Professional Services Automation: At what stage of my business growth should I invest in a PSA system?

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    Written by HarmonyPSA on 2014-10-15 Last updated 2018-07-09 - 42 minute read

In order to grow your IT business you need the right business management systems in place to allow for growth. Without the right systems you may find it hard to stay on top of your financial position, inefficiencies in communication between parts of the business may grow and errors may occur as a result of manual data handling. A good Professional Services Automation solution (PSA), or business management system, will allow you to get organised, manage your tickets, timesheets and resource allocation, enable clear communication across all your staff, reduce errors and, most importantly, give you the information you need to put you in control of every part of your business.

 However, implementing a new business system is time consuming and can be costly, you don’t want to over complicate your business processes with unnecessary complexity. So, what is the right time to start thinking about making the change from spreadsheets and home-grown business systems? At what point can you ensure that you will see a good return on your investment? To try and help companies figure out the level of business management functionality they need we have identified 7 key stages of growth and mapped the system capabilities required to each level (you may have seen this discussed in a previous blog I wrote some time ago).  First, identify your stage of growth and then use our Capability Map as a functional checklist.
 
Stages of growth
The diagram below illustrates the key stages companies go through from incorporation to a multinational corporation.  Not all companies get there and not all stages are discrete, however, in general, this is the journey to success most businesses strive for:
 
 
Seven stages of business growth

 

 

 

The main aspects of each stage, when considering your control environment:

 
1.     Start-up
The system support for this stage is almost non-existent.  It’s helpful to have an accounting system but if you can’t hold everything else in your head, spreadsheets will do.  Invoices need to look professional, but this is easily accomplished with word documents.  Enjoy this stage, the world gets harder.
 
2.     Growth
Customers are signing up and going live and the operating model is shifting focus to multi-customer support and regular billing.  This shift in emphasis delivers contact management and data discipline requirements
 
3.     Breakout
At this stage you should have a solid customer base and revenue will be less volatile as an increasing percentage is based on recurring payments.  To manage things you need a solid contracts database and sales support tools.  Also, customer profitability starts to matter as does effective time management
 
4.     Investors
You’re running a successful technology business but to fully exploit your market position you may need some external investment.  Any investors will want to see clear management reporting and the due diligence process will through up any weakness in control you have been living with
 
5.     Overseas
The product is successful at home and opportunities exist to drive out into overseas markets.  The reseller route has immediate attractions, bringing rapid entry, local market knowledge, support in the time zone, an existing sales force and low cost of entry. Alternatively, you may open an overseas office requiring more management time and far better MIS.  Again, this is a key growth stage from a control perspective
 
6.    Roll Up
Whether you are the one acquiring another business, or have been acquired, the needs of consolidation are many and complicated.  At this point, a well-designed control environment is the key success factor above all others
 
7.     Enterprise
Overcome all these stages and you may end up with a global enterprise.  Get to this point without an integrated control environment and you will be missing revenue, sales opportunities, control and visibility across the enterprise
 
The table below summarises the control system needs of each stage.  Once you’ve decided which stage best reflects where you are in your own journey, use this grid to checkout your own control solution sophistication and confirm that you are on track for further growth:
 

Capability Map

 
Capability/Stage
1
2
3
4
5
6
7
Finance
Basic Accounts
             
Deferred Revenue Control
             
Contract Management
             
Central Product Pricing
             
Purchase Orders
             
Consolidated MIS
             
Multi-currency Accounts
             
Client Master Data
             
Multi-entity Accounts
             
Sales
Basic CRM
             
Pipeline
Reporting
             
Quote/Order Management
             
Target
Reporting
             
Campaign
Management
             
Revenue
Recognition
             
Reseller
Management
             
Multi-tenant
CRM
             
Global
Reporting
             
Operations
Billable Only Recording
             
R&D
Claim Back-up
             
Incident
Management
             
Expenses
             
All
Time Recording
             
Project
Budgeting
             
Formal
Billing Control
             
Support
Time Tracking
             
WIP
Accounting
             
Inter-company
Sales
             
Capability Legend
No capability required
 
Essential to support growth
 
Useful but not essential
 
Control gap impeding growth
 
                   
 

Getting the control environment right and fit for purpose is a key aspect of running a successful technology business and making the most of the growth opportunities presented by the products you sell.  If you are missing control solutions for the processes above, this is a gap that should be addressed at the earliest opportunity. I hope you find this analysis useful in figuring out your requirements, if so, get in touch and we'll be happy to talk to you about how HarmonyPSA might be able to fill any capability gaps you have uncovered.

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See also:

At what stage of my business growth should I invest in a PSA system?
How to build a business case for a PSA solution
Implementing professional services automation - where to start?
The 5 golden rules for PSA implementation success
Assessing the ROI for implementing a Professional Services Automation (PSA) solution
Beyond Professional Services Automation – Are new breed PSA systems are changing the way technology providers do business?

 

About the Author: Harmony Business Systems Ltd (HBS) is the company behind HarmonyPSA, the most complete cloud PSA software on the market. Developed with functionality to cater for even the most complex needs of MSPs, VARs, ISVs and Professional Services organisations, HarmonyPSA truly is the next generation of PSA systems. HBS is an independent company based in the UK. Follow HarmonyPSA on or LinkedIn


Tags: Business, business growth, implementing a psa solution, invest in a psa system, invest in psa, Professional Services Automation, PSA, General PSA, psa system

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