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Ice hockey star Wayne Gretzky famously said, “I skate to where the puck is going, not where it has been.” It’s a popular quote because it vividly illustrates something that everyone wants to do, but may not understand how. Here, I will look at how to do this in a services business.
Firstly, we have to focus our energy into looking forward. Most services-centric businesses are prone to manage based on what has happened, or at best what is happening. Not enough energy goes into projecting what is likely to happen next, and projecting accurately enough to take corrective action at the correct time.
Let’s face it, successful project delivery, especially in the technology world, continues to be hard. The Project Management Institute’s 2017 research shows the success rate of projects continues to bump along at about two thirds. The all-too-common pattern of project status is green-green-green-RED! In my experience, this happens because too much energy is focused on battling with today’s problems and not enough on getting real about the consequences of those challenges. Do those slipped deliverables mean we go live later? We need to know where the project is headed.
In fact, if we thought carefully about that common pattern then we would be suspicious of the green-green-green projects. For example, if the timing of milestones and resource plans have not changed in the first half of a six-month project then shouldn’t we be asking questions? Things never turn out exactly as we expected, so the immutability of the plan must mean that it’s not being kept up to date!
This malaise affects not just projects, but how we manage our whole Professional Services business. KPI stands for Key Performance Indicator: it should indicate what will happen next. But much of the time the “KPIs” we look at are retrospective: realized rate, utilization, billings, etc.
Again, we would do better to look at the patterns and tease out the trends—we know that revenue will be lower in December than in other months (because of vacation), but what is the overall trend in revenue? If we extrapolate revenue from six months in the past, through the current forecast and out into the future does it take us where we want to be?
Is the proverbial puck of average rate going up or down when we look over nine months including some pipeline? If it’s going downwards then at what speed, and why? Is it because we’re under competitive pressure, or we’re under-estimating effort, or because an influx of new staff means it’s taking longer than we expect to deliver fixed-price engagements?
It’s only when we understand these forward-looking trends, and we are able to quantify the rate of change, that we are able to be proactive in managing our business; we are skating to where the puck is going.
Here’s a scenario: a business provides both on-premise and cloud implementation services. These are delivered by two separate teams with somewhat different skills. Unsurprisingly, demand for on-premise services is falling, but cloud implementations are on the up. It makes sense to retrain consultants from on-premise into cloud, but how fast should that be done?
Moving people too slowly will lead to under-utilization in the on-premise group when cloud is running too hot (maybe even having to bring in contractors). Retraining prematurely—too far in advance of rising demand for cloud—may mean their training is forgotten while they continue in on-premise. So, working out the timing of the skills trend in this business will deliver significantly greater profitability.
I suggest you consider how your business can become more “trend literate”. Ask yourself what are the key trends for your business (for example, utilization will matter less if your model depends on contractors or if most of your work is fixed price) and see if you can diagnose their causes and plot the rate of change. A “trend playbook” will help the whole team understand the levers and will drive consistent decision-making behaviour.
Your professional services automation (PSA) application should have all the data for this analysis, and should be able to remove noise (like variations in the number of business days per calendar month). Ideally, it will also have intelligence that provides deeper insights into the patterns. In other words, technology is good at working out where the business “pucks” are going. But the people in your business will still have to take the decisions. At the end of the day, there is no credit for spotting trends. You need to respond to them, and responding better will greatly improve business performance.
Post Date: December 4, 2018
Mark Robinson is a thought leader in the services industry, and a serial entrepreneur with 30 years of experience to draw on. As a co-founder of Kimble Applications in 2010, he has spent a great deal of time over the last decade advising the leaders of services businesses and focusing on the challenges they face in a competitive industry.
The Technology & Services Industry Association (TSIA) is dedicated to helping technology and services organizations large and small grow and advance in the technology industry. Find out how you can achieve success, too. Call us at (858) 674-5491 or we can call you.