"Weathering the Storm":
Technology Services Companies Need to Focus on Cost Control and Revenue Generation

by Gerry Smith

Following the economic downturn and the market swings, a number of technology services related companies have downsized, merged, or consolidated, leaving major 'company saving' projects uncompleted.

While technology seems to have hit a bad patch and there is tremendous uncertainty about its viability, this is a critical time when many IT services organizations are forced to review their business models, streamline operations and consolidate their talent pool.

The winners in the current economy will be those who can reduce costs, optimize their use of resources, provide high-quality services and products, and respond most effectively to customer demands.

Downturn does not mean downtime
Organizations should utilize this time to review performance and take necessary steps to improve business processes:

* Prioritize IT spending. Examine technology spending and look for technologies that will add value, facilitate customer relationships, and contribute to the company's bottom line.
* Review partnerships. Ensure the IT companies you partner with have a proven business model and stable customer base and products.
* Evaluate customer strategy. Make certain your CRM processes facilitate real interaction with your customers. Including customers in the service delivery process can help eliminate problems before they get out of control.
* Overhaul financial management processes. Ensure management has an enterprise view of budgets, sales, gross margins, and work in progress. Use this information to increase billing and invoicing efficiency in order to improve cash flow.
* Improve resource utilization. Understanding the skills, preferences and availability of your resource pool, ensures better staffing of projects to ensure that deadlines are met and that customers are satisfied.

Managing for greater efficiencies
Automation is key for helping technology services companies deal with economic realities. Executive management can realize greater efficiencies of cost, time and productivity by integrating their processes.

Improving the sales cycle and service delivery
The sales team can develop and implement a methodology. They can also accurately and more easily manage the sales pipeline. The services team has a better understanding of projects coming up in the future and are able to improve planning and resource utilization. Better access to knowledge also means that over and above meeting client deadlines, the services team is working hard to meet or exceed client expectations.

Executive views of company-wide performance
Executive management needs better access to Enterprise wide performance metrics impacting revenue and profitability. Managers have an indispensable window in to their overall operations in order to make real-time business decisions.

Reduced costs
Technology services companies can also realize tremendous cost savings through reduced administration and data-entry time and errors. Organizations can realize savings of as much as 70 percent on time spent in the areas of sales, project planning and scheduling and engagement administration. Automation has an impact on every stakeholder in the organization from the bottom to the top. Consultants spend less time on administrative tasks and have easier and instant access to best practices, competitive information or any other knowledge item.

Improved resource utilization leads to improved revenues
Organizations can increase operational productivity by freeing up billable resources. On an average IT services organizations can realize an approximate increase of 4 percent in revenues per employee in a year through the capture of lost time and expenses and improved resource utilization.

Eliminate lost revenue from missing T&E data
The finance department can eliminate lost billable time and expenses, shorten invoicing cycles and ensure that invoices are accurate and timely. Also, accurate revenue recognition calculations ensures that services organizations calculate their revenues, using the method which is most applicable to their business, quickly and with confidence that the numbers will be defendable.

It is not easy to battle the economic slowdown, but technology services companies can use this time efficiently to consider their business processes and software investments. As you focus on operational performance, maintaining customer relationships and optimizing resources, consider business management software that can have a rapid impact on revenue generation; cost control and ultimately profitability.


Gerry Smith is President and CEO of Changepoint Corporation. Changepoint provides comprehensive Web-based professional services automation (PSA) solutions for technology services organizations. IT professional services organizations such as Callisma, Dell Technology Consulting and CIBER, and IT departments such as BG&E and Integris-Health use Changepoint to automate and integrate their business processes, enabling them to manage their people, projects and budgets more effectively. Headquartered in Canada, Changepoint has offices in the United States, United Kingdom, France and Germany. For additional information, please visit our website at www.changepoint.com .

More articles on technology in The CIO Refresher and e-business in The CEO Refresher Archives

See also: Strategies and Processes for a Changing Economy by Dana Baldwin | A Strategic Approach to Cost Reduction by Derek F. Martin | Survival Strategies for Slow Seasons by Anne Thornley-Brown

   


Copyright 2001 by Gerry Smith. All rights reserved.

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