Profitability & Productivity in Professional Services
by Martijn van der Hoeden on October 13, 2022
Profitability and productivity are inextricably linked– the more productive your team is, the more you can potentially earn.
Professional services businesses, like marketing agencies, software developers, and more, can zero in on both profitability and productivity by taking a good, hard look at their project management:
- How billable is the team?
- Are people consistently overworked? Underworked?
- Are there any tasks that can be automated to trim the fat?
- What do project profit margins look like?
All the above questions, when answered, can point to solutions and even quick fixes for both profitability and productivity. Here’s how you can systematically boost profitability and productivity for your services business. Take a look at these areas to see where you can optimize and start saving/earning more.
Time tracking- How billable is the team?
You want your team to be as billable as possible. That is, the bulk of their working hours should be productive and dedicated to clients, not consumed by menial admin, etc. For teams to be as billable as possible, time tracking must be as easy as possible. Nothing written down, no confusion as to which project the time goes to, you get the idea.
Creatives, especially, are known for their shoddy time-tracking skills. And the last thing any project manager wants to do is hunt around after the project is complete to figure out how much each person spent on their work.
- Time tracking helps account for ALL the billable hours spent working on a project, so nothing falls through the cracks.
- Time tracking eliminates the need for consultants and team members to guesstimate or round up, leaving less money on the table.
- Efficient time tracking during the project will help you stay within budget and within the time constraints of the contract.
- Using a time-tracking solution naturally increases productivity, as people know they are ‘on the clock and have to account for what they do during that time.
- When time tracking is easy for people, they don’t waste any energy actually ‘tracking it’, meaning they can get back to what they do best for the business.
Recommendations for time tracking:
- Implement 1-time tracker or tool only and stick with it
- Integrated with your CRM and project management solution (or built-in)
- Browser and mobile app trackers
- Self-driving time tracking
- GPS time tracking if necessary
Efficient resource management ensures that both profitability and productivity are top of mind. Within resource management, capacity planning specifically provides tools to keep managers consistently aware of the workloads of their teams. Capacity planning helps you measure how many hours/tasks the team can handle against the total hours/tasks needed to complete the project.
- The goal of capacity planning before a project is to increase profitability by accurately accounting for the capacity of the team to complete the project tasks as efficiently as possible.
- With adequate capacity planning, there’s less risk of having to bring in costly external resources to complete deliverables.
- A popular way for managers to make sure projects are always delivered on time
- Insights into the current status of workload can help managers and team shift focus when necessary
- Prevent burnout by offloading work when someone else is at or over capacity
- Promote higher productivity levels in team members who could use additional work
Recommendations for utilization rates and capacity planning:
- Use task-based capacity planning for straightforward projects with small teams
- Use hours-based capacity planning for more granular projects with larger teams
- Make sure your resource management is integrated with your task management, so you can see what exactly is on everyone’s plate if you need to
Automation- Trim the fat
You can trim the fat on both your money and your time by leveraging automation wherever possible during your project lifecycle. Let the software do things for you that you don’t need to do yourself by setting up these kinds of automated features. The good news is that today, project management tools are all about automation. Automation within a project management solution gives you lots of options. A few examples include automated invoicing, self-driving time tracking, automatic project creation, and more.
- Automating admin tasks means spending less hourly on people to do these for you.
- Automation reduces the risk of human error, helping you get paid correctly and on time with integrated invoicing and billing software, for example.
- Automation and organization go hand and hand. You can stay organized and on top of your projects with automated alerts for budget overspending, upcoming milestones, and more.
- Team members can stick to what they do best instead of migrating data, keeping track of invoices, etc.
- People can get to work on contracts more quickly with features like automatic contract setup and automatic project creation from your CRM data.
- Self-driving time tracking– aka fully automated time tracking– gets another mention here for automating the process and thus, keeping people on task.
Recommendations for automation:
- Set up automated invoicing
- Set up automated alerts for time and budget overspend
- Use self-driving time tracking
Analytics & Reporting
Finally, one of the easiest ways to start getting more profits is to find out how profitable you are today. That’s where accurate analytics and reporting on your projects come in. Using the reporting and analytics features with your project management tool can help you see where your project profit margins stand, how much money your individual team members are earning on your contracts, and more. Plus, project tracking should be very easy, so that everyone who needs to can see in real-time where the lines for budget and timeline lie. Ultimately, this is how you keep your visibility high into the health of your projects.
- You can figure out how much profit your projects and your clients are really making you and compare it with your other data.
- Project tracking ensures you have constant visibility into timelines, tasks, and budget spending.
- Real-time project status updates can alert you and the team to areas that may need more attention.
- Everyone has insight into the health of the project and can use this information to stay productive in their respective responsibilities.
Recommendations for analytics and reporting
- Find out your project profit margins
- Calculate the profitability of your individual clients
- Track your projects with a Gantt chart to keep it simple
How to earn more and keep productivity high
Profitability and productivity are two sides of the same coin, and for professional services, you can increase both by leveraging the right software tools. This includes, but isn’t limited to, time tracking, capacity planning, automation, and analytics and reporting. You can do all these things in one solution if you choose an all-in-one project management platform like PSOhub.