How is professional services automation evolving? Part 1
- Summary:
- This is the first in a two-part story about the evolving technology for PSA. This first part builds on a discussion with an executive of PSA vendor Kimble. The second examines a number of functional holes in current PSA offerings.
I recently met with Mark Robinson, CMO of Kimble, a Professional Services Automation (PSA) vendor, at July's Sage Summit in Chicago. Kimble’s PSA solution is built on the Salesforce.com Platform-as-a-Service (PaaS). This platform permits tight integration between Salesforce and Kimble solutions.
Robinson and I discussed a number of PSA related issues. Here is a recap of that conversation.
One area we discussed is the criticality for many services firms to drive more top-line revenue. Attracting new business is essential to the survival and growth of service firms yet many struggle with this given the frequent feast/famine cycles some firms experience. Mark states:
…pretty much everyone else out there from small to medium size is focused on growth. They can’t rely on their partners’ ‘black book’ to find new work or repeat business based on long term engagement with key accounts. Their growth is achieved primarily by looking forward and not backwards.
Robinson indicated something I’ve known for years: PSA solutions were originally designed to be integrated with financial software packages. It’s true. It was a rare analyst briefing when a PSA vendor didn’t stress how easy it was to connect their solution to one of many common financial accounting solutions.
In time, several of the early PSA solutions were acquired by leading financial accounting software vendors. For example, NetSuite bought OpenAir – a PSA vendor that had previously bought competitor QuickArrow.
Make no mistake, integration between PSA and financial accounting software is an important capability. Even when integration is present, too many project leaders and consulting executives are spending a lot of time collecting and entering information into the financial system.
You’ll see them doing a number of sales forecasts, budgeting and other financial planning & modelling activities within the financial applications. They have to do this as the PSA and financial solutions are mostly integrated at the accounting transaction level only. The missing information is often sales pipeline data or other budgeting and forecasting information.
What these older PSA solutions weren’t focused on was tight integration with CRM (customer relationship management) software. That’s important if a services company really wants to grow. Robinson adds:
To scale faster and more efficiently in the vast majority of project based businesses, you need to be looking forward and adjusting your plans (there is not much you can do about the past!). So you need to have a very tight coupling between early stage pipeline and the associated resource demand.
You need a very accurate forecasting regimen to not run out of cash or need huge amounts of costly working capital to deploy. Even before the Netsuite deal with Oracle, we were seeing a trend of Netsuite PSA customers who used Salesforce CRM looking to migrate to a solution which was more tightly coupled with Salesforce CRM.
FinancialForce, an ERP vendor that created its application suite on top of Salesforce.com’s PaaS also understands this lesson. They’ve gone beyond core financial applications and now have professional services and human capital modules, too. All of these are tightly integrated with Salesforce’s CRM solutions.
CRM integration has become a big thing as CRM suites have grown materially in recent years. Today's CRM suites have powerful social sentiment analysis tools, marketing automation solutions, access to big data sets, access to external databases, etc. Great CRM suite integration allows professional services firms to do a far better job of targeting new clients, running thought leadership mailing campaigns, scheduling and executing webinars, filling their sales pipeline, etc.
In the early days of PSA, solutions were modestly integrated with leading financial software and office automation software. As the years went by, more applications were created and integrated (e.g., payroll and expense reimbursement) but these integrations often involved two or more solutions built on different technology platforms with different data models. It was integration but without a common data model/dictionary, it was a sub-optimal integration. Why? Someone had to reconcile fields like “Client” or “Prospect” to mean “Customer”, “fees” sometimes meant “backlog” or “revenue”, etc.
As PaaS technology became more prevalent, firms like NetSuite and Salesforce attracted other software developers/firms to create applications on their platforms. Products like human capital management software Fairsail, Sage’s SageLive, ERP solutions Rootstock and Kenandy, the Unit4/Salesforce joint venture solution FinancialForce, and many more all run on and with the Salesforce PaaS.
These solutions all possess a tight integration with Salesforce’s sales and marketing solutions. There is little data redundancy in this approach. Users generally see the same user interface across solutions. Reporting tools work from a common data dictionary. It’s what deep application software integration should be.
What this tighter integration provides is a single source of (of hopefully real-time) data. This is important as it can aid in decision making. Robinson adds:
I also talked a lot about our application design being focused around augmented intelligence. We believe that to unlock scale in a consulting firm then you need three things. First gain visibility of data – the clichéd ‘one source of the truth’. Many applications claim to do this, so we are not unique in that.
Our view is that it is no good having an Apple watch with data about your company performance if the person looking at the watch doesn’t know or doesn’t have the experience necessary to interpret that data, to make the right decision to impact performance, etc.
In a growing consulting firm there will inevitably be a paucity of experienced people – so there is often a bottleneck in decision making at the top, with only a few people with the sufficient level of sales, practice and operational management experience to make decisions based on this data.
What we have designed into Kimble is expert insights or 'charms,' which indicate to users what they need to do in a given situation rather than just presenting a long report that they need to interpret – so guided analytics and augment intelligence principles.
You can then have the confidence to ‘empower’ - which is our second thing to do to scale - people to make decisions rather than relying on a few individuals. The final thing is to find a way of creating consistency in that decision making process. In this case you need to enforce a discipline. Our application is designed to allow you to easily configure and re-configure so that it helps enforce your chosen process discipline.
My conversation with Robinson covered other areas, too.
We discussed how the development of intellectual property and thought leadership materials is key to the success of a services organization. To do so, a services group needs to develop skills like writing and public speaking in the people it wishes to groom as subject matter experts. And, it needs to create opportunities for these people to become deeply knowledgeable in those matters.
But where is the functionality that identifies these potential thought leaders? Where is the functionality that ties this intellectual property and thought leadership materials/events/etc. to a person’s career and to sales successes? How does this get incorporated into a service professional’s performance reviews and into the firm’s leadership development processes? While I suspect that many of the required pieces for this exist in a PSA suite, it never seems to get called out or discussed as part of an integrated and well thought out process.
Finally, Robinson shared with me a number of stats/facts about Kimble. Kimble has about 200 customers and 30,000 users of its PSA solution. It recently signed Sage and Fairsail as customers. The software is also integrated with Sage’s SageLive and X3 product lines. X3 is the high-end ERP solution of Sage. Kimble tends to capture a lot of business from fast-growing service entities.
In Part II, I discuss a number of functional needs PSA and ERP vendors could fill and how this benefits service organizations.