WHAT’S NEW
MANAGEMENT FOR DESIGN Winter 2017
A guide to project-based success
Leadership, efficient business systems and clear goals are the key ingredients to business growth. Great leaders will have a fully rounded 3D perspective of their business; they understand that while clients are important it is equally important to focus on being a great leader. It is about both doing business and running a business. According to the University of Cambridge Judge Business School there are five topics that are vital to the success of any professional service firm. These five topics are: strategy and differentiation, leadership, people management, client service and business development. Key to the success in a growing professional service firm is transparency and action, turning concepts and ideas into specific actions that will improve individual, practice and firm performance. The key signposts for any growing project-based firm must include enterprise resource planning (ERP). You should ensure your ERP system is set up for your project-led business infrastructure. Finding a solution that connects all aspects of the business both front and back end will increase efficiency, decrease confusion and create accurate proposals that turn into projects and invoices.
1. Project-based firms need a project-based ERP that drives billable capacity and project profitability. An ERP system that best suits professional service firms will avoid complex and costly customisation, enabling quicker growth and immediate tangible value. 2. Having a completely connected and well-designed planning solution ensures low maintenance, as you will only need to look after the one system. Using a cloud-based solution will further lower maintenance costs as maintenance, upgrades and security is handled by a vendor whose focus is solely on an impenetrable data centre. 3. You want to find a proven professional services project-based ERP system that is easily adapted. The system should allow you to personalise views, create your own reports and add new workflows as necessary. 4. Project-based firms are only as good as their leaders. To successfully grow, those leaders need to have three-dimensional vision, the knowledge on how to lead and which paths they should take. Leaders don’t just wear one hat or have one responsibility; they must be unique and strategic, manage employees, manage clients and manage business systems.
M4D networking event with guest speaker Andrew Leoncelli
On Wednesday 21st June, we have the pleasure of hosting our latest networking event — an insider’s view of the Property Market — with guest speaker Andrew Leoncelli. The event will be a great opportunity to join colleagues and business leaders across the architecture, engineering and design sectors to gain insight into the current and predicted property market.
Andrew single-handedly established the Residential Projects business line for CBRE in Victoria in 2010. He has extensive experience working with large listed Australian developer clients as well as some of Asia’s largest residential developers from Singapore, Malaysia and mainland China. Andrew is currently managing a number of Melbourne’s highest profile and exciting residential projects including Australia 108. During the evening, he will share his insights into the procurement process, engaging the design team, the intricacies of collaboration and marketing and delivering the “highest residences in the southern hemisphere”. And what’s planned for the future! Drinks and canapes will be available throughout the night and it is set to be a great evening worth attending. If you have not yet reserved your place and would like to attend, please contact Director, Rob Peake at rpeake@m4d.com.au or call M4D on 03 9645 8834.
Winter Watch
Our selected must-watch video this quarter comes from Gartner Research and explores the world of Project and Resource Planning solutions specific to service firms. The speakers in this video go in depth on the full scope of solutions available and the problems that they solve as well as how they will improve your business performance. It is important to pick the right business management system for your enterprise and be able to use it effectively.
Businesses that effectively use integrated systems across all stages of the business lifecycle have been found to manage resources more effectively and thus improve margins. Stats show that businesses with a clear view of their business end-to-end have 25–30% better margins. Having the right business management system that can be used by both front and back end processes will help to improve productivity in all aspects of the business. By using a cloud based system you can expect 1.7 times the return on investment you would get from an on-premises system. This is because cloud based systems have more rapid and less disruptive upgrades saving money and increasing efficiency. A cloud-based system will also save you 20% on your IT costs, further improving your margins. Business management systems that are industry specific are able to handle vertical business practices and specific processing requirements negating the need for customisation or third party software to fill in the gaps. Regardless of size, all creative businesses can benefit from purpose-built solutions. The visibility they get when framed in the specific industry context gives them a competitive advantage.
Is your business secure in the face of cyber attack? The Australian Cyber Security Centre has reported that 90% of organisations in Australia encountered some form of attempted or successful cyber security compromise during the 2015–2016 financial year. This information combined with the recent global ransomware attacks proves that cyber security should be a priority for all businesses. We’ve created a checklist of the top 10 things you should be doing to protect your business. This short checklist ticks off the main issues you can address right now to keep your business safe. Download the checklist here.
MANAGEMENT FOR DESIGN
Cyber Security Checklist MANAGEMENT FOR DESIGN
Professional Services Benchmarking
Service Performance Insight, a global research, consulting and training organisation, has developed a professional service maturity model as a strategic planning and management framework. The core belief of the professional service maturity model is that professional service organisations achieve success through the development of five service pillars. These pillars are: •
Leadership
•
Client relationships
•
Human capital alignment
•
Service execution
•
Finance and operations.
For the past 10 years, Service Performance Insight has been surveying the professional services industries to give key insights into the overall landscape of these industries combined, regionally and individually. The survey is extremely comprehensive, and as such, so are the results. Here are our key takeaways from this year’s survey. Biggest challenge Interestingly for the past few years the top challenge for firms has not remained the same, the latest survey revealed that improving sales and marketing is the biggest challenge. Over the past three years the overall importance of these challenges has risen, reflecting competitive pressures, achieving revenue, maintaining targets and retaining top talent are all becoming more difficult for professional service firms. Many firms have experienced torrid growth and expansion over the past five years and now struggle to keep up as their infrastructure and culture haven’t grown at the same rate.
Biggest wins The results from the client relationships section of the survey revealed that the revenue from new clients was highest in the Asia Pacific region at 37.5%, indicating strong growth. The Asia Pacific region also had the highest bid-to-win ratio, percentage of referenceable clients, solution development effectiveness, service sales effectiveness and service marketing effectiveness. They also had the lowest sales cycle. All of these are good indications that the Asia Pacific market is growing and strong. The survey did however indicate that architecture and engineering firms had the smallest percentage of revenue from new clients but the highest percentage of repeat clients. Employee utilisation Human capital alignment continues to be a major challenge and significant improvement priority for professional services firms. The global economy, changing workforce dynamics and technology, in both our professional and private lives have changed the world of work. 27.5% of consultants now work primarily from home and 4.9% are contingent workers both on and offshore. The survey revealed an extremely strong correlation between employees’ performance indicators and business success, with almost all the best results coming from those working at the most successful firms. Interestingly, architecture and engineering firms had the highest employee billable utilisation. They also have the highest days to recruit and hire standard positions (69.1) but the lowest number of days for a new hire to be productive (41.4). Service execution There are several positive trends that have been observed over the last five years in the service execution section of the survey. The survey found that there is faster staffing, greater use of a structured delivery methodology, better on-time service delivery, fewer project cancellations and cost overruns. All of this has led to higher project margins. While this is all very positive, it was also found that the average price per project went down significantly, meaning it now takes more projects to maintain and grow annual revenue. Finance and Operations Service Performance Insight’s 2016 survey of professional service firm’s finances and operations revealed that architecture and engineering firms achieved 94% of their annual targets and 87% of their annual margin targets. They also had the most days of sales outstanding at 60 days, which is 20 more than most other service firms. The survey also found that architects and engineers have improved their profits year on year, they have also increased their revenue growth. However architects have reported the second highest level of general and administrative overhead, accounting for 17.1% of all their expenses. Contact us to discuss the survey results and see how your business measures up.
Consult Australia ASPAC Leaders Conference M4D Directors Rob Peake and Gordana Milosevska attended the Consult Australia ASPAC leaders conference from the 3–5 May. The conference provided them with a unique opportunity to network, debate and discuss relevant topics and issues with their peers from 25 different countries in the Asia-Pacific region. Over the three days they heard from nearly 50 speakers on topics ranging from succession planning, to the political outlook, to mental health in the workplace.
•
Succession: Charles Nelson told us that an exit strategy takes 10 years, so start planning! Look carefully at the levers affecting valuation of your business and invest in capital assets to increase value.
•
Cyber security: before the world was hit by the recent ransomware attacks, Aptify, a software technology & services company were already telling us that we need more secure passwords, restrictions on system admins, tested disaster recovery plans, and cyber insurance.
•
Mental health: speaker Karmal Sharma, Director of Rezilium and an RUOK ambassador, spoke about mental health becoming a growing issue in Australian workplaces. He believes that as we are in the business of people, it is important we are all able to improve our awareness of and response to mental health. In another session, Mental Health Commissioner Lucy Brogden, outlined the five key areas workplaces need to address: »»
smarter workplace design
»»
promoting and facilitating early support and intervention
»»
building a positive organisational resilience
»»
supporting recovery
»»
the awareness of mental illness and reducing stigma.
Consult Australia
Key messages
Consult Australia
(From left to right) Peter Geoghegan, Founder, Geotron Consulting Engineers; Gordana Milosevska, Director & Owner, Management for Design; Megan Motto, CEO, Consult Australia and Arthur Psaltis, Managing Director, Pritchard Francis. •
Technological disruption: AutoDesk discussed the severe lack of expenditure on R&D by architecture, engineering and construction firms. 30% of revenue at AutoCAD is spent on R&D, yet the rest of us are averaging 1%. With 65% of primary school students growing up into jobs that don’t exist yet it is important that AEC and creative businesses invest more to protect their businesses in the future.
•
Economic outlook: Hardy Dale, Chief Economist at the HIA presented insights into the economic outlook. While the global economy is unpredictable in the face of Brexit and Trump, and the tide is turning for the Australian construction industry, there are opportunities. New South Wales and Victoria are all about population growth and will continue to grow for at the least the next 4–5 years. There is a huge amount of government investment in infrastructure. Architecture firms can look forward to an increase in the need for commercial and retail developments as well as entertainment and recreation buildings — there’s a shortage of hotels in Melbourne, for example!
•
Gender equality: it was pointed out (again) just how unequal the male to female ratio is in engineering, architecture and associated professions. Currently out of all engineering graduates only 16% are female and only 12.4% of the engineering workforce are female. The ratio is better for architects, with 41% of graduates being female, yet only 21% of the workforce is female. On the day there was a significant proportion of businesses believing that this is an issue that needs to be addressed and are actively trying to advance equality across their businesses.
The conference had such a wide range of speakers and topics, overall the event was incredibly insightful and a great way to meet other key players in the industry.
READING LIST Fast Future John Doehring Over the next 25 years, grand-scale, “uber” change will profoundly transform virtually everything in our world. Amazing opportunities lie ahead for forward thinking and agile organisations, while killer threats await those unprepared or unwilling to change.
Your Unbeatable Business Louis Dharma Your Unbeatable Business is essential reading for every entrepreneur and business to thrive in this new hypercompetitive world marketplace. Listen to EVERYTHING Louis Dharma has to say as if your business depended on it, because it does. The world needs people to lead the way in our rapidly changing world.
Business Growth Manifesto Louis Dharma Do you want to create exponential growth in your business & leave your competition in your dust? This book includes the “magic” ratio you can use to grow ANY Business, the six policies to growth hack your business and explains how to double your business & crush your competition in the fastest time humanely possible.
Project Management in the Real World Elizabeth Harrin This highly accessible guide summarises over 250 years of experience from professional project managers. It contains a wealth of knowledge that can be applied in a short period of time and contains theory, international case studies and hints and tips on controlling budget, time, scope and people.
The Elegant Universe Brian Greene Brian Greene, one of the world’s leading string theorists, peels away layers of mystery to reveal a universe that consists of eleven dimensions, where the fabric of space tears and repairs itself, and all matter — from the smallest quarks to the most gargantuan supernovas — is generated by the vibrations of microscopically tiny loops of energy.
MANAGEMENT FOR DESIGN
Management for Design provides integrated business systems and services to the design industry across Strategy, Finance, Information Technology, Human Resource Management and Business Systems. By working with Management for Design our clients are enabled to focus on what they are great at and to control and build their businesses. For more information visit www.m4d.com.au or phone 03 9645 8834.
