This document outlines a five-step process for professional service organizations to develop a successful annual business plan:
1. Build a shared vision of success including mission, values, charter, and business model.
2. Conduct a SWOT analysis to assess organizational strengths, weaknesses, opportunities, and threats.
3. Expose any key themes or disconnects between different organizational priorities.
4. Confront reality by comparing objective performance data to industry benchmarks to identify areas for improvement.
5. Use the insights from steps 1-4 to develop initiatives for the upcoming year's plan that will help achieve the organization's vision.
Introducing the Professional Service Maturity ModelJeanne Urich
Introducing the leading Professional Service Maturity model used by over 10,000 service and project-oriented organizations to chart their course to service excellence.
How to convince the stakeholders to use the Balanced Scorecard concept | BSCD...Aleksey Savkin
The Balanced Scorecard is a business tool recognized world-wide by companies' executives. The secret of the successful BSC project is that all key employees, business owners, and top managers are involved. Research show that the biggest challenge during the implementation of the BSC is a motivational problem. Before starting a Balanced Scorecard project it is necessary to explain this business approach to all stakeholders so that they would buy into the design of the Balanced Scorecard and in the future became active users of this business tool. More: http://www.bscdesigner.com/
HR Performance Management - How to measure and report on your hr performance ...Anne Van de Catsye
Are you struggling to define the most relevant measures that will track your HR activities? Do you want to build an HR Dashboard that impresses your Executive Management Team? Or are you just looking for a professional HR reporting template?
Inside this Guide:
1. The Theory : Introducing the Concept & Model.What is HR Reporting?
2. The Practice : A roadmap for creating your HR Reporting.How to develop your HR Reports?
3. The Experience : Sharing experiences.How to be successful?
This Guide describes step by step how to select different types of KPIs, how to organize your reporting process and create your reporting templates.
For each step in the Guide, you will be introduced to the relevant tools and templates to complete them: lists of KPIs to choose from, workshop templates for agreeing on the most relevant HR measures and so much more. You will get a better understanding of KPIs through some relevant definitions and theory, but you will also receive some lessons learned around implementing a reporting process.
Strategic HRM
Strategic HRM refers to Human Resources Practice that is coordinated and consistent with the overall business objectives in order to improve business performance. Strategic HRM emphasises the importance of Human Resources – and the people in the business – to the success of an organisation. Businesses with an emphasis on strategic HRM may have an HR representative in the boardroom or advising/feeding back to senior executives, and may also make use of HR business partners.
Critics of strategic human resource management say that it is a good idea in theory but often hard to implement at the organisational level. Translating the organisation’s objectives and values into tangible initiatives that can be driven by the HR department is a complex problem underlying strategic HRM. Almost all the big companies of the world are following Strategic HRM practices to improve their organizational efficiency to the fullest.
HR Metrics
Human resources metrics are different measurements that are used to show the value that the human resources function provides to the organization. These measurements demonstrate how effective the efforts of the human resources department are to the overall success of the organization.
There are three types of human resources metrics:
• Metrics that measure the effectiveness of the human resources function
• Metrics that measure the efficiency of the human resources department
• Metrics that measure the effectiveness of the employees within the organization
Introducing the Professional Service Maturity ModelJeanne Urich
Introducing the leading Professional Service Maturity model used by over 10,000 service and project-oriented organizations to chart their course to service excellence.
How to convince the stakeholders to use the Balanced Scorecard concept | BSCD...Aleksey Savkin
The Balanced Scorecard is a business tool recognized world-wide by companies' executives. The secret of the successful BSC project is that all key employees, business owners, and top managers are involved. Research show that the biggest challenge during the implementation of the BSC is a motivational problem. Before starting a Balanced Scorecard project it is necessary to explain this business approach to all stakeholders so that they would buy into the design of the Balanced Scorecard and in the future became active users of this business tool. More: http://www.bscdesigner.com/
HR Performance Management - How to measure and report on your hr performance ...Anne Van de Catsye
Are you struggling to define the most relevant measures that will track your HR activities? Do you want to build an HR Dashboard that impresses your Executive Management Team? Or are you just looking for a professional HR reporting template?
Inside this Guide:
1. The Theory : Introducing the Concept & Model.What is HR Reporting?
2. The Practice : A roadmap for creating your HR Reporting.How to develop your HR Reports?
3. The Experience : Sharing experiences.How to be successful?
This Guide describes step by step how to select different types of KPIs, how to organize your reporting process and create your reporting templates.
For each step in the Guide, you will be introduced to the relevant tools and templates to complete them: lists of KPIs to choose from, workshop templates for agreeing on the most relevant HR measures and so much more. You will get a better understanding of KPIs through some relevant definitions and theory, but you will also receive some lessons learned around implementing a reporting process.
Strategic HRM
Strategic HRM refers to Human Resources Practice that is coordinated and consistent with the overall business objectives in order to improve business performance. Strategic HRM emphasises the importance of Human Resources – and the people in the business – to the success of an organisation. Businesses with an emphasis on strategic HRM may have an HR representative in the boardroom or advising/feeding back to senior executives, and may also make use of HR business partners.
Critics of strategic human resource management say that it is a good idea in theory but often hard to implement at the organisational level. Translating the organisation’s objectives and values into tangible initiatives that can be driven by the HR department is a complex problem underlying strategic HRM. Almost all the big companies of the world are following Strategic HRM practices to improve their organizational efficiency to the fullest.
HR Metrics
Human resources metrics are different measurements that are used to show the value that the human resources function provides to the organization. These measurements demonstrate how effective the efforts of the human resources department are to the overall success of the organization.
There are three types of human resources metrics:
• Metrics that measure the effectiveness of the human resources function
• Metrics that measure the efficiency of the human resources department
• Metrics that measure the effectiveness of the employees within the organization
This presentation contains more information about the use of the balanced scorecard in general to map out strategies and track results. It is specific to the City though not as specific as the WDM Balanced Scorecard presentation found here.
The balanced scorecard is a strategic planning and management system that is used extensively in business and industry, government, and nonprofit organizations worldwide to align business activities to the vision and strategy of the organization, improve internal and external communications, and monitor organization performance against strategic goals. In this presentation, you will learn the principles of Balanced Scorecard and you will explore the core processes of this system.
Balanced Scorecard implementation in SMEs: From theory to practiceemilvadana
In theory, Balanced Scorecard implementation is a clear and not so complicated process. While the implementation and usage of a performance management system in large companies has been thoroughly analyzed, the characteristics of the SMEs raise question on how should a Balanced Scorecard be customised and implemented in order to generate the benefits a SME needs.
Balanced Scorecard, A Comprehensive Guide Upendra K
The Balanced scorecard is a management system that enables organizations to clarify their vision and strategy and translate them into action.
Provides an organization with feedback of both the internal business processes and external outcomes, which allows for continuous improvement of strategic performance and results.
Nerve center of an enterprise
The term “scorecard” signifies quantified performance measures and “balanced” signifies the system is balanced between:
Short-term and long term objectives
Financial and non-financial measures
Lagging and leading indicators
Internal and external performance perspectives
The concept of the balanced scorecard was first touted in the Harvard Business Review in 1992 in a paper written by Robert S Kaplan and David P Norton.
The paper introduced the idea of focusing on human issues as well as financial ones, and measuring performance across a much wider spectrum than businesses had done before.
Kaplan and Norton published their ideas in full in The Balanced Scorecard: Translating Strategy into Action in 1996 and it became a business bestseller.
The balanced scorecard is centered on four performance metrics or perspectives:
Customers
Internal processes
Financial
Learning and growth
When implemented properly, each one of these perspectives contains four subparts consisting of
Objectives
Measures
Targets
Initiatives
Why the Balanced Scorecard is Good but Not Great: The BUSINESS MODEL STRATEGY...Rod King, Ph.D.
Developed by Robert Kaplan and David Norton in the 1990s, the Balanced Scorecard (BSC) is the most widely used tool for managing the performance of a business. The BSC is used by the majority of companies in the Fortune 1000 as well as by many small and medium-scale businesses. The BSC focuses on a managing a chain or “stream” of performance metrics rather than the output or traditional singular financial metric of profit.
In the presentation below - http://goo.gl/lSIDX9 - I take a critical look at the traditional Balanced Scorecard as well as introduce a new tool in the evolution of the framework for the Balanced Scorecard. Tools such as Kaplan and Norton’s Strategy Map have been developed to complement the Balanced Scorecard. However, in this age of Business Model Planning, Strategy, and Performance Management, the traditional Balanced Scorecard or Strategy Map is not enough.
What do you think?
Rod.
http://goo.gl/lSIDX9
A strategic approach to Human Resource Management
Please see:
https://flevy.com/browse/business-document/strategic-human-resources-147
For an improved version
This presentation gives a very high-level explanation of what a dashboard should be used for, what type of content it should consider and how it should look to be most effective.
Redefining Corporate Innovation Performance Measurement
The core of the case study ‘Redefining Corporate Innovation Performance Measurement’ is a framework dedicated to the performance assessment of a multitude of innovation unit archetypes. A set of premises, which replenish the output evaluation method, precedes the framework. In the beginning, a categorization of different corporate innovation unit archetypes introduces the topic. In the end, an opinion on COVID-19’s impact on corporate innovation rounds the case study off.
-- Buy slides at www.tools4management.com --
The Performance Management and Balanced Scorecard overview presentation is a comprehensive walkthrough of what Performance Management and Balanced Scorecard is and how you implement it at your company or your customer company. The nice looking slides are easy to incorporate into your own presentation and are designed by professionals to both give you an inside into the subject and give a professional presentation to your stakeholders. The PowerPoint slides are:
Slide 1: What is The Balanced Scorecard
Slide 2: The barriers to implementing Strategy
Slide 3: The Balanced Scorecard 4 perspectives
Slide 4: Rationale for the Balanced Scorecard
Slide 5: Signs that you may need a new performance measurement system
Slide 6: Balanced Scorecard Team Roles and Responsibilities
Slide 7: Balanced Scorecard Project Plan and Timeline
Slide 8: A simplified Communication Plan for your Balanced Scorecard project
Slide 9: Translating with the Balanced Scorecard
Slide 10: The Balanced Scorecard should contain a mix of lag and lead measures of performance
Slide 11: Cause-and-effect linkages in the Balanced Scorecard
Slide 12: Mapping Initiatives to Objectives
Slide 13: “Cascading” the Balanced Scorecard
Slide 14: The Cascading Process
Slide 15: Linking the Balanced Scorecard to Budgeting
Slide 16: Public-Sector Balanced Scorecard
Slide 17: Commonly used Financial Measures
Slide 18: A sample of customer Measures
Slide 19: Internal Process Measures
Slide 20: Employee Learning and Growth Measures
This presentation contains more information about the use of the balanced scorecard in general to map out strategies and track results. It is specific to the City though not as specific as the WDM Balanced Scorecard presentation found here.
The balanced scorecard is a strategic planning and management system that is used extensively in business and industry, government, and nonprofit organizations worldwide to align business activities to the vision and strategy of the organization, improve internal and external communications, and monitor organization performance against strategic goals. In this presentation, you will learn the principles of Balanced Scorecard and you will explore the core processes of this system.
Balanced Scorecard implementation in SMEs: From theory to practiceemilvadana
In theory, Balanced Scorecard implementation is a clear and not so complicated process. While the implementation and usage of a performance management system in large companies has been thoroughly analyzed, the characteristics of the SMEs raise question on how should a Balanced Scorecard be customised and implemented in order to generate the benefits a SME needs.
Balanced Scorecard, A Comprehensive Guide Upendra K
The Balanced scorecard is a management system that enables organizations to clarify their vision and strategy and translate them into action.
Provides an organization with feedback of both the internal business processes and external outcomes, which allows for continuous improvement of strategic performance and results.
Nerve center of an enterprise
The term “scorecard” signifies quantified performance measures and “balanced” signifies the system is balanced between:
Short-term and long term objectives
Financial and non-financial measures
Lagging and leading indicators
Internal and external performance perspectives
The concept of the balanced scorecard was first touted in the Harvard Business Review in 1992 in a paper written by Robert S Kaplan and David P Norton.
The paper introduced the idea of focusing on human issues as well as financial ones, and measuring performance across a much wider spectrum than businesses had done before.
Kaplan and Norton published their ideas in full in The Balanced Scorecard: Translating Strategy into Action in 1996 and it became a business bestseller.
The balanced scorecard is centered on four performance metrics or perspectives:
Customers
Internal processes
Financial
Learning and growth
When implemented properly, each one of these perspectives contains four subparts consisting of
Objectives
Measures
Targets
Initiatives
Why the Balanced Scorecard is Good but Not Great: The BUSINESS MODEL STRATEGY...Rod King, Ph.D.
Developed by Robert Kaplan and David Norton in the 1990s, the Balanced Scorecard (BSC) is the most widely used tool for managing the performance of a business. The BSC is used by the majority of companies in the Fortune 1000 as well as by many small and medium-scale businesses. The BSC focuses on a managing a chain or “stream” of performance metrics rather than the output or traditional singular financial metric of profit.
In the presentation below - http://goo.gl/lSIDX9 - I take a critical look at the traditional Balanced Scorecard as well as introduce a new tool in the evolution of the framework for the Balanced Scorecard. Tools such as Kaplan and Norton’s Strategy Map have been developed to complement the Balanced Scorecard. However, in this age of Business Model Planning, Strategy, and Performance Management, the traditional Balanced Scorecard or Strategy Map is not enough.
What do you think?
Rod.
http://goo.gl/lSIDX9
A strategic approach to Human Resource Management
Please see:
https://flevy.com/browse/business-document/strategic-human-resources-147
For an improved version
This presentation gives a very high-level explanation of what a dashboard should be used for, what type of content it should consider and how it should look to be most effective.
Redefining Corporate Innovation Performance Measurement
The core of the case study ‘Redefining Corporate Innovation Performance Measurement’ is a framework dedicated to the performance assessment of a multitude of innovation unit archetypes. A set of premises, which replenish the output evaluation method, precedes the framework. In the beginning, a categorization of different corporate innovation unit archetypes introduces the topic. In the end, an opinion on COVID-19’s impact on corporate innovation rounds the case study off.
-- Buy slides at www.tools4management.com --
The Performance Management and Balanced Scorecard overview presentation is a comprehensive walkthrough of what Performance Management and Balanced Scorecard is and how you implement it at your company or your customer company. The nice looking slides are easy to incorporate into your own presentation and are designed by professionals to both give you an inside into the subject and give a professional presentation to your stakeholders. The PowerPoint slides are:
Slide 1: What is The Balanced Scorecard
Slide 2: The barriers to implementing Strategy
Slide 3: The Balanced Scorecard 4 perspectives
Slide 4: Rationale for the Balanced Scorecard
Slide 5: Signs that you may need a new performance measurement system
Slide 6: Balanced Scorecard Team Roles and Responsibilities
Slide 7: Balanced Scorecard Project Plan and Timeline
Slide 8: A simplified Communication Plan for your Balanced Scorecard project
Slide 9: Translating with the Balanced Scorecard
Slide 10: The Balanced Scorecard should contain a mix of lag and lead measures of performance
Slide 11: Cause-and-effect linkages in the Balanced Scorecard
Slide 12: Mapping Initiatives to Objectives
Slide 13: “Cascading” the Balanced Scorecard
Slide 14: The Cascading Process
Slide 15: Linking the Balanced Scorecard to Budgeting
Slide 16: Public-Sector Balanced Scorecard
Slide 17: Commonly used Financial Measures
Slide 18: A sample of customer Measures
Slide 19: Internal Process Measures
Slide 20: Employee Learning and Growth Measures
During this session we define what a business plan is and it's uses and benefits. We provide a framework to follow when developing your plan that helps you go through all the key elements to ensure that you have a concise and solid plan for investors and for your partners, employees and other stakeholders.
Kaplan and Norton's Balanced Scorecard approach encourages businesses to analyze and report performance based on four key perspectives - financial, customers, internal processes and organisational capacity.
This short presentation provides an overview of the balanced scorecard model.
The Top HR Stories to Tell with Data: Templates that Wow Business LeadersVisier
The “datafication of HR” is one of 2014′s hottest topics, with 91% of organizations aspiring to move from reactive or operational reporting to proactive workforce analytics over the next 24 months. Indeed, “experience with workforce analytics” has become a sought-after line item on HR professionals’ resumes.
What is driving the “datafication” of HR? A growing number of corporate boards, CEOs, and CHROs understand that by applying data-driven solutions to improve decisions about talent, they can improve revenues and profits. Really, if you can measure real impactful aspects of the people in your organization and make intended changes, you can get the impact in terms of real business results. More than ever before, HR can play a critical role in driving business performance.
View the full webinar recording here:
http://www.visier.com/lp/top-10-hr-stories-with-data/
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1. A Service Performance Insight White Paper
Service Compass: Charting the Course
to Professional Service Excellence
Five Steps to Build
a Successful Services Business Plan
December 2012
Sponsored by
Service Performance Insight
6260 Winter Hazel Drive 25 Boroughwood Place
Liberty Township, OH 45044 USA Hillsborough, CA 94010 USA
Telephone: 513.759.5443 Telephone: 650.342.4690
David.Hofferberth@SPIresearch.com Jeanne.Urich@SPIresearch.com
www.SPIresearch.com
2. TABLE OF CONTENTS
Introduction.................................................................................................................................... 1
Symptoms of Misalignment.......................................................................................................... 1
Five Steps for Successful PS Business Planning...................................................................... 2
Step 1 – Build a shared vision of success.................................................................................. 2
Step 2 – Assess organizational strengths and weaknesses ...................................................... 4
Step 3 – Expose Key themes and disconnects.......................................................................... 6
Step 4 – Confront reality............................................................................................................. 7
Step 5 – Build initiatives ............................................................................................................. 9
Tools can help with the planning process................................................................................ 10
Information enables more accurate business planning.......................................................... 11
Quantify Improvement to Drive Change.................................................................................... 13
Conclusions ................................................................................................................................. 14
About Service Performance Insight .................................................................................... 15
FIGURES
Figure 1: Service Planning Pyramid ............................................................................................... 3
Figure 2: SWOT Analysis ............................................................................................................... 5
Figure 3: Expose Key Themes and Disconnects ........................................................................... 7
Figure 4: Subjective and Objective Insights ................................................................................... 8
Figure 5: Create a fact-based appraisal leading to break-through improvement priorities .......... 10
Figure 6: Use tools to organize, strategize and prioritize ............................................................. 10
Figure 7: Integrated Information-driven Business Planning ......................................................... 11
TABLES
Table 1: Integration Helps Drive Performance ............................................................................. 12
Table 2: Translate Key Initiatives into the Financial Plan............................................................. 13
3. Service Compass Five Steps to Build a Successful Services Business Plan
Service Performance Insight Page 1
INTRODUCTION
For many professional service organizations annual planning has become
an empty ritual. Firms often waste too much time and energy reliving
past failures instead of exploring new avenues for growth. Done right,
instead of a necessary evil, business planning can open up fresh new
ideas and facilitate playing to strengths rather than shoring up
weaknesses. The best of the best PSOs each year find new and better
ways to do the things they love to do…. and are especially good
at….while minimizing the hassles and tedium of doing the things that
hold them back or waste precious time and resources.
Each year PS organizations should devote time to reenergizing their
vision and strategies as they plan the upcoming year’s business. The
annual business planning process can be a valuable catalyst for growth
and profit. At least annually, plan to get leadership aligned by
reevaluating and improving go to market and sales strategies; discuss
new and better ways to motivate the workforce and streamline processes
and systems. In the ever more crowded professional service market,
creating, maintaining and enhancing competitive differentiation is a
business imperative. Without new and differentiating knowledge, skills,
intellectual property and supporting systems and tools, all too many
firms find themselves slipping towards staff augmentation with
commoditized skills and rates while they watch fresh, young challengers
seize hot new markets with in-demand competencies.
This White Paper identifies five critical steps PSOs should take on an
annual basis to prepare for what lies ahead.
SYMPTOMS OF MISALIGNMENT
Before embarking on an annual planning exercise, SPI Research has
explored some of the reasons why PSOs fail to deliver their desired
results. Our experience has shown that when things go wrong, it most
often starts at the top and then cascades downward throughout the
organization, ultimately showing up in lackluster financial performance.
Eliminating the root causes of dysfunction and inefficiency goes a long
way toward driving organizational success. Common issues:
Unclear strategy – lack of clarity around target markets, target
clients and why we win. Inability to capitalize on market
opportunities due to lack of alignment, lack of employee
engagement or leadership and cultural issues. No leverage to
drive repeat sales, limited competitive differentiation, poor sales
and marketing execution.
Murky service charter – particularly a problem for embedded
PSOs – with conflict between driving financial PS revenue and
margin versus helping the overall company achieve its objectives
of market expansion and client delight.
4. Service Compass Five Steps to Build a Successful Services Business Plan
Service Performance Insight Page 2
Silos – exist in all companies – they usually occur in the choppy
waters between groups or functions where responsibility and
accountability are blurry. A classic example… who is
responsible for driving new service revenues – is it sales or
delivery? How can disconnected processes and poor handoffs be
improved?
Skills imbalance - the logical extension of organizational silos…
where all parties are not aligned … not selling what we can
deliver or not being able to deliver what has been sold. Not
enough or too many people with the right skills, excessive non-
billable headcount, sub-par utilization, revenue per person,
difficulty in recruiting, ramping, retaining, inability to quickly,
easily staff projects.
Immature processes - disparate or poor systems and tools.
Inconsistent project methods; lack of tools and intellectual
property leading to low repeatability and inability to drive
efficiency and reuse.
Poor quality and customer satisfaction – Failed projects, cost
overruns, difficulty securing references. No quality review
processes and/or poor project visibility into budget to actuals.
Poor financial performance – Revenue and margin below
targets, poor forecasting accuracy, unpredictability and high
levels of risk.
FIVE STEPS FOR SUCCESSFUL PS BUSINESS PLANNING
The annual planning process — regardless of the agenda, framework or
method subscribed — is not only essential for running the business, but
is also an opportunity for reflection and a powerful catalyst for change. If
an executive team is failing at execution, the root cause resides in
conversations not had, topics not addressed and, subsequently, actions
not taken. Failing to execute is the symptom; diagnosis is key to solving
the problem.
Effective planning relies on both quantitative and qualitative
information. It is critical PS executives don't just consider the annual
business plan as a financial exercise, as key improvement or expansion
initiatives can have implications far beyond the income statement.
Step 1 – Build a shared vision of success
Business planning is hard to do, but is well worth the effort. Many PSOs
use an outside facilitator to ensure key points of view are heard and
incorporated. They annually refocus and reenergize the business for
many reasons beyond financial planning. Overarching objectives may
include:
5. Service Compass Five Steps to Build a Successful Services Business Plan
Service Performance Insight Page 3
Accelerate revenue and margin growth either through mergers
and acquisitions or internal process improvements;
Drive alignment between the service organization and other
departments, or improve internal service organization alignment;
Assimilate new groups, companies or functions;
Capitalize on new markets and create new solution offers;
Implement new systems and processes to improve effectiveness
and efficiency;
Improve quality and client satisfaction; and
Optimize sales and marketing effectiveness.
The first step is to build a shared vision of success. It might sound easy,
but it is a critical component of beginning the year with a clear and
concise view of where you want to go (Figure 1). A vision statement
outlines what a company wants to be. It concentrates on the future; it is a
source of inspiration and provides a clear picture of the future. It sets the
direction for business planning.
For instance, Google’s vision "Organize the world's information and
make it universally accessible and useful” is clear, compelling,
inspirational….and… actionable.
Figure 1: Service Planning Pyramid
Source: Service Performance Insight, December 2012
Next is a Mission statement, which tells how the organization will
achieve its vision. It concentrates on the present; it defines customers
and critical processes, and it informs everyone about the desired level of
performance.
What business the company is in and who are the primary
"clients"
What is the responsibility of the organization toward these
"clients"
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What are the main objectives which support the company in
accomplishing its mission
For instance, Ben and Jerry’s mission "To make, distribute and
sell the finest quality all nature ice cream and euphoric
concoctions with a continued commitment to incorporating
wholesome, natural ingredients and promoting business practices
that respect the earth and the environment” says it all.
Next is Values and Culture – how we conduct business here. It is the set
of unwritten rules for decision-making and power. Behavior – the
intrinsic values that define “who we are,” “what we do,” and “how we
act.” Establishing core values is an extremely important component of
the service business plan as they describe the attitudes and behaviors the
organization prizes. Consider having the team pick key individuals who
best exemplify cultural values – write their stories and core values will
emerge. If you can’t think of a story that exemplifies a core value… it
probably isn’t one.
Then there is the Charter. Charter defines the scope, objectives and
participants in a project. It provides a preliminary delineation of roles
and responsibilities, outlines the business plan objectives, identifies the
main stakeholders, and defines team or functional authority. The charter
describes the role, function and boundaries for functional organizations.
And finally, the business model, which provides greater detail into the
specific markets, clients and service portfolio.
Do you have a direct or indirect sales model?
Do you have different programs and teams by industry,
geography or account?
Do you have horizontal or vertical centers of competency?
Are you centrally or de-centrally managed?
The business model describes the way the PSO is organized and how it
will address:
Key markets – and key clients
Contribution – what products or services do you provide?
Distinction – what makes your product or service unique, why
clients choose you
The annual business plan is built as a pyramid for a reason – the only
way to galvanize the entire organization is to attach to a bright and
compelling future (the vision), and each of the activities rely on each
other and cascade in order to build alignment and focus throughout the
organization.
Step 2 – Assess organizational strengths and weaknesses
The second step is to conduct a SWOT analysis. It stands for Strengths,
Weaknesses, Opportunities and Threats. A SWOT analysis guides the
PSO to identify the positives and negatives inside the organization
(strengths and weaknesses), and outside of it, (opportunities and threats).
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Developing a shared view of the current situation is the first step to
alignment, change and improvement.
Figure 2: SWOT Analysis
Source: Service Performance Insight, December 2012
First, assess the organization's strengths.
What services are you best known for;
Who are your best employees and clients; and,
What do they do best or what do they like most about your firm?
It might be the PSO has a unique life/work balance – enabling it to take
advantage of skilled consultants at the top of their craft while
accommodating flexible work schedules. But this core strength may also
show up as a weakness due to difficulty in scheduling or inability to
focus part-time workers on incremental business development activities.
Explore how to accentuate the strengths while eliminating or overcoming
the weaknesses.
Second, assess the organization's weaknesses.
What are some things you don't do well and how might you turn
them into a strength? Or eliminate them as a weakness?
For instance, the PSO might have clients that desire global service
delivery but today it can only deliver locally. Therefore, a major
initiative might be to expand globally, either organically, through
acquisitions or through new partnerships. Determine where change is
possible. If the organization is at a juncture or turning point, an
inventory of strengths and weaknesses can reveal priorities and
possibilities.
Now focus on the external environment, assess untapped opportunities in
the market.
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What does the market need or how is it changing, and how can
the PSO prepare for it?
What are hot new growth services that require minimal training
but can be sold at a high profit margin?
Adjust and refine plans mid-course. A new opportunity might open
wider avenues, while a new threat could close a path that once existed.
And finally, assess external threats.
Are new competitors emerging that could cause disruption and
compromise profit?
Is there some new regulation on the horizon, which will cause
increased regulatory costs or eliminate lines of work altogether?
Focus on strengths and opportunities, while shoring up or eliminating
weaknesses and threats that could derail your efforts.
Remember, the purpose of performing a SWOT is to reveal positive
forces that work together and potential problems that need to be
addressed or at least recognized. Executives can list internal and external
opposites side by side. Ask clients to answer these simple questions:
what are the strengths and weaknesses of your firm, or effort, and what
are the opportunities and threats facing it?
Executives should use fact-based information, which probably comes
from core business solutions (ERP, CRM, PSA, etc.), to assess strengths,
weaknesses, opportunities and threats. Take advantage of this
information because it is specific to the PSO and can yield significant
insight into the future.
Step 3 – Expose Key themes and disconnects
In step three executives should expose key themes and disconnects,
which while important to all types of organizations, are particularly
critical for embedded service organizations, where charter conflict is
rampant. SPI Research often sees PSOs where the financial model is at
odds with what the executive team really wants and needs from the
professional services organization.
In many instances there may be incompatible points of view regarding
what the PSO should or should not be. Balancing profit, client delight,
sales enablement and market growth requires give and take. Tipping the
scale too far in favor of profit undermines client delight, sales
enablement and market growth, while tipping too far towards sales
enablement and market growth may compromise client delight and
profit. Use the planning process as a catalyst to expose and rationalize
these disconnects. The answer may be to set up an internal bank of non-
billable hours dedicated to sales enablement, market growth or client
delight.
It is critical in this step for the executive team to uncover divergent
points of view to arrive at the best possible course which supports the
overall vision. SPI Research finds that some of the greatest debates
occur here. Every executive has his or her own opinion, and they are all
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important but the team must understand and rationalize competing
priorities.
Figure 3: Expose Key Themes and Disconnects
Source: Service Performance Insight, December 2012
In many cases there is a root cause for the lack of alignment. Most
professional services organizations have a number of different charters,
each of which impact the financial plan. For instance, one might be
ensuring client satisfaction and references, or focusing on driving repeat
business and referrals. Executives should ask, “Do all of our clients need
to be wildly satisfied or primarily our most important ones?” The second
might be to achieve revenue and profit targets, where the PSO is
primarily focused on efficiency, which may compromise effectiveness.
In many cases, this might be a short term charter to improve the financial
position, but could come at the expense of client satisfaction and long-
term growth. If market growth is a primary focus, expansion could come
at the expense of revenue and profitability.
The plans made a year ago were probably very important at the time.
But going forward these charter priorities should be reevaluated.
Decisions must be made not only for the next year, but for years to come.
Part of the plan must include how to get there.
Step 4 – Confront reality
Planning does not need to be a necessary evil – it can be the most
important and empowering tool in a PSO’s arsenal to get the entire
organization on the same page – to achieve truly great things. Effective
planning creates a safe, fact-based, and reality-based environment where
new ideas can flourish.
Figure 4 shows an example of the process SPI Research uses to help
clients gain both quantitative and qualitative insight into their current
reality.
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Figure 4: Subjective and Objective Insights
Source: Service Performance Insight, December 2012
SPI Research believes there are two realities, first is objective
performance; how a PSO compares to industry peers from a quantitative
standpoint, which shows potential areas for improvement. It is at this
point where executives should draw information from their information
systems to compare to industry benchmarks - showing where the
organization excels and where it is falling behind. Numbers don’t lie and
executives should use this information to compare and contrast their
organization to others.
For instance, executives might be satisfied with a lower billable
utilization rate than their peers, as they might place increased emphasis
on service productization. This investment overtime will show up in
higher bill rates and revenues but may represent incremental cost in the
short term. There are many avenues to success, quantitative benchmarks
expose the possibilities.
The second reality is the subjective reality. The subjective reality can
make or break a PSO’s business plan. Is everyone on the same page?
Are there unconscious saboteurs – if so, it’s probably because folks have
not had the opportunity, in a safe environment to give their opinions.
Here PS executives need to identify the real change agents, those who
are dissatisfied with the current reality, who see a brighter future, and
more importantly are willing to do something about it. There are also
detractors, who just say no, but they may have a very good reason. They
may feel these new initiatives have been tried before and failed, or
perhaps there is just too much on the plate and this too will pass as
another “planning exercise du jour.”
Both realities must become one to achieve any type of lasting change.
Both the agents of change and detractors care about the future of the
organization, and it is important their opinions are heard and respected.
In the end, both sides must come together for any type of lasting
improvement. They must leave the planning session with an
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acknowledgment the PSO has decided on a specific direction, regardless
of whether or not they completely agree. This acknowledgment will be
shared with all others in the organization; it is important everyone sings
from the same hymnal.
Then, executives must focus on the highest impact initiatives for
improvement to create an actionable business plan.
Step 5 – Build initiatives
The final step is to create the initiatives that will propel the organization
into the new year and beyond. By now the executive team should have
galvanized the planning team around a shared view of the future, and its
priorities. Now is the time to take action – with realistic success
measures and clear roles, responsibilities and timelines. The team that
ends up with a laundry list of 15 to 20 key priorities is doomed to failure
before it starts.
As one might imagine, when too many initiatives are proposed, very few
are fully enacted, and this failure eventually stalls the PSO’s growth and
profitability plans. All of those competing priorities with no real owners
or investment demoralize and disenfranchise both the leadership team
and everyone else throughout the organization. In order to drive the plan
forward there are several areas to avoid, each of which could hurt the
planning process.
First is the absence of executive alignment and leadership, due to
initiatives being viewed as only tactical;
No market, benchmark or customer fact-based data to
substantiate decisions on priorities or to describe the rationale
behind the changes;
Lack of meaningful engagement of business operations and
employees until it is too late for them to have input, investment
or engagement in the process; and,
Poor or no sustained communication regarding Why? Why now?
What is in it for me? To build support and participation
throughout the organization;
No ongoing process for strategy execution and follow-through,
resulting in lack of sustained focus and commitment.
To be successful SPI Research recommends no more than five, and
preferably three key annual initiatives. Typically, these overarching key
initiatives address action areas such as business development and sales
growth; employee enablement or financial improvement. PSOs are great
at driving client projects – so develop clear “big rock” improvement
priorities with assigned owners, teams and project plans. Cascade
initiative participation throughout the organization to include your best
and brightest change captains from around the world. Above all else,
clear, frequent communication is a critical success factor. Communicate
what happened in the planning sessions; let employees see and
understand the organization’s vision; help them internalize strengths and
opportunities while acknowledging weaknesses and threats.
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Figure 5: Create a fact-based appraisal leading to break-through
improvement priorities
Source: Service Performance Insight, December 2012
TOOLS CAN HELP WITH THE PLANNING PROCESS
First, there should be a top line initiative which is a short statement
explaining the primary objective (Figure 6). Next, the area of focus
breaks the initiative into components to outline the primary objective.
Again, executives should incorporate a very short statement for each area
of focus. For each area of focus there must be success metrics to show
whether or not the PSO has succeeded. Ideally, these metrics are
quantitative and not subjective, and can be measured by the
organization’s information infrastructure.
Figure 6: Use tools to organize, strategize and prioritize
Source: Service Performance Insight, December 2012
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Each of these success metrics requires some type of action. Finally there
should be a timeline as well as an executive owner, which is not
necessarily responsible for every action, but must work with others in a
collaborative fashion to accomplish the goals.
INFORMATION ENABLES MORE ACCURATE BUSINESS PLANNING
The annual rite of business planning begins with an analysis of the past
year of data. This information provides a base upon which to build the
upcoming year’s plan. Obviously, utilizing the organizations internal
business systems to obtain the data streamlines the planning process.
Almost every professional service organization with more than 10
employees uses some type of financial management solution (Enterprise
Resource Planning, or ERP). ERP enables PS executives to analyze in
detail all of the critical key performance measurements to determine
areas of success, as well as those areas requiring improvement. There are
also other important solutions PSOs should leverage in the planning
process. They include Client Relationship Management (CRM) and
Professional Services Automation (PSA). Both CRM and PSA provide
the information necessary to show leaders revenue and profitability by
the types of services sold, geographic regions, clients and practice areas.
Ideally, the information infrastructure is integrated so information can
seamlessly be passed from one system, for instance, from CRM to HCM
solution to show services sold, which helps with staffing requirements,
from HCM to PSA to better understand the skills required, resource
workload and their cost, to find the gaps where skills are not available,
from PSA to ERP to provide project profitability estimates and then back
from ERP and CRM to show which services are the most profitable and
therefore should be accentuated.
Figure 7: Integrated Information-driven Business Planning
Source: Service Performance Insight, December 2012
Integration improves visibility into core professional services assets —
the people, processes and capital used to complete work. SPI Research
believes that comprehensive real-time visibility is only attained through
application integration. In other words, information flows across
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different departments and functions, so that executives and other critical
employees have a more complete picture of operations, and therefore can
make better decisions as part of the annual business plan, while updating
them as conditions change over the course of a year.
In order to demonstrate the value associated with integration of
departmental solutions with the core financial management solution, SPI
Research has provided some of the key performance indicators in terms
of how PSOs execute services (Table 1).
Table 1: Integration Helps Drive Performance
Key Performance Indicator
(KPI)
Without PSA
With Non-
Integrated
PSA
With
Integrated
PSA
Billable utilization 66.3% 71.3% 74.4%
Concurrent projects managed 4.46 4.54 5.22
On-time delivery 74.8% 76.8% 80.0%
Annual revenue per billable
consultant
$183K $206K $225K
Source: Service Performance Insight, December 2012
Billable utilization is one of the main reasons PSOs purchase PSA. The
table shows PSOs not using a PSA solution averaged 66.3% utilization.
In other words, on a 2,000 hour basis they billed a little over 1,325 hours
annually. Those organizations purchasing PSA, but not integrating it
with the core financial solution improved billable utilization up to over
71%, meaning over 1,420 billable hours per year, a gain of almost 100
hours over those organizations without PSA! For organizations utilizing
PSA with its integration to the core financial management solution they
increased utilization and now bill almost 1,500 hours annually – an
additional 80 hours of billable time over the course of a year. These
improvements directly translate into revenue and margin.
A similar comparison can be made with the number of projects managed
concurrently by a project manager. The net effect of a project manager
using no PSA solution to a fully integrated PSA solution adds up to one
additional project managed concurrently, meaning less overhead required
to run projects. This overhead reduction helps increase project margins
which ultimately show up in overall profitability.
On-time delivery is also critical key performance indicator, and moving
from no PSA solution to a fully integrated PSA solution increases on-
time delivery, which definitely improves both profitability and client
satisfaction, which ultimately leads to higher growth rates.
And finally, annual revenue per billable consultant soars $42K from
$183 to $225K for companies who deploy and integrate their PSA
application with their other core business applications.
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The importance of this section is to note that besides proving
productivity, utilizing integrated business solutions can also improve
PSOs planning capabilities and performance improvement initiatives.
QUANTIFY IMPROVEMENT TO DRIVE CHANGE
For this analysis, SPI Research created an example PSO, with
fundamentals similar to many organizations in the PS Maturity Model™
2012 Benchmark study. The following is just an example, but shows the
potential financial benefits from embarking on a PS Transformation
initiative.
For this example, SPI Research assumed the following:
∆ Number of PS employees: 130
∆ Number of Billable PS employees: 100
∆ Annual PS Billings: $24.5mm
∆ Billable utilization: 68.0%
∆ Average hourly bill rate: $180
While there are literally hundreds of potential improvements that PSOs
can make, SPI Research focused on a few key performance areas to
improve profit margins. Small improvements can yield significant
results. For instance, one goal might be to reduce recruiting and ramping
time down from 120 to 50 days.
Table 2: Translate Key Initiatives into the Financial Plan
Key Initiative Success Metrics Assumptions Financial
Employee
Growth and
Development
• Reduce recruiting
and ramping time
from 120 days to 50
days
• 70 more potential billable
days
• $180/hour bill rate
• 68% utilization
• 10 new employees
annually
$685,440
Improve
Operations
• Implement new
cloud-based PSA
• Improve utilization
2% (from 68% to
70%)
• 2,000 billable hours /year
potential
• 100 billable employees
• $180/hour average
billable rate
$720,000
Service
Packaging
• 20% of projects sold
as packages
• Improve project profit
margins 30 to 40%
• Total revenue of $25M
• $5M sold as packages
$500,000
Total $1,895,440
Source: Service Performance Insight, December 2012
In this example the organization aligned recruiting with the sales and
project pipeline to more efficiently find the right employees in addition
to creating and maintaining an extensive database of candidates, to
reduce the time to recruit. Once onboard the PSO focused on effective
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training and mentoring so new hires come up-to-speed in billable roles
faster. The upshot of this exercise results in 70 more billable days
annually. With 10 new employees this could add up to almost $700,000
in additional revenue annually (Table 2).
Likewise, if the PSO desires to improve operations it might consider the
implementation of a new Professional Services Automation (PSA)
solution. In this particular example SPI Research has shown a very low
increase in billable utilization due to the implementation of PSA.
Normally, SPI Research sees a 5-8% increase in billable utilization when
PSOs implement PSA. Regardless, the net result of this conservative
estimate is over $700,000 in additional annual revenue.
And finally, one area very much in the spotlight right now is service
packaging, which helps PSOs more efficiently and effectively develop,
sell and execute services. This metric focuses on service margins, and as
is shown in this example, the increases can be significant in terms of
overall financial benefits.
The purpose of this table is to show that in the PSO’s annual business
plan there are both operational and financial implications that must be
considered. Again, a PSO’s annual business plan is not just a financial
plan; it is a plan that will help move your organization forward.
CONCLUSIONS
The end of the year can be very exciting for PSOs. It is time to reflect
back on all of the past year’s successes, as well as its failures, and realize
there is a whole new empty canvas for the upcoming year. The exercise
executives go through in terms of business planning can be very
enlightening for the executive team and the rest of the organization. It is
a chance for executives to meet to discuss all of the possibilities that lie
ahead and to work to eliminate issues which dragged down performance.
Undoubtedly there will be individuals who are very aggressive in terms
of moving forward, as well as others who believe only minor tweaks to
the status quo will suffice. Every team member has a point-of-view, and
it is important that everyone's point is heard, discussed, debated and
resolved.
Following the five steps provides PSOs with a much better chance of
moving forward successfully. It is critical the executive team take
advantage of information resources to gain a quantitative insight into
performance, as well as listening to the opinions of team members to
gain a qualitative insight. Now is the time to make it happen!