KPIs for Professional Services Organizations

2011 Cardinal Point Solutions - Proprietary and Confidential

Killer KPIs for

Professional Services Organizations

Raman Singh Oracle

Bill Gibbard Cardinal Point

Jeanne Urich SPI Research

Oracle OpenWorld October 4, 2011

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

reserved.

Confidential Oracle Internal

Program Agenda

Brief Industry Perspective

Killer KPI Discussion

Killer KPIs

Performance Levers

Benchmarks

Turning Data into Intelligence

Where to Go for More Information


reserved.


Common Characteristics Of Successful Professional Services Firms

Source: SPI Research

Competitive Differentiators

Clear and compelling strategy

Focus on revenue, margin and cost

Optimized financial, contractual and IT operating processes

Attract, hire, retain and motivate high quality staff

Tools to schedule, deploy & measure quality of service delivery

Communicate effectively to generate and close business

Service Performance Pillars


reserved.


Why Killer KPIs Matter Examples Of What Companies Are Achieving

A 17 billion dollar organization increased sales force productivity

by over 100%

A 500 million dollar company improved its customer satisfaction

rating from 42% to over 80%.

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

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%

Client Relationships

Service Execution

Finance & Operations

Human Capital


reserved.


Oracle In Professional Services

9 of the top 10 global IT services firms

run Oracle Applications

8 of the top 10 Best Firms to Work For

in Consulting Magazine run Oracle

Applications

27 of the top 35 most innovative

consulting and business services firms

run Oracle Applications

10 of the top 10 companies in the

business services industry by market

cap run Oracle Apps

16 of the top 20 most innovative

business services firms run Oracle

Applications

10 of the top 10 of the worlds top

outsourcing service providers run Oracle

Applications

Consulting Services Business Services

http://www.google.com/imgres?imgurl=http://www.devtechnology.com/images/EDS-HP.jpg&imgrefurl=http://www.devtechnology.com/schedules/edsites-2s.aspx&h=395&w=832&sz=80&tbnid=xegOj2lMRpblvM:&tbnh=68&tbnw=144&prev=/images?q=EDS+logo&zoom=1&q=EDS+logo&hl=en&usg=__UaQ711321tdzOqP19ievTTnnrYc=&sa=X&ei=QNswTf_qIpH4sAOU0In_BQ&ved=0CBkQ9QEwAQhttp://en.wikipedia.org/wiki/File:McKinsey_and_Company_Logo_1.svghttp://en.wikipedia.org/wiki/File:Ernst&young_logo.svghttp://en.wikipedia.org/w/index.php?title=File:Accenture2010.tif&page=1http://en.wikipedia.org/wiki/File:KPMG.svghttp://upload.wikimedia.org/wikipedia/commons/5/51/IBM_logo.svg


reserved.


Program Agenda



Killer KPIs

Performance Levers

Benchmarks




Best Practice Solutions for

Project-Centric Organizations

Oracle Fusion PPM

PeopleSoft ESA

OBIEE Project

Analytics

www.CardinalPointSolutions.com


GL

Pro

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ype

Custo

mer

Pro

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Resourc

e T

ype

Activity

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Yes, right in your ERP!

Embedded Analytics

Alerts

Put your time and attention where it needs to be

Exception Based Reporting

Drill from the analytic to resolve the issue

Actionable Analytics

Service Performance Insight www.spiresearch.com

Copyright 2011 SPI Research. All rights reserved. Not for distribution.

SPISPIResearchResearch

People

People

Pro

cess

Pro

cess

CapitalCapital

Industry-leading PS ResearchCore to our portfolio




People

People

Pro

cess

Pro

cess

CapitalCapital

Supply Resources Recruiting

Training and Ramping

Utilization

Retention

Revenue Sales campaigns, pipeline, service mix, client mix

Pricing, scope change, billable hours, labor mark-up

Demand Solutions Client Requirements

Solutions Portfolio

Marketing and Sales campaigns

Costs Service development investments

Billable and non-billable resources

Project costs

Overhead costs SG&A, IT

Best in Class PSOs Balance Supply and Demand




People

People

Pro

cess

Pro

cess

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Killer KPIs

Revenue Sales Pipeline

Backlog

Bid/Win ratio

Revenue per person

Costs

Fully loaded cost per person

Subcontractor expense

Overhead cost SG&A, IT

Discretionary spending

$

Best clients & services

On-time, on-budget

References

Days Sales Outstanding

Billable headcount

Billable utilization

Realized bill rates by skill level

Attrition

Workforce Plan





People

People

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cess

Pro

cess

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Performance Levers

Revenue

High quality leads

Robust Sales Pipeline

Top Clients, top services

Installed base up-sell

Accurate estimates

Billable Utilization Improve Rates

Limit discounting

Costs

Virtual Workforce

Billable to Non-Billable headcount

Loaded costs per person

Subcontractor margin

Discretionary spending

Limit Overhead




People

People

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cess

Pro

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CapitalCapital

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%

Employee Annual Attrition 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%

14

Attract, motivate and retain top talent

Virtual workforce

Career Building fast on-boarding and ramping

Reduce Attrition

Skill building, training, mentoring




People

People

Pro

cess

Pro

cess

CapitalCapital

Service Execution Top 20


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%

Average Project Overrun 8.8% 12.6% 30.8%

A Standardized Delivery Methodology is used 81.3% 55.5% 46.4%

15

Invest in quality control PMO, methodology

Complete projects on-time

Consider remote service delivery virtual workforce

Standardize project delivery




People

People

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cess

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Finance & Operations Top 20


Year-over-Year change in PS Revenue 20.0% 6.3% 217.0%

Annual Revenue per Employee $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%

Percent of Annual Revenue Target Achieved 101.3% 88.7% 14.2%

16

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




People

People

Pro

cess

Pro

cess

CapitalCapital

Profit Drivers

Profit

Bill Rate

Hours

Overhead

Labor Cost

Revenue

Cost

Move to more strategic services

Improve Sales and Marketing Effectiveness

Focus on resource mgmt.

Focus on high-growth markets & clients

Hire and invest in superior skills

Superior client results drive repeat business

Right people, right projects, right time

Improve subcontractor and labor margin

Quality Management on-time, on-budget

Reduce overhead

Use technology to reduce cost

Manage investment in new services

17




People

People

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cess

Pro

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Income Statement - Improve your Bottom Line!

Income Statement Top 20 All

Others Advantage

Direct gross PS revenue 81.1% 58.7% 38%

Indirect gross revenue + Pass thru 14.4% 34.2% -123%

Total reimbursable expense

revenue 4.5% 7.1% -37%

Total Revenue 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%

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




People

People

Pro

cess

Pro

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CapitalCapital

Small Improvements, Big Results!

$

Revenue Sales productivity +10% ~

$300K

Utilization +1% ~ $2 3K pp

Bill Rate +10% ~ $14K pp

Costs

Reduce overhead

Improve sub margin

Reduce non-billable expense

target $2500 pp/qtr

Reduce DSO 10 days ~.4%

Increase service attach rate

1% ~ $200-500K revenue

increase

Installed base sales reduce

cost of sale

Reduce admin. hours 1

hr/week ~ $10K pp/year

Attrition ~ $150K per

person

Workforce Plan





People

People

Pro

cess

Pro

cess

CapitalCapital

Balanced Performance

50%

70%

P4 P5 P6 P12 P9 P8

Utilization

30

80

P4 P5 P6 P12 P9 P8

DSO

0

5

10

0 2 4 6 8 10

Project Portfolio

Schedule

20




People

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CapitalCapital

Join the Research

21

Participate in the research and receive a free report

($995 value)

www.spiresearch.com/survey/2012psmb/2012psmbOracle.htm

2011 Results Core Financial Solution


Reporting

^NOT


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


Bill Rate

Cost

Bid-to-Win

Profits

Delivery

Client Satisfac

tion


Customer

Opportunity

Pipeline

Project Financials

Project Resources

Methods and Tools

Company PL

Company Balance Sheet

User Interactions / System Interactions


Kindle 3G

Raffle

PPM Pavilion 3547 Moscone West

across aisle from

Oracle DEMOgrounds

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

Customized Demo Offerings

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


reserved.


Program Agenda



Killer KPIs

Performance Levers

Benchmarks




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

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.

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


reserved.


Oracle Project Analytics Complete Solution for Project Business Lifecycle Reporting

ORACLE PROJECT ANALYTICS

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

Integrated security model with Oracle ERP suites

Significantly speeds time to value and lowers TCO compared to custom data warehouses


reserved.


Q&A


reserved.


To Learn More

www.oracle.com

Oracle Business Intelligence Solutions

www.oracle.com/us/solutions/ent-performance-bi/index.html

Oracle Insight Program

www.oracle.com/insight

System Integration

Strategic Consulting

Assessments

www.cardinalpointsolutions.com

Business Performance Acceleration

Business Transformation

Benchmarking

www.spiresearch.com


People

People

Pro

cess

Pro

cess

CapitalCapital

http://www.oracle.com/us/solutions/ent-performance-bi/index.htmlhttp://www.oracle.com/us/solutions/ent-performance-bi/index.htmlhttp://www.oracle.com/us/solutions/ent-performance-bi/index.htmlhttp://www.oracle.com/us/solutions/ent-performance-bi/index.htmlhttp://www.oracle.com/us/solutions/ent-performance-bi/index.htmlhttp://www.oracle.com/insighthttp://www.cardinalpointsolutions.com/http://www.spiresearch.com/


Bill Gibbard Managing Director [email protected]

Jeanne Urich Managing Director

[email protected]

Documents

KPIs for Professional Services Organizations