, clients, solutions
Align Sales and Delivery to enhance resource management
Accurate estimates, risk and contract management
Backlog is the fuel for growth
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SPISPIResearchResearch
People
People
Pro
cess
Pro
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CapitalCapital
Profit Drivers
Profit
Bill Rate
Hours
Overhead
Labor Cost
Revenue
Cost
Move to more strategic services
Improve Sales and Marketing Effectiveness
Focus on resource mgmt.
Focus on high-growth markets & clients
Hire and invest in superior skills
Superior client results drive repeat business
Right people, right projects, right time
Improve subcontractor and labor margin
Quality Management on-time, on-budget
Reduce overhead
Use technology to reduce cost
Manage investment in new services
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People
People
Pro
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Pro
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CapitalCapital
Income Statement - Improve your Bottom Line!
Income Statement Top 20 All
Others Advantage
Direct gross PS revenue 81.1% 58.7% 38%
Indirect gross revenue + Pass thru 14.4% 34.2% -123%
Total reimbursable expense
revenue 4.5% 7.1% -37%
Total Revenue 100.0% 100.0% 100%
Total Direct Labor expense 44.9% 46.2% -16%
Total sub./outside consultant
expense 11.0% 21.0% -48%
All other expenses 20.4% 26.7% -109%
Total Expenses 76.3% 93.9% -19%
EBITDA % 23.7% 6.1% 290%
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Increase Sales Effectiveness
Increase billable utilization
Price Management
Improve subcontractor margin
Capture all re-billable expense
Use best available resources
Create virtual work environment
Resource mgmt.
Reduce SG&A (facilities)
Reduce non-billable expense
Improve cash flow - lower
DSO
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People
People
Pro
cess
Pro
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CapitalCapital
Small Improvements, Big Results!
$
Revenue Sales productivity +10% ~
$300K
Utilization +1% ~ $2 3K pp
Bill Rate +10% ~ $14K pp
Costs
Reduce overhead
Improve sub margin
Reduce non-billable expense
target $2500 pp/qtr
Reduce DSO 10 days ~.4%
Increase service attach rate
1% ~ $200-500K revenue
increase
Installed base sales reduce
cost of sale
Reduce admin. hours 1
hr/week ~ $10K pp/year
Attrition ~ $150K per
person
Workforce Plan
Client Relationships
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People
People
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CapitalCapital
Balanced Performance
50%
70%
P4 P5 P6 P12 P9 P8
Utilization
30
80
P4 P5 P6 P12 P9 P8
DSO
0
5
10
0 2 4 6 8 10
Project Portfolio
Schedule
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2011 Results Core Financial Solution
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2011 Cardinal Point Solutions - Proprietary and Confidential
Reporting
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2011 Cardinal Point Solutions - Proprietary and Confidential
Dont track 250 Metrics
Easy to Get Metrics First
implement by major business process stream
Include Lagging and Leading Metrics
Executive Sponsorship
agreement top down
agreement on having transparency
Empower Operational Managers
authority to produce results
measure interrelated metrics
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2011 Cardinal Point Solutions - Proprietary and Confidential
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Bill Rate
Cost
Bid-to-Win
Profits
Delivery
Client Satisfac
tion
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2011 Cardinal Point Solutions - Proprietary and Confidential
Customer
Opportunity
Pipeline
Project Financials
Project Resources
Methods and Tools
Company PL
Company Balance Sheet
User Interactions / System Interactions
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28 Copyright 2011, Oracle and/or its affiliates. All rights
reserved.
Confidential Oracle Internal
Program Agenda
Brief Industry Perspective
Killer KPI Discussion
Killer KPIs
Performance Levers
Benchmarks
Turning Data into Intelligence
Where to Go for More Information
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29 Copyright 2011, Oracle and/or its affiliates. All rights
reserved.
Confidential Oracle Internal
Oracle Delivers Quick Time To Benefit For Killer KPIs
Business Intelligence Applications
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We have had boundless success with reporting using Oracle Business
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2011 Cardinal Point Solutions - Proprietary and Confidential
Bill Gibbard Managing Director [email protected]
Jeanne Urich Managing Director