We talk a lot about resolutions in January...but in order to have an attainable resolution, you must first consider where you are now and what needs improvement. I think most of us do this personally, but it is equally important to take an honest look at your organization's reflection in the mirror in order to make strategic improvements.
Is your business running optimally? What could you be doing better? Through numerous conversations with Professional Services Organizations (PSOs), I've found that many do not have an accurate picture of their organizational maturity. As a result, these organizations are not utilizing the right tools and technologies to grow and, overall, run their business better.
As we kick off a new year, it's a good time to level-set and think about how your organizational maturity stacks up.
Establish the Right Framework
The first step is to establish a framework to measure against peers, identify areas for improvement and gauge progress over time. At Tribridge, we utilize the following framework, based on the SPI PS Maturity™ Model, when helping organizations determine their most productive investments.
This framework considers five distinct organizational performance pillars:
Client Relationships: Every aspect of the organization that interacts with external customers. Sales and Marketing are an integral part of a client relationship but, in this evolving PSO world, it also includes Service, Support and other Optimization Services groups.
Human Capital: The organizational focus to attract, develop and manage human talent is one of the biggest challenges for PSOs.
Delivery: The groups that are in charge of delivering the solutions offered by the organization. They focus on efficiency (project and resource management) and quality.
Financials: Realizing the value provided to customers and maximizing profitability over time.
Next, we consider the five stages, or levels, of maturity. While each pillar at your organization could be at a different stage of maturity, the following is a view of the organization as a whole. See if you can identify your current level.
Level 1 - Informal: This is where most PSOs get started. Two or three partners with experience in a particular field start a company to provide their expertise to, very often, their prior employer or related company. The organization might hire additional resources over time but, the PSOs at this stage are very opportunistic. Everyone wears multiple hats and the most important driver is revenue generation (get the next project or customer). At this stage, the company is not focused on efficiency.
Level 2 - Functional Excellence: Your PSO has grown and evolved. Its size (50-75+ FTEs) allows for dedicated groups. There is differentiation between Sales and Delivery and there is probably a developing back office group. Specialization allows for best practices to develop but, most typically, these processes live within their specific area (silo) and are not integrated throughout the organization. Level 2 is where most PSOs live.
Level 3 - Alignment: At this stage, standard processes have been established across your organization and there is a consistent and repeatable delivery methodology. Processes are mapped and developed with the customer and project flow in mind, not the specific organizational groups.
Level 4 - Organizational Excellence: With the foundation of an aligned organization, your PSO can now develop and track precise metrics and controls (visualized as organizational dashboards) and manage by exception. For example, if a project profitability goal of 50% is established (could be by solution/offering), the management team can focus on the 10% that are below expectations and not the entirety of project portfolios. When analyzing projects, customer overall profitability (including sales costs) could also be taken into account.
Level 5 - Continual Improvement: With your organization performing at all levels and the appropriate metric tracking, the focus of the management team is improving process efficiencies and developing new solutions or offerings for your customers.
Why is This Important?
As your service organization evolves, your organizational structure needs to adapt. Growth and improvement bring new technology and system requirements.
These levels of maturity are associated with specific metrics for every performance pillar. Here are a few example:
An important delivery pillar metric, resource billability, tends to be between 65-70% for levels one and two and 70-80% for levels three to five (SPI PS Benchmark)
A client relationships pillar metric, win to bid ratio, tends to be between 35-50% for levels one and two and 50-65% for levels three to five (SPI PS Benchmark).
The metric ranges for specific verticals allow us to compare organizations and gauge their maturity level.
For instance, here is an example pertaining to the Client Relationship pillar: a Customer Relationship Management (CRM) system will probably be the first requirement for a Level 1 or 2 company, but a Customer Experience (CX) assessment doesn’t become a priority until processes need to be standardized and integrated (Level 3).
Utilizing a maturity framework enables you to identify the current status of your PSO and allows for peer comparison and tracking metric improvements over time. Once that is done, you can make a business "resolution" for the year and plan organizational and system evolution. It is crucial to start by making sure your investments bring the highest levels of return and are aligned with the organization’s vision and strategy.
At the end of the day/year, these resolutions need to be reflected in the organization's key metrics and bottom line.
Check out Tribridge Professional Services solutions and see how we've helped organizations utilize the right tools and technologies to run their business better.