business growth with psa softwareAs an IT solution provider grows, their business tends to become more complex. With multiple locations and multiple lines of business, their projects tend to become larger and more resources are required on projects for longer periods of time. Continued growth may also introduce issues like different customer tax jurisdictions and multi-currency.

The focus of the business tends to change as well – from “wild west – get ‘er done!” approach to a more structured, repeatable methodology that can effectively scale. This method requires more consistent business processes, visibility, accountability and audit trails.

Also during a growth period, the management focus on the business starts to rely more on forecasting/planning and measuring estimates against actuals to determine business effectiveness. The management team’s financial focus shifts from focusing on top-line revenue growth to more detailed margin/profitability-oriented analytics in order to drive additional growth investments.

So, as an IT solution provider’s business enters growth mode, it is important to focus on the key areas to ensure successful and profitable scaling.

5 key transition points for an IT solution provider’s business to scale profitably

1. Forecasting/planning

As companies grow, they can’t really rely on backward-looking financial statements or quarterly P&L’s to make future growth decisions. As the company starts to get bigger, things start to move faster. Successful growth cannot succeed by making today’s decisions based on what happened last month or last quarter
Setting a business up for growth means ensuring you have the real-time visibility to provide operational managers and executives with the “planning runway” needed to make better decisions. This means having a system in place to ensure:

  • every time a new quote revision goes out, the forecast is refreshed in real-time
  • quote revisions drive detailed forecasts that show hours required by specialized resource type, 30-60-90 days out
  • margin and revenue forecasts are displayed not just by rep and opportunity, but also by line of business, manufacturer and product type, etc.

PSA module tip: The key here is that the opportunity module is linked directly to the quotation module so that the quotation versions including detailed BOM and labor estimates are driving detailed forecasting analytics.

2. Measuring estimates vs. actuals

As companies grow, projects tend to get bigger as well. Managing project risk becomes a key focus. From a risk management perspective, only finding out a project’s true margin after the project has closed is not an option.

In order to effectively manage risk, PM’s need real-time visibility into the detailed consumption of materials and labor as the project progresses. The best project risk management approach is to take the detailed BOM and labor estimate a project was quoted based on and provide the PM’s with real-time visibility into the detailed draw down of those materials and services as they are consumed. To illustrate… if a project is 25% complete, the PM would know that the project is at 21% of the materials budget and 27% of the labor budget. This allows PM’s to have:

  • an “early warning” system for when discrepancies in project estimates vs. actuals occur
  • access to the specifics of those discrepancies
  • the real-time information they need to take immediate corrective action

PSA module tip: The keys here are that the quotation module contains the detailed BOM and labor estimates and the information is automatically fed to the project module as the starting materials and labor budget. Additionally, to get real-time visibility into consumption, the project assignment, time sheets, expenses and materials fulfillment data would all need to be linked to produce crucial job costing analytics.

3. Cycling implementation lessons learned back into the quoting process

As the volume of quotes grows and the complexity of the solutions proposed increases, it becomes more and more important to continually improve the accuracy of the quotation process in order to produce consistent margins.

The challenge is that managing various quote BOM and labor estimate versions against detailed project actuals to get visibility into discrepancies between planned and actual project margins is crucial, but difficult without the right system and methodology in place. Often times, this only happens when something really bad happens on the project but the smaller discrepancies are never caught or corrected. This leads to on-going project margin leaks, which hampers business growth.

If done well, it would allow IT solution providers to cycle detailed implementation lessons learned back into the quoting process once a project has been completed, which can be a major driver of more consistent project margins and sustained business growth.

PSA module tip: In order to maintain the integrity of the original BOM and labor estimates, but also accommodate customer scope changes and allow for quoting estimate and/or project delivery errors, a change order module would be recommended. Ideally, the change order module would be linked to the sales order module so that approved change order line items would be automatically added to the Sales Order for invoicing purposes.

4. Procurement/equipment/product fulfillment

As an IT solution provider grows and projects become larger, the complexity of the equipment/software BOM deliverable tends to get bigger as well. In addition to tracking and communicating the ordering/delivery/shipping/ billing lifecycle of each piece of equipment/software, the coordinated effort between product delivery and service delivery becomes more intricate, especially in phase-oriented projects. Layer this across multiple orders and consider that projects are in different lifecycle phases and worked on by different personnel. Without the right system in place, it’s just a matter of time before something gets missed and the wrong equipment shows up on the wrong day or inaccurate invoices are sent to clients.

Ideally, the order fulfillment personnel would start with the detailed BOM and labor estimate that the approved quote version was based on. As various P.O.s, packing slip and invoice documents were created, they would have visibility into the exact delivery lifecycle stage of each item belonging to a project in a single unified view. Project managers would also have access to this unified view to coordinate service delivery with equipment/software delivery and have the ability electronically indicate which items for that project are now ready to be billed so the fulfillment personnel can invoice. This would allow for much more tightly coordinated collaboration and automated communication between the order fulfillment and service delivery teams.

PSA module tip: Ideally the quotation module would be linked directly to the sales order module, as well as the P.O., shipping and invoicing modules. The procurement team’s view of the equipment delivery lifecycle would be accessible by the service delivery team with functionality to automate the PM’s requests for next phase item ordering or invoicing.

5. Tracking customer assets/equipment under service contact

As an IT solution provider grows and starts to offer different types of service contracts and as their customers’ deployments become more complex, tracking each customer’s assets/equipment under service contact becomes more and more difficult to manage. Adding to the complexity is that each customer asset/equipment mix is not static during the life cycle of a service contact (assets/equipment are added, returned, exchanged, or need to be repaired/replaced).
In order to keep your service contract customers happy and keep your help desk costs down, the person on the help desk should be able to respond accurately in real-time as they are triaging a support call:

  • Is the asset/equipment the customer is calling about is under service contract?
  • What service level is associated with that particular asset/equipment?

Without access to this information in real-time, the help desk personnel will likely provide the service regardless of whether or not the asset was actually covered by service contract, since they cannot categorically confirm that the service contract does or does not apply at the first point of contact. This leads to billable support being provided in advance of the customer knowing there is no coverage. Then, that leads to billable hours being thrown in for free in order to maintain the customer relationship if the customer disputes a charge after the fact.

Ideally, the equipment fulfillment process (including any returns/exchanges/replacements) should automatically update the customer inventory asset/equipment list. This would enable the help desk personnel to get an accurate view of the customer’s assets/equipment and applicable service contracts so they would have information and the confidence to handle the customer issues appropriately and profitably.

PSA module tip: The procurement/order fulfillment module should be linked to the customer inventory and service contract module that the help desk would have real-time access to from within a service ticket. An integrated RMA module would address the returns/exchanges and replacement changes in order to keep the customer asset/equipment list accurate over the life cycle of the service contract.

Scale profitably with the right guides and tools

psa buyers guide thumbnailThese are just a few examples of the business process linkages that would significantly improve a growing IT solution provider’s ability to grow profitably. If your PSA software can effectively tie these areas together, then the ability to scale successfully becomes that much easier.

So, if your goal is to scale your IT solution provider business, check out the PROMYS PSA Buyers Guide that we have created to help you determine which PSA module mix and which category of PSA software best meets your needs. You can also find other great guides and checklist to support scaling your business.

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