KPIs For Professional Services Organizations

Killer KPIs for
Professional Services Organizations

Raman Singh Oracle
Bill Gibbard Cardinal Point
Jeanne Urich SPI Research
Oracle OpenWorld October 4, 2011
2011 Cardinal Point Solutions - Proprietary and Confidential
Program Agenda
Brief Industry Perspective
Killer KPI Discussion
Killer KPIs
Performance Levers
Benchmarks
Turning Data into Intelligence

Where to Go for More Information
Copyright 2011, Oracle and/or its affiliates. All rights

reserved.
Confidential Oracle Internal
Common Characteristics Of Successful Professional

Services Firms
Competitive Differentiators
Service Performance Pillars

Source: SPI Research
3

reserved.
Clear and compelling strategy
Attract, hire, retain and motivate

high quality staff
Tools to schedule, deploy &

measure quality of service delivery
Communicate effectively to
generate and close business
Focus on revenue, margin and cost

Optimized financial, contractual
and IT operating processes
Why Killer KPIs Matter Examples Of What Companies Are

Achieving
Client Relationships
A 17 billion dollar organization increased sales force productivity

by over 100%
Service Execution
A 500 million dollar company improved its customer satisfaction

rating from 42% to over 80%.
Finance & Operations
A billion dollar company reduced its Days Sales Outstanding

(DSO) by over 50% from 70 days to under 40, and increased
speed for generating invoices 7 fold
Human Capital
A 100 million dollar organization grew revenue by 33%, and

gross margins by 35%. On the on-boarding side, it improved
effectiveness of new consultant recruits by 50%

reserved.
Oracle In Professional Services

Consulting Services
9 of the top 10 global IT services firms
run Oracle Applications
Business Services
10 of the top 10 companies in the

business services industry by market
8 of the top 10 Best Firms to Work For cap run Oracle Apps
16 of the top 20 most innovative
in Consulting Magazine run Oracle
business services firms run Oracle
Applications
Applications
27 of the top 35 most innovative
10 of the top 10 of the worlds top
consulting and business services firms
outsourcing service providers run Oracle
run Oracle Applications
Applications

reserved.
Program Agenda
Killer KPIs
Performance Levers
Benchmarks


reserved.
Best Practice Solutions for

Project-Centric Organizations
Oracle
Fusion
PPM
PeopleSoft
ESA
www.CardinalPointSolutions.com
OBIEE
Project
Analytics
Project
Project Type
Customer
Product
Resource Type
Activity Type
GL
Embedded Analytics
Yes, right in your ERP!
Exception Based Reporting
Alerts
Put your time and attention where it needs to be
Actionable Analytics
Drill from the analytic to resolve the issue
www.spiresearch.com
Copyright 2011 SPI Research.

All rights reserved. Not for distribution.
ss
ce
Pro
Service Performance Insight
Pe
op
le
Industry-leading PS ResearchCore to our portfolio
SPI
Research
Capital
Best in Class PSOs Balance Supply and Demand

Revenue
Sales campaigns, pipeline, service mix, client mix

Pricing, scope change, billable hours, labor mark-up
Supply Resources
Demand Solutions
Recruiting
Training and Ramping
Utilization
Retention
Client Requirements
Solutions Portfolio
Marketing and Sales campaigns
Costs
www.spiresearch.com

ss
ce
Pro
Pe
op
le
Service development investments

Billable and non-billable resources
Project costs
Overhead costs SG&A, IT
SPI
Research
Capital
Killer KPIs
Workforce Plan
Costs
Fully loaded cost per person

Subcontractor expense
Overhead cost SG&A, IT
Discretionary spending
www.spiresearch.com
Billable headcount
Billable utilization
Realized bill rates by skill level
Attrition
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ce
Pro
Best clients & services
On-time, on-budget
References
Days Sales Outstanding
Pe
op
le
Revenue
Sales Pipeline
Backlog
Bid/Win ratio
Revenue per person
SPI
Research
Capital
Performance Levers
Billable Utilization
Improve Rates
Limit discounting
www.spiresearch.com
Virtual Workforce
Billable to Non-Billable headcount
Loaded costs per person
Subcontractor margin
Discretionary spending
Limit Overhead
ss
ce
Pro
Costs
Pe
op
le
Revenue
High quality leads
Robust Sales Pipeline
Top Clients, top services
Installed base up-sell
Accurate estimates
SPI
Research
Capital
Human Capital Alignment Top 20

Key Performance Indicator (KPI)
Top 20
All Others
Advantage
Executive real-time enterprise visibility
81.3%
64.3%
26.4%
% of Employees Billable or Chargeable
79.5%
69.9%
13.7%
5.6%
6.9%
18.9%
Employee Billable Utilization
72.8%
66.9%
8.7%
Billable Hours per person
1,505
1,410
6.7%
Employee Annual Attrition
Attract, motivate and retain top talent

Virtual workforce
Career Building fast on-boarding and ramping
Reduce Attrition
Skill building, training, mentoring
www.spiresearch.com
14

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ce
Pro
Pe
op
le
SPI
Research
Capital
Service Execution Top 20

Top 20
All Others
Advantage
PSA is Integrated
70.6%
42.4%
66.5%
Projects Canceled
1.1%
2.1%
45.3%
Projects Delivered On-time
86.0%
77.1%
11.6%
Frequency of Project Overruns
13.3%
17.9%
25.9%
8.8%
12.6%
30.8%
81.3%
55.5%
46.4%
Average Project Overrun
A Standardized Delivery Methodology is used
Invest in quality control PMO, methodology

Complete projects on-time
Consider remote service delivery virtual workforce
Standardize project delivery
www.spiresearch.com
15

ss
ce
Pro
Pe
op
le
SPI
Research
Capital
Finance & Operations Top 20

Top 20
Year-over-Year change in PS Revenue
All Others
Advantage
20.0%
6.3%
217.0%
$215
$149
44.0%
Project Margin for Time & Materials Projects
44.3%
34.0%
30.2%
Quarterly Revenue Target in Backlog
53.7%
43.6%
23.2%
101.3%
88.7%
14.2%
Annual Revenue per Employee
Percent of Annual Revenue Target Achieved
Focus on high-growth markets, clients, solutions

Align Sales and Delivery to enhance resource management
Accurate estimates, risk and contract management
Backlog is the fuel for growth
www.spiresearch.com
16

ss
ce
Pro
Pe
op
le
SPI
Research
Capital
Profit Drivers
Revenue
Move to more strategic services

Improve Sales and Marketing Effectiveness
Focus on resource mgmt.
Hours
Focus on high-growth markets & clients

Hire and invest in superior skills
Superior client results drive repeat business
Bill Rate
Cost
Right people, right projects, right time

Improve subcontractor and labor margin
Quality Management on-time, on-budget
Labor Cost
Reduce overhead
Use technology to reduce cost
Manage investment in new services
Overhead
www.spiresearch.com
17

ss
ce
Pro
Pe
op
le
Profit
SPI
Research
Capital
Income Statement - Improve your Bottom Line!

All
Others
Direct gross PS revenue
81.1%
58.7%
38%
Indirect gross revenue + Pass thru
14.4%
34.2%
-123%
4.5%
7.1%
-37%
100.0%
100.0%
100%
Total Direct Labor expense
44.9%
46.2%
-16%
Total sub./outside consultant

expense
11.0%
21.0%
-48%
All other expenses
20.4%
26.7%
-109%
Total Expenses
76.3%
93.9%
-19%
EBITDA %
23.7%
6.1%
290%
Total reimbursable expense

revenue
Total Revenue
www.spiresearch.com
18
Increase Sales Effectiveness

Increase billable utilization
Price Management
Improve subcontractor margin
Capture all re-billable expense
Use best available resources

Create virtual work environment
Resource mgmt.
Reduce SG&A (facilities)
Reduce non-billable expense
Improve cash flow - lower
DSO

ss
ce
Pro
Advantage
Pe
op
le
Top 20
Income Statement
SPI
Research
Capital
Small Improvements, Big Results!
Costs
Reduce overhead
Improve sub margin
Reduce non-billable expense
target $2500 pp/qtr
www.spiresearch.com
Workforce Plan
Reduce admin. hours 1
hr/week ~ $10K pp/year
Attrition ~ $150K per
person
ss
ce
Pro
Reduce DSO 10 days ~.4%
Increase service attach rate
1% ~ $200-500K revenue
increase
Installed base sales reduce
cost of sale
Pe
op
le
Revenue
Sales productivity +10% ~
$300K
Utilization +1% ~ $2 3K pp
Bill Rate +10% ~ $14K pp
SPI
Research
Capital
Balanced Performance
Utilization
10
Project Portfolio
70%
0
0
50%
P4
P5
P6 P12 P9
P8
10
Schedule
DSO
80
30
P5
P6 P12 P9
www.spiresearch.com
20

ss
ce
Pro
P8
Pe
op
le
P4
SPI
Research
Capital
Join the Research

Participate in the research and receive a free report
($995 value)
www.spiresearch.com/survey/2012psmb/2012psmbOracle.htm
www.spiresearch.com
21

ss
ce
Pro
Pe
op
le
2011 Results Core Financial Solution
SPI
Research
Capital
^ NOT
Reporting
Dont track 250 Metrics
Easy to Get Metrics First

implement by major business process stream
Include Lagging and Leading Metrics
Executive Sponsorship
agreement top down
agreement on having transparency
Empower Operational Managers

authority to produce results
measure interrelated metrics

Bid-toWin
Client
Satisfac
tion
Cost
Delivery
Bill Rate
Profits
User Interactions / System Interactions
Customer
Opportunity
Pipeline
Project
Financials
Project
Resources
Methods and
Tools
Company PL
Company
Balance Sheet
Customized Demo Offerings
PPM Pavilion
Project Costing, Project Billings and Project Contracts

Project Analytics, Controls and Reconciliations
PeopleSoft Workcenter Pages
Managing Programs and Resources
Proposal Management
Services Procurement
PSO and Software Industry Solutions
Kindle 3G
Raffle
3547 Moscone West

across aisle from
Oracle DEMOgrounds
Session #
Title
Time / Location
17480
Oracle Fusion Project Portfolio Management: New

Tools of the Trade
10/4 5:00pm
Moscone West 3018
18026
Oracle Fusion Financials: Innovations in Financial

Reporting
10/5 10:15am
Moscone West 3016
18580
Metrics That Matter for Your Business: Analytics for

Oracle Fusion Applications
10/5 1:15 pm
Moscone West 3016
21060
Oracle Project Analytics for PeopleSoft
10/6 12:00pm
Moscone West 3012
Program Agenda
Killer KPIs
Performance Levers
Benchmarks

28

reserved.
Oracle Delivers Quick Time To Benefit For Killer KPIs

Business Intelligence Applications
Gain visibility and insight into business performance, processes, and customers
Respond faster to opportunities and threats
Gain a single, consistent view of enterprise information across functions & data
sources
We have had boundless success with reporting using Oracle Business
Intelligence Enterprise Edition. The idea of delivering reports faster and with
less expensive resources has become a reality for us. Replaced outdated
legacy reporting tools, accelerating report creation from several weeks to a
day or two
The unified applications infrastructure of Oracle E-Business Suite Release 12,
Oracle VM, and Oracle Business Intelligence gives us a single source of
reliable information, improving integration among applications and
departments.
29

reserved.
Oracle Project Analytics

Complete Solution for Project Business Lifecycle Reporting
ORACLE PROJECT ANALYTICS
30

reserved.
Pre-built warehouse & ETL: project

funding, agreements, budgets, costing,
billings, revenue, performance and
profitability data
Library of over 100 pre-built intelligence

dashboards, reports and alerts
Over 500 pre-built metrics
Significantly speeds time to value and

lowers TCO compared to custom data
warehouses
Integrated security model with Oracle

ERP suites
Q&A
31

reserved.
To Learn More
s
es
oc
Pr
Pe
op
le
www.oracle.com
Oracle Business Intelligence Solutions
www.oracle.com/us/solutions/ent-performance-bi/index.html
Oracle Insight Program
www.oracle.com/insight
SPI
Research
Capital
System Integration
Strategic Consulting
Assessments
www.cardinalpointsolutions.com
32

reserved.
Business Performance Acceleration

Business Transformation
Benchmarking
www.spiresearch.com
Bill Gibbard
Managing Director
BGibbard@CardinalPointSolutions.com
Jeanne Urich
Managing Director
Jeanne.Urich@SPIResearch.com

KPIs For Professional Services Organizations

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KPIs For Professional Services Organizations

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Killer KPIs for

Professional Services Organizations

Turning Data into Intelligence

Copyright 2011, Oracle and/or its affiliates. All rights

Confidential Oracle Internal

Common Characteristics Of Successful Professional

Service Performance Pillars

Copyright 2011, Oracle and/or its affiliates. All rights

Confidential Oracle Internal

Clear and compelling strategy

Attract, hire, retain and motivate

Tools to schedule, deploy &

Focus on revenue, margin and cost

Why Killer KPIs Matter Examples Of What Companies Are

A 17 billion dollar organization increased sales force productivity

A 500 million dollar company improved its customer satisfaction

Finance & Operations

A billion dollar company reduced its Days Sales Outstanding

A 100 million dollar organization grew revenue by 33%, and

Copyright 2011, Oracle and/or its affiliates. All rights

Confidential Oracle Internal

Oracle In Professional Services

10 of the top 10 companies in the

Copyright 2011, Oracle and/or its affiliates. All rights

Confidential Oracle Internal

Turning Data into Intelligence

Copyright 2011, Oracle and/or its affiliates. All rights

Confidential Oracle Internal

Best Practice Solutions for

2011 Cardinal Point Solutions - Proprietary and Confidential

2011 Cardinal Point Solutions - Proprietary and Confidential

Copyright 2011 SPI Research.

Service Performance Insight

Industry-leading PS ResearchCore to our portfolio

Best in Class PSOs Balance Supply and Demand

Sales campaigns, pipeline, service mix, client mix

Copyright 2011 SPI Research.

Service Performance Insight

Service development investments

Fully loaded cost per person

Service Performance Insight

Service Performance Insight

Human Capital Alignment Top 20

Executive real-time enterprise visibility

% of Employees Billable or Chargeable

Employee Billable Utilization

Billable Hours per person

Employee Annual Attrition

Attract, motivate and retain top talent

Copyright 2011 SPI Research.

Service Performance Insight

Service Execution Top 20

Projects Delivered On-time

Frequency of Project Overruns

Average Project Overrun

A Standardized Delivery Methodology is used

Invest in quality control PMO, methodology

Copyright 2011 SPI Research.

Service Performance Insight

Finance & Operations Top 20

Year-over-Year change in PS Revenue

Project Margin for Time & Materials Projects

Quarterly Revenue Target in Backlog