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.