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Every professional services company needs a healthy bottom line and having a high utilization rate is a great way to get there. But here’s the trick: How do you maximize utilization without burning out your employees?
There is no silver bullet for improving utilization rates; it takes hard work, a well-thought-out approach, and a purposeful use of technology. But it is absolutely possible.
That’s according to Frank Geric, a professional services consultant with over 20 years of experience in sales and project management. On June 28, Geric will host a free one-hour webinar, “Professional Services Management: 5 Essential Steps to Boost Utilization.” He’ll talk about the best practices for achieving and maintaining profitable utilization rates.
In anticipation of the event, Geric took time for a quick Q&A session to share a few thoughts about what kinds of things you can expect to learn from the webinar. He discusses cost savings, visibility, and some facts about utilization that you might not have heard before.
Q: First of all, let’s start with something simple: What is utilization, exactly?
A: Great question. For our purposes here, utilization is a measure of the billing efficiency of an organization or individual. Here’s the key: The higher the utilization rate, the more profitable the company. Right now, the utilization rate for professional services organizations around the world is 77 percent. That number ranges from 75 percent in the legal industry to 81 percent in the IT industry.
Q: So if a higher rate means greater profits, shouldn’t the goal be to achieve 100 percent? But we’ve heard is that 100 percent utilization is a terrible idea. Why is that? That seems a bit counterintuitive.
A: Well, you’re right about that. It does seem like 100 percent would be optimal. But here’s the thing, you don’t want to burn anyone out. Becoming 100 percent utilized isn’t only a bad idea, it’s not healthy. It is also not possible. Excessively high utilization rates make an organization inflexible because the organization can’t react to new customer demands.
Q: Is company-wide visibility crucial to success?
A: Oh, absolutely! You must know the status of projects and resources at all times. If projects are over budget, it may be necessary to move resources to improve effectiveness. It’s important to know which resources are underutilized before it’s too late. If you know that one of your consultants isn’t busy, you should find out if his skills are needed on a project while it’s still possible to affect his realization rate. Planning and communication are key.
Q: Last question – Is a great utilization rate possible without a few high-tech tools?
A: It’s a proven fact: all professional services firms need to use and embrace technology, such as professional services management software. Smaller organizations may have simple requirements, but they still need technology. It’s so important to have a system to help with tracking, which should ideally be integrated with a billing system. If possible, companies should find a solution that allows them to track hours and expenses in real time. With real-time visibility, managers can react to problems or changes in demand in a more agile fashion.
Want to learn more and have a chance to ask Geric your own questions? Register now for “Professional Services Management: 5 Essential Steps to Boost Utilization.”
REGISTER FOR THE WEBINAR NOW
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