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Performance Pillars




Until now, little if any research examined Professional Service strategies and benchmarks within the context of a rapidly maturing technology environment. Some of the questions around these issues include:

  • What are the most important focus areas for professional service organizations (PSOs) as business processes mature?

  • What is the optimum level of maturity or control at each phase of an organization’s lifecycle?

  • Can diagnostic tools be built for assessing and determining the health of key business processes depending on an organization’s level of maturity?

  • Are there key business characteristics and behaviors that spell the difference between success and failure? If so, do they change depending on the maturity of the company or industry?

The information contained in this analysis is great for small and mid-market PSOs to help them diagnose areas for investment and improvement. Larger PSOs can also use the information to compare themselves to their midsized competitors to become more adept. Over the past year SPI Research benchmarked and analyzed performance in 50+ billable professional services organizations.

This research culminated in the publishing of a report in January 2008 titled: “The New Professional Services Maturity Model – A Roadmap to Achieving Professional Services Excellence”. This report provides benchmark data from professional services providers in addition to actionable guidance on how to improve organizational maturity, leading to performance improvements and increased profitability. It shows how professional services organizations can begin the process of establishing their own roadmap to service excellence by comparing themselves to industry benchmarks.

Pillars

SPI Research has organized the key business processes required to create and run a professional service organization into five performance pillars:

  1. Vision Strategy & Culture: A unique view of the future and the role the service organization will play in shaping it. A clear and compelling strategy provides a focus for the organization and galvanizes action. Effective strategies focus on target customers, their business problems, and how a solution solves those problems differently, uniquely, or better than its competitors. For a service strategy to be effective, the role and charter of the service organization must be defined, embraced and supported throughout the company. Depending on whether the service strategy is to primarily support the sale of product or to drive service revenue and margin; service organization goals and measurements will vary.

  1. Finance and Operations: The ability to manage services profit and loss — to generate revenue and profit while and developing repeatable operating processes. Elements of this pillar provide long-term financial stability, which enables PSOs to manage growth and provide an acceptable level of return to shareholders.

  1. Human Capital Alignment: The ability to attract, hire, retain and motivate employees. With changing workforce demographics, human capital strategy has increased in importance. As executives work to manage costs, they must assure clients have the best/cost-effective personnel working on projects. As PSOs adopt new staffing models designed to achieve these goals, they must also be diligent to keep their best people on-board and motivated.

  1. Service Execution: The methodologies, processes and tools to effectively schedule, deploy and measure the quality of the service delivery process. Service execution involves a number of factors: from assuring utilization rates remain high, to delivering services in a predictable and acceptable time frame, to reducing cost while improving project quality and harvesting knowledge.

  1. Client Relationships: (sales, marketing and communications) The ability to effectively communicate with employees, partners and customers to generate and close business and win deals. Effective client management involves improving relationships to better understand client needs, while ensuring clients will provide references and testimonials.

"I actually purchased the report and I am loving it.  I am an ex-Accenture guy and a metric freak! We are currently measuring ourselves and creating the missing KPI’s in our NetSuite Instance. We are also in the process of putting in place a self assessment and measuring ourselves toward the 5 pillars. We will then decide where we want to go and which one to improve. I want to take you on your offer and fill in the questionnaire!"

Martin McNicoll, ing.
IT-RATION Consulting, inc.

"This report is invaluable for any PS person who is responsible for either initiating a PS business or operating one at any stage of the maturity life cycle."

Alan Waitt, CABM Director Professional Services | ASI Consulting North America

"Great questionnaire – just filling it out gives me many things to think about and many ideas for how to improve my business. You’re providing a great service, and I thoroughly enjoyed your report."

David Suydam
President
Architech Solutions

These five pillars identify specific areas in which PSOs of all types (product or service) strive to improve capabilities that will both optimize profitability and improve quality, human capital and client satisfaction — providing the best environment for long-term success. However, maximizing performance in one pillar could lead to performance degradations in the other four. The objective is to optimize the results within each pillar, while driving overall revenue, margin and customer satisfaction.

Maturity Levels

Within each of the Service Performance Pillars, SPI Research developed guidelines for process maturity.  These guidelines cut across the five service dimensions to illustrate examples of business process maturity.  These levels measure the correlation between process maturity and service performance excellence. This model is built on the same foundation as the Carnegie Mellon Capability Maturity Model (CMM), which has been adopted for software development; but is specifically targeted toward billable PSOs, that either exclusively sell and execute professional services, or complement the sale of products with services to optimize a product’s use. The five maturity levels include:

  • Level 1 — Initiated: At maturity Level 1, processes are ad hoc and fluid. The business environment is chaotic and opportunistic, and the focus for a PSO is primarily on new client acquisition and reference building. Often professional service employees at this level are chameleons — able to provide presales support one day and develop interfaces and product workarounds the next. Success depends on the competence and heroics of people in the organization, and not on the use of proven processes, methods or tools.

  • Level 2 — Piloted: At maturity Level 2, processes have started to become repeatable. Best practices may be demonstrated in discrete functional areas or geographies but they are not yet documented and codified for the entire organization. Basic processes have been established for the five Professional Services Performance Pillars but they may not be universally embraced.

  • Level 3 — Deployed: At maturity Level 3, the PSO has created a set of standard processes and operating principles for all major service performance pillars but renegades and “hold-outs” may still exist. Management has established and started to enforce financial and quality objectives on a global basis.

  • Level 4 — Institutionalized: At maturity Level 4, management uses precise measurements, metrics and controls, to effectively control the PSO. Each service performance pillar contains a detailed set of operating principles, tools and measurements. Organizations at this level set quantitative and qualitative goals for customer acquisition, retention and penetration, in addition to a complete set of financial and operating controls and measurements.

  • Level 5 — Optimized: Maturity Level 5 focuses on continual improvement of all elements of the five performance pillars. A disciplined, controlled process is in place to measure and optimize performance through both incremental and innovative technological improvements. Quantitative process-improvement objectives for the organization are established. They are continually revised to reflect changing business objectives, and used as criteria in managing process improvement. New initiatives for quality, cost control or client acquisition are in place to ensure optimum performance. The rough edges between disciplines, functions, and specialties have been smoothed to ensure unique problems can be addressed quickly without excessive bureaucracy or functional silos.