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Evaluating and Selecting a Complete PSA Solution for Billable Services Organizations

Choosing the right PSA tool is a critical decision that clearly impacts the bottom line of Billable Services Organizations. Organizations that choose the right tool will be rewarded with a competitive advantage and will enjoy increased profitability and decreased costs of administration. These are achievable goals for most Billable Services Organizations, provided they do their homework when evaluating solutions.

This paper examines the many advantages of implementing a PSA solution and provides several factors to consider during the evaluation process. We will discuss the various functions of PSA solutions as well as the numerous benefits of the on demand services model. Additionally, we will address key features and technical details, and then we will conclude with some important questions to ask when talking with PSA vendors.

Overview of the Marketplace
The PSA industry offers end-to-end automation solutions for Billable Services Organizations looking to alleviate several increasingly pressing issues:

• Need for real-time reporting to support strategic decision making and quick reactions to fast-changing market dynamics
• Rapid and efficient delivery of information throughout scattered organizations
• Tighter margins due to the higher salaries and mobility of skilled talent
• Geographically dispersed workforces, offices, and clients
• The need to capture and reuse business intelligence (reports, historical data, previous work) to bid new business, manage profits, and reduce costs
• Ongoing training in changing technologies and markets
• Work with third-party partners, vendors, and contractors to win and service broader projects
• Increasingly complex project workflows and lifecycles

Usually, the selection process of any new software solution begins with building a business case to determine if making an investment of both time and money would be beneficial. Identifying the solution's benefits is the first step, and should be straightforward. For example, our clients typically tell us that a PSA solution helped them solve the following key problems:

• Lack of visibility into project status and revenue forecasts
• Low project profitability and reuse of intellectual property
• Difficulty in the management and scheduling of resources
• Inaccurate capture of all client billable time and expense

In addition to addressing those issues, PSA solutions help services organizations focus on growth by extending their geographic reach and their ability to take on larger projects. More specifically, the right PSA vendor can help Billable Services Organizations rapidly improve their ROI, quickly deploy new tools, increase the utilization of their consultants, and improve access to detailed metrics for the in-depth analyses of their businesses.

Not all PSA solutions are created equal, however. While some companies may claim to meet the needs of all services organizations, their solutions typically are taxed with serving two divergent markets – Professional Services Automation (PSA) for Billable Services Organizations, and Project Portfolio Management (PPM) for internal IT organizations. Your services organization should focus on selecting a solution that is designed exclusively for the billable services industry and that will provide all of the functionality that is required by your Billable Services Organization – such as Financial Management, Billing Management and Strategic Business Analytics – without the added complexities and features that are irrelevant to your business.

Advantages of PSA Solutions
The goals of a PSA solution are to streamline business processes, enabling users to focus on their core business functions, and to provide the visibility an organization needs to overcome their day-to-day business challenges. In accomplishing that goal, PSA solutions can fulfill several of the following functions:

• Time, Expense, and Billing Management: The fundamental basis for tracking services is based on managing Time, Expenses, and Billing. Although this information is valuable for any organization, it is extremely important to the success of a Billable Services Organization. In addition to allowing employees to easily enter their information, the PSA solution must support a system of approvals. For example, a project manager must be able to approve or reject Time for the employees on his or her projects. The ability to accurately bill clients and to report on these values leads to better decision making and reinforces your company's credibility in the eyes of your customer base.
  
  
• Project Management: The tasks related to managing projects are a fundamental responsibility for Billable Services Organizations. The ability to define and track information related to projects is extremely important because it ensures that deadlines are met and that Time and Expenses are controlled. All too often, project managers are alerted to a budget overrun after the fact – when it is too late to proactively manage scope and client expectations. A good PSA solution will alert users to such situations, allowing them to act quickly and efficiently before these events occur. Additionally, the solution will accurately track detailed information related to clients and projects.
  
  
• Resource Management/Skills Management: A Billable Services Organization's fundamental assets are its people and their skills. Profits and success are based on the efficient utilization of these resources. A good PSA solution will enable users to schedule individuals for actual and potential projects. One of the most difficult aspects of keeping track of multiple consultants is managing their skills and qualifications. A PSA solution should be able to maintain an accurate list of employees' skills and certifications. This list should be updated regularly by individuals and should be searchable by managers.
  
  
• Reporting and Analytics: Based on the time, expense, project, and schedule information entered and tracked by the solution, managers and company decision makers must be able to report on revenue, cost, gross margins, and utilization. This information can assist in decision making and performance analysis. To fulfill this requirement, effective PSA solutions should deliver actionable, real-time business intelligence to services professionals. With one click, users should be able to drill down into detailed data to gain further insight into project profitability, utilization, average hourly rate, and actual vs. forecasted revenue. Additional dashboards should include visibility into projects, staffing, and resource analysis.
  
  
• Forecasting: Information regarding forecasted revenue and the availability of resources for potential projects can significantly help in closing new deals. An effective PSA solution should offer services professionals the visibility they need to accurately assess resource utilization, forecasting, and staffing requirements for current and future projects. Revenue forecasts should always be current with the solution's resource scheduling system.
  
  
• Integrations: To facilitate accurate and timely billing of clients, a PSA solution must be able to integrate with an organization's existing billing systems. A Billable Services Organization's ability to easily integrate with Accounting Management, Customer Relations Management (CRM), Human Resources (HR), and Sales Force Automation (SFA) applications allows for accurate tracking on financial payables and receivables and provides additional details related to clients and projects. Additionally, it is essential that the PSA solution includes a Web Services Application Programming Interface (API), which allows the solution to integrate with any front- or back-office application and move information into and out of the PSA solution – eliminating manual processes and data entry, thus saving countless man hours.
  
  
• Knowledge Management: In even the most successful Billable Services Organizations, employees will come and go. One of the best investments a professional services organization can make is in maintaining its knowledge base. The areas related to technology consulting are changing quickly, yet the same best practices can apply to many different scenarios. Keeping track of items such as project plans and proposals is critical, and a good PSA solution should allow for tracking and maintaining revisions to documents and for searching through them based on specific criteria. Collecting and organizing this data will improve efficiency in the future and will aid in the development of companywide best practices that add value to clients.
  
  

Thus far, we have examined the various core components that should be included in a complete PSA solution. Next, let us look at how such an application can best be delivered.

First of all, there can be many hidden costs with the client/server hardware model. Rolling out a PSA solution to an entire organization can be very costly. Not only are there many potential technical problems, but issues such as application accessibility from client sites, security, and data protection must also be addressed. In addition to the software license itself, buyers must pay for hardware and support software. Maintenance fees and the salaries associated with requiring onsite IT personnel further contribute to the cost of the software license model, as do charges for customization, maintenance, training, and support.

Additionally, many PSA vendors have attempted to create a “one-size-fits-all” solution, yet deployments have proven to be far too costly for many organizations and the usage benefits are often limited. Furthermore, the manageability of such applications leaves much to be desired. Tasks such as installing the tool on client machines and managing the back-end servers are costly and time-consuming, defeating the very purpose for the existence of many PSA solutions.

These challenges and costs of maintaining and upgrading software have pushed many organizations to look for alternatives. The on demand services model – also referred to as software as a service (SaaS) – solves many of these challenges. When organizations purchase on demand applications, clients generally pay for the level of functionality that is appropriate for their organization, and there is no software or hardware to buy, install, maintain, or upgrade. Corresponding payment models include per-user costs that are much more affordable than a client/server license. This enables organizations to buy only the amount of the application that they actually require and allows them to grow as their business needs expand – equating to savings of as much as 90% compared to similar client/server solutions.

In addition to cost, there are several major benefits of using the on demand model for PSA solutions, including Total Cost of Ownership and Rapid Deployment.

Evaluating Total Cost of Ownership
Often, when shopping for software solutions, evaluators place much emphasis on the initial purchase price of the software itself. When evaluating a PSA solution, however, it is very important to take into account the Total Cost of Ownership (TCO) for the solution. This value considers much more than the initial purchase price of the software and includes all of the secondary costs related to installing, deploying, configuring, and managing an application. Many organizations have found the predictability and reduced cost of an on demand subscription much more appealing than a traditional license model.

The costs related to implementation, deployment, management, and support of traditional applications can cost more than the license cost itself. The TCO takes into account the greater burden on internal IT staff and the overall decreased end-user experience due to the software update process in the client/server model. In the on demand model, however, much of this burden is transferred to the service provider, and in most cases, the on demand will be much better equipped to manage the application and related technology. The result is a lower-cost solution – one that allows you to focus on your core business.

Rapid Deployment
Web-based applications eliminate the requirement of visiting all the desktop computers in an environment to install software. This means that application services are available immediately to users that meet the minimum system requirements. For Web-based applications, all that is required is access to the Web and a supported Internet browser – no plug-ins or downloading of software. On the server side, systems administrators can simply enable and disable accounts to manage access to the system.

Reduced Management and Administration
On Demand products provide the benefit of offloading standard data management tasks to those who know the application best – the vendor. Managing database servers, Web servers, and applications can be costly. This is especially true in an industry where qualified technical professionals are difficult to find and retain. Furthermore, Billable Services Organizations focus on the delivery of technical solutions, yet the success of their business depends on billing available resources to clients, rather than maintaining an application.

Other tasks, such as training end users and troubleshooting application problems can affect users and system administrators alike. The costs associated with system downtime can be considerable for any size organization. The on demand model shifts the burden of management and administration to the application vendor.

Accessibility
The rapid rise of the Internet has brought great demands on the availability of information. It is no longer acceptable for a potential client to call a business, wait on hold, and then be told that the information he or she requires will be sent in the mail within a few days. Similarly, end-users of PSA solutions expect the application to be available to them regardless of their location. In today's global economy, consultants travel throughout the world, but they still require access to their corporate applications. A consultant should not have to visit his or her branch office or have to “dial in” to the corporate network in order to enter in time, expense, or billing information.

The on demand model is well suited for offering accessibility of applications. Since the application service is available via the Internet, users can access important information as long as they have access to the Web. When evaluating PSA solutions, businesses should take special care to ensure that full application functionality is available online and that the application does not require special connectivity that might not work through standard firewalls.

The result will be an application that is easy to access, ensuring that consultants, managers, and executives will take advantage of it.

More Efficient Client Support
To meet the growing needs of today's marketplace, providers of PSA solutions release application upgrades and enhancements. Additionally, users are constantly asking for new features and updates to existing ones, and they often have questions about software functionality.

All of these issues can be handled centrally via the on demand model because the vendor controls the entire application. When code updates are made, providers can easily provide the new application code to all clients, and changes to the data structure or application logic itself can be managed behind the scenes. All of this can be done without forcing end users and system administrators to reinstall software on their machines.

Now that we have taken a look at the benefits of the on demand model – including minimizing Total Cost of Ownership and speeding time-to-deployment – we will examine some key product features to consider.

To meet these above objectives, there are many features that organizations should consider when evaluating the functionality of a PSA solution. Buyers should look for an end-to-end solution that will integrate with the organization's current applications, thereby preserving the investment. In many instances, organizations search for short-term solutions to immediate problems. For example, a business may choose to implement a time- and expense-tracking application to address their challenges with capturing billable time. Although this might improve current operations, businesses should look for a long-term solution that allows for growth.

PSA solutions that provide advanced functionality and true process workflow can greatly improve profitability. The following table presents a list of major feature areas that Billable Services Organizations should look for in a complete solution.

What to Look for in PSA Product Functionality

Application Design
In addition to the product features offered in a PSA solution, organizations should consider how these functions are implemented. Potentially useful functions can be overlooked if several application design goals are not met. Specifically, PSA solutions should incorporate the following design elements:

• Ease of use: As with almost any software, a PSA solution must be easy to use in order to be functional. Having an easy-to-use PSA solution can help avoid problems associated with many other software applications. In some cases, it is estimated that 80% of all users actually utilize only 20% of the application's functionality. If advanced functions are too difficult to use, clients tend to avoid them. A solution that is easy to understand and that offers an intuitive method for managing advanced functions is inherently more user friendly.
  
  
• Role-based security: All Billable Services Organizations require security and the ability to grant specific access to certain users. For example, department managers may be required to approve all time and expenses, whereas project managers are responsible for time and expenses incurred against specific projects. These relationships might sound simple on the surface, but it is important that the security permissions are easy to implement and operate within. If they are not, users try to circumvent security measures altogether. When evaluating security requirements, look for a role-based application that allows administrators to quickly and easily assign the appropriate permissions.
  
  
• Integration with other systems: Because no application can be all things to all clients, services organizations should select a PSA solution that can easily integrate with existing in-house programs. Information must flow seamlessly throughout your organization – from opportunity recognition to project delivery and ultimately through to the invoicing and collections process. It is no longer acceptable for data to be locked into silos of departmental applications. For example, a PSA solution should offer the ability to import data from your accounting system and provide methods to easily enter and modify basic information.
  
  
• Role-based “dashboard” views: Managers and executives are often presented with far too much data, forcing them to spend hours sifting through it to find what they require. In order to be effective, a good PSA solution will not only track certain pieces of financial information, it will calculate and display real-time project status information. To eliminate the problem of too much information, an effective solution will allow users to quickly and easily view the data that they find most useful from a single screen called a dashboard – enabling users to find important statistics and measures regarding financial information without having to run numerous reports or visit several different areas of the application.
  
  
• Accessibility: As discussed earlier, many Billable Services Organizations are distributed organizations in every sense of the word. A typical company might have several branch offices located throughout the continent or even the world, and consultants and other team members often work off-site at client offices. Therefore, the PSA solution must be accessible, making the on demand model absolutely essential.
  
  

PSA applications that incorporate these important design goals provide services organizations the functionality that they require. Next we will examine the technological foundation of PSA solutions.

Client Requirements and Maintainability
PSA solutions fall somewhere along a continuum: Applications in which the majority of processing and information analysis is performed on the client side are at one end of the continuum, and at the other end are applications that use provider-side servers and databases to provide most of the processing.

For the input and analysis functions related to Billable Services Organizations, the best option is a solution that performs most of the processing on the provider's end. This method allows the majority of processing to be off-loaded to dedicated servers. When clients generate reports, all of the processing is done on the provider's high-end dedicated server machines, and all that is received on the client side are the results of the analysis. Additionally, applications can be available on any computer. Traveling consultants are not required to use their laptops for reporting time and expenses because they can easily use client computers. The use of standard protocols ensures that the application will be available from behind firewalls and from any site that has access to the Internet.

The overall benefit of PSA solutions that use provider-side servers for processing is that they give you increased scalability and performance coupled with enhanced accessibility.

Performance
PSA solutions should be able to accommodate a large number of users, the majority of which are often consultants who report time and expenses. Additionally, managers and business leaders use the solution to generate reports and graphs and to track projects. Because some of these functions can be resource-intensive, the PSA solution must be able to efficiently utilize system resources to deliver the necessary information as quickly as possible – without sacrificing detail. A solution that provides useful information but is too slow will be too much of a nuisance for consultants and managers to use it.

Scalability
An effective PSA solution will work well for small consulting organizations as well as be able to scale up to thousands of users. One factor affecting scalability is the application architecture itself. Inefficient use of application development technologies can result in the inability to effectively support many users.

Another important aspect of scalability is more closely related to the usability of the application. When a system grows from 100 to 1,000 users, will the same functionality still apply? Will the security model still be valid, or will it become cumbersome to implement, manage, and maintain? These are important questions to consider in order to guarantee that a PSA solution that works well for you today will work equally well in the future.

Stability
Billable Services Organizations depend on PSA solutions, and all aspects of the business – from reporting of time and expenses to billing customers – are dependent on the consistency and reliability of the application. That said, there are certain types of applications that are less prone to crashes and other reliability problems.

The simpler the application is on the client side, the less likely it is to have stability issues. In other words, solutions that use provider-side servers for processing offer users more reliability. It is easier to address issues on applications with low client-side requirements because patches do not have to be developed and deployed on all of the affected client computers.

In general, the lower the requirements on the client side and the simpler the underlying technology, the more stable and reliable the solution will be. By managing complex data manipulation and reporting operations on the provider-side, challenges with cross-platform compatibility and support of client applications are minimized. The result of an on demand solution is a better end-user experience and increased reliability.

Data Protection and Security
PSA solutions hold sensitive financial information that organizations depend on to complete business functions. Therefore, it is important that the data is properly protected and that adequate security measures are in place. One portion of the problem is technical – data must be regularly backed up and the backups must be tested. Additionally, security-related patches must be applied to servers, and secure network connections must be available to protect information during transit.

Data protection is also largely based on the functionality provided by the application. PSA solutions must have a flexible architecture that allows users to easily define access privileges based on the business practices – role-based security, as addressed earlier. All of these factors contribute to the protection of Billable Services Organizations' sensitive information.

A crucial aspect of determining a PSA solution's level of protection and security is to understand whether it holds an unqualified SAS 70 Type II certification. A SAS 70 report gives an account of a services organization's control activities – including controls over IT and related processes. SAS 70, which stands for Statement on Auditing Standards No. 70, is an internationally recognized auditing standard that was developed by the American Institute of Certified Public Accountants (AICPA). It is identified in Section 404 of the Sarbanes-Oxley Act to assist public companies reliant on services organizations for functions related to financial reporting.

A SAS 70 Type I report lists only a services organization's description of controls as of one point in time, and the auditor's assessment is limited to whether the controls were operational and suitably designed. Conclusions on the operating effectiveness of controls are not drawn. However, the more in-depth SAS 70 Type II report includes a description of the services organization's controls and safeguards when hosting or processing customer financial data. The Type II report also includes a description of the audit tests performed by the independent auditor, generally for a minimum period of coverage of six months. An “unqualified” auditor's opinion for a SAS 70 Type II report indicates that all control objectives specified by the services organization were achieved without a significant exception or deficiency.

We've covered several important factors to consider when selecting a PSA solution, from the advantages of using a PSA solution and the benefits of the on demand model, to essential features and technical requirements. The questions presented in the next section will help you to pull all of the information together to find the right PSA solution for your services organization.

• Is the application user-friendly? Is it intuitive? Is it an end-to-end solution rather than a point solution?
• Will the application automate and streamline your processes?
• How soon can the application be fully functional within your organization?
• Does the PSA provider guarantee a successful implementation?
• How easily can the solution be integrated with other business applications?
• Does the PSA provider focus exclusively on Billable Services Organizations?
• Does the provider understand your business and have extensive experience with similar companies?
• Are effective security measures in place to ensure that the data is protected? Does the provider hold an unqualified SAS 70 Type II certification?

With favorable answers to these questions, your professional services organization can be sure that the PSA solution you choose will give you the functionality and security you need to overcome your day-to-day challenges – both now and in the future.

To help you determine the impact a PSA solution can have on your software services and delivery organization, call 866.313.PSA1 (7721) and mention this white paper to receive a free 30-minute consultation, or click here to request a consultation online.

QuickArrow, a founding member of the Technology Professional Services Association, TPSA (www.tpsaonline.com), has more than 230 clients and 20,000 users worldwide, including IT services, software, hardware, environmental consulting entities, as well as management consulting, health care consulting and business services organizations. Clients include Salesforce.com, Borland Software, Eloqua, Genesys Telecommunications Laboratories (a subsidiary of Alcatel), and INX. QuickArrow is headquartered in Austin, Texas.