Cultivation of Resources
On average, it takes services giant Electronic Data Systems Corp. five days to find the appropriate people and place them on a project. Now, the Plano, Texas, company is looking to the latest in PSA software to turn those days into minutes.
EDS earlier this month became one of the largest professional services companies to buy into the nascent market for PSA (professional services automation) software when it signed a deal with Evolve Software Inc. worth $6 million initially. But the deal between Evolve and the e.Solutions business unit of EDS, which has 6,000 consultants globally, could grow to encompass other parts of EDS as well as become a reseller agreement.
EDS action follows that of Accentureformerly Andersen Consultingwhich late last year inked a multimillion dollar deal with Novient Inc. to use its PSA software for 75,000 consultants globally.
While the large services companies have legitimized the nascent PSA market with the weight of their presence, the market may not need all that much help. Aberdeen Group Inc. last week released a report that found that sales of PSA software suites last year grew by 223 percent, to $300 million. The report projects that by the end of 2004, it will be a $3 billion market.
The software clearly benefits professional services companies by helping to streamline their operations, thereby improving the bottom line. But the benefits extend to customers, too.
"Itll allow us to staff projects in a more timely fashion. Well know how many people and skill sets we are looking for and the vocation well in advance of signing a contract," said Dave Stevens, vice president of the U.S. Southwest region of the e.Solutions unit.
At the same time, "because well have that global database of all our resources, well be better positioned to get the best resource for the client from a skills standpoint," Stevens said.
Without PSA software, EDS resource managers use a range of techniques for tracking available consultants and their skill sets. The e.Solutions unit uses a Microsoft Corp. Access database that includes people, their availability and limited information on their skills. But some resource managers use spreadsheets to track consultants, and still others use whiteboards.
"Its pretty elementary in terms of maturity level. For 6,000 consultants globally, its too cumbersome," Stevens said.
Such practices typically translate into a disconnect between what the professional services companys salespeople promise and what the company can deliver.
"As a sales guy, I make certain promises for an engagement on time, on money and so on. Then EDS has to figure out how to start on time and end on time, given the resources already booked," said Dave Hofferberth, an analyst at Aberdeen Group, in Boston. "Thats one reason IT projects failpeople making promises that they cant meet."
With the PSA software, a salesperson can check the resource pool and "prebook the best people available for a project," Hofferberth said. Or the salesperson can see that the best people for a project will be available in three months and schedule the engagement to start at that time.
Evolves suite includes best-practices templates on how to propose an engagement.
The PSA tool allows the use of best practices in scoping, pricing and configuring a service so that the consulting company can propose what the customer wants and deliver it in a way thats on budget and on time, according to Evolve officials, in San Francisco.
Once a project has begun, PSA software can also be used by the service companys client to track its progress.
"The [client] can track time and money better. Often, you will see two months into the project youve spent 80 percent of the money and only accomplished 20 percent of the work. This lets you see things like this faster. Its a communication and collaboration tool," Hofferberth said.
In addition, PSA software possesses the potential to hasten the resolution of disagreements over invoices, which are common, according to Hofferberth. Billing is also integrated into the PSA software, permitting the customer to view invoices on the Web. Customers can drill down to get a breakdown of what deliverables are reflected in charges.
"The client can immediately mail back to the project manager at EDS and say, I have a disagreement with this cost, and the EDS project manager can see if they overbilled or if there needs to be a discussion," Hofferberth said.
With all the operational efficiencies promised by the software, companies such as EDS and Accenture should be able to reduce overhead. Whether that will translate into lower costs for customers is an open question.
"In our unit, were billing off of market rates that are competitive," said EDS Stevens, who expects the software to pay for itself "in a matter of months."
PSA software vendors maintain the biggest benefit comes in improved customer satisfaction, which they claim has never been very high for professional services companies, according to Evolve officials.
Satisfaction with PSA tools has been described as mediocre to poor, although no one has conducted a large, cross-industry study for professional services companies, according to the Information Technology Services Marketing Association, in Lexington, Mass.
"When Evolve talks about customer satisfaction being mediocre, I think theyre right. But were not sure if that applies to a KPMG [LLC]," said Julie Schwartz, vice president of research at ITSMA. "It would probably apply to a Scient [Corp.], Viant [Corp.] or Lante [Inc.], but dont paint the entire industry with one brush."