Disruption in professional services markets delivers an incentive to automate

The disruption of professional services markets — caused in part by the emergence of digital technologies — is encouraging cloud-based business app providers like NetSuite to accelerate the automation of business processes in the world of suits.

According to NetSuite CEO Zack Nelson, there is a simple and powerful trend underlying it all. “Product companies are becoming service companies and services companies are becoming product companies.

NetSuite revealed the next-generation of its services resource planning (SRP) solution, combining enterprise resource planning (ERP) and professional services automation (PSA) at its annual conference in San Jose today. In simple terms, the target sectors are those companies that bill for time. That covers the gamut from advertising, marketing services, IT services, and consulting. For software companies — one of NetSuite’s core markets — the solution also helps tackle the issue of pricing models that incorporate the cost of implementation and consulting services.

According to Nelson, “This is the first system in which you can manage both product- and services-based companies. Typically in the past, that’s meant different systems, but this is the first time you can do it in one place.

The automation of professional services business systems is a surprisingly recent development — unlike, say, production systems, which have be addressed by ERP for decades.

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(NetSuite CEO Zack Nelson)

In part, it’s disruption wrought by digital technologies that is providing the impetus. As an example, marketers and advertisers are struggling to respond to rapid and disruptive changes in the media markets. The industry is facing a significant transformation with the shift to digital and fee- and performance-based business models, so for them services resource planning promises an integrated approach — offering go-to-woah process control.

The company says it provides complete job routing — from procurement to client to legal approval — and that it can streamline project management, resource optimisation, pitch-to-invoice, and other critical advertising and marketing business processes. The goal is to optimise quotes and staffing, while increasing staff utilisation and agility.

Professional services have proved something of a sweet spot for NetSuite. A recent report by SPI Research noted that the majority of the “best of breed” service providers it studied were either NetSuite OpenAir PSA solution or NetSuite SRP users.

And those top companies significantly outperformed their peers, according to the researchers. SRI said that the “Best-of-the-Best” firms averaged net profit of 30.2 percent, compared to 9.8 percent among all others. “These extraordinary figures are a direct result of integrated business applications,” said Jeanne Urich, SPI Research Managing Director. “Integrated business applications are a catalyst for improving maturity, as they provide real-time visibility to all aspects of business performance.

The findings are included in the SPI Research 2014 Professional Services Maturity Benchmark, an in-depth report based on a study of 238 professional services firms.

In fact, the “Best-of-the-Best” firms outperformed their peers even as the professional services industry in 2013 experienced declines in all major metrics — including bill rates, utilisation and revenue per consultant, according to SPI Research.

On several key metrics, SPI Research found the differential between the 13 leaders and all others to be:

  • Average revenue per project: $US413,000 vs $US178,000;
  • Size of deal pipeline to forecast: 309 per cent vs 184 per cent;
  • Annual revenue per employee: $US236,000 vs $US150,000;
  • Reference clients: 85per cent vs 74 per cent;
  • Projects delivered on time: 84 per cent vs 77 per cent.
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