"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
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.
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
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