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Professional Services Insights Magazine 2012/13

The article discusses how professional services organizations (PSOs) must carefully manage their resources and processes to maximize profitability in challenging economic times. PSOs rely on billable hours from employees but clients are demanding more transparency and paying less. To maintain profits, PSOs must optimize staff utilization, accurately track billable hours, and prove their value to clients. Standardizing business processes can help PSOs execute efficiently and generate the profits needed for growth.

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Professional Services Insights Annual Magazine 2012
Contents 10 Key Attributes of a Successful Project Jacob Thaning, SVP of Global Consulting at Deltek, walks through the pitfalls and risks that are worth being aware of when working on large projects. 10 38 60 74 86 A New Way to Measure Value Gary Boomer, CEO of Boomer Consulting, discusses how value pricing within the accounting industry has become a proven alternative to effort-based pricing and a direct result of the changing, customer-driven marketplace. Building a Bridge to Growth in a Financial 'Earthquake' Rasmus Ødum, Executive Vice President of Danish Engineering consulting firm COWI, details how building solid foundations can help counteract seismic shifts in the global economy. Modernizing the Legal Industry Knut-Magnar Aanestad, Chief Knowledge Officer at Schjødt law firm, discusses how the legal industry continues to look in new directions for business and international offerings. Businesses Must 'Clear The Bar' to Stay On Top Victor Allis, CEO of Dutch software company Quintiq, e ­ xplains what ‘making the 6 meter jump’ means and how it can help businesses leap over the competition. An Executive Opportunity. . . . . . . . . . . . . . . . . . . . . . . . . . Walking The Profit and Loss Tightrope. . . . . . . . . . . . . . . . . Top 10 Key Attributes of a Successful Project. . . . . . . . . . . . Top 5 Best Practices to Increase Your Resource Utilization . . Agile Business Intelligence. . . . . . . . . . . . . . . . . . . . . . . . . . Accounting Firms. . . . . . . . . . Cautious Optimism. . . . . . . . . A New Way to Measure Value. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Agencies. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Talking the Talk. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Agency 3.0: The Destination For Advertising Agencies in a Digitally Focused World. . . . . . . . . . . . . . . . . . . . . . . . . Architecture & Engineering Firms. . . . . . . . . . . . . . . Building a Bridge to Growth in a Financial ‘Earthquake’. Architecture & Engineering Benchmark Reports . . . . . . Decision Making at the Best Run A&E Firms . . . . . . . . Law Firms. . . . . . . . . . . . . . . . . . . Modernizing the Legal Industry . . . . Change is the Name of the Game .. 44 46 . . . . . . . . . . . 54 . . . . . . . . . . . . . 58 60 66 68 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Scientific Research and NGOs . . . . . Data Explorers in the Norwegian Sea. Decision Making Based on Facts . . . . . 28 30 38 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Management & IT Consulting Companies . . . . . Businesses Must 'Clear The Bar' to Stay On Top. . Adapting to the Times. . . . . . . . . . . . . . . . . . . . . 4 6 10 20 22 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 72 74 80 84 86 92 98 100 104
1 An Executive Opportunity ■ By Hugo Dorph, Executive VP and General Manager, Deltek, Inc. 2 "In today's challenging economic climate…" Now, how often have you heard that opening in recent years? The thing is: it really shouldn't matter. Today the professional services industries are so global and so competitive that up-cycle or down-cycle simply determines whether we're balancing closer to 15% profits or closer to zero. And whether it's one or the other we're constantly under pressure to squeeze the most out of our business. In recent years many firms have been balancing closer to zero - they've walked the tightrope between profit and loss. And nothing sharpens your senses like walking a tightrope. I like to see that as an executive opportunity. Let's always think that way. Let’s sharpen our senses and act on what we learn from that. The first thing is to focus on the most important issue. Consider for a moment, what, in your current business environment, is going to have the biggest impact on improving your bottom line? Getting better at your profession or getting better at managing your business? In this magazine you will meet some of the industry leaders within Professional Services who every day strive to make the most out of their businesses. They will share with you what they have learnt from walking the tightrope and how they are acting on their executive opportunities. At Deltek we work with thousands of clients around the world to help them improve their business processes. We see the best (and worst) practices in action, every day. And there are three take-aways that the best companies do well and always strive to improve: - this has much to do with the quality of your work and fee negotiations, but it also has a lot to do with the quality of your business processes. Example: billing. Clients expect to pay less and they scrutinize every single line item. You must be able to provide full transparency for every hour billed and execute timely and accurate billing. And by the way, you can't leave that to the finance department. Best practice is to have fiscally accountable Project Managers and Client Executives. Be better at standardizing your business processes - this doesn't talk about the quality of your processes, but how good you are at sticking to them. A recent SPI Research report reveals that Professional Services firms who use standard business processes more than 80% of the time grow almost twice as fast as those that do not! And I would add, if you're acquisitive you won't be successful without standard processes. Make it a priority and get personally engaged - you, the business executives, have the most power to effect difficult change and you have more cross-company perspective than anyone on your team. By the way that's the same perspective your clients have. They look across your business so your processes have to support that perspective too. About the author Hugo Dorph has worked professionally with project-focused enterprise applications for more than 15 years. He is EVP and General manager of Deltek's Profesional Services business unit. Be better at proving your value 3 Be better at managing your resources - this is obvious, but effectively managing people resources based on fact is the one area where we see the biggest gap, even in large firms. • Busy doesn't mean billable - know the difference at all time. • Never use guesstimates - base everything on recorded fact. • atch long-term project pipeline against planned capacity to stay M ahead of any resource issue. These take-aways all add up to managing your business on real-time, factbased decision making. Manufacturing companies have done this for decades. Professional Services firms are only now catching on. Whether you are already a Deltek client or not there is a good chance you are only scraping the surface of what your systems can do for your business. Deltek can help with that and we can start by helping you better understand how. Our commitment to the Professional Services industries as well as our ability to support you globally is stronger than ever. Happy Reading! ■ 4 An Executive Opportunity An Executive Opportunity 5
Walking The Profit and Loss Tightrope Proving value Even with the best people on board, PSOs need to prove their value to clients by accurate billing. Why? Because today clients are not only paying less money for the same services, but also demanding that professional services companies keep track of every minute they pay for. ■ By Neil Davidson, Managing Director, Deltek UK So what’s the game-changer in this challenging landscape? Well, a PSO’s profit invariably comes from the ability to charge x-times actual labour costs. Most consultants are paid even when they are not billing, so professional services firms need to work hard to keep them utilized, and at acceptable billing rates. In these challenging economic times, what is the outlook for Professional Services Organizations and how can they best maximize profitability? In these challenging economic times, Professional Services Organizations (PSOs) know only too well that there can be a very thin line between m ­ aking a profit and incurring a loss. In walking this PL ‘tightrope’, they need to meet the challenges of doing more with less, maximizing resource planning and staff utilization and ultimately increasing profitability. Today’s PSO landscape PSOs - including consulting firms, agencies, accounting firms and law firms - are fairly unique in business. Unlike manufacturers, who make profits by making products and selling them at a mark-up, PSOs have people assets. Therefore, they need to create value through applying the specialized knowledge and skills of their people to solve clients’ business problems. In today’s vulnerable economic landscape, PSOs are realizing that, having already cut their operations to the bone, they simply cannot further reduce their people assets. So it’s time for executives in these companies to get smart and look at how they can maximize the potential for additional optimization of their people and processes. It’s time for executives in these companies to get smart and look at how they can maximize the potential for additional optimization of their people and processes. 6 Walking the Profit Loss tightrope In other words, PSOs must execute efficiently in order to generate the profit necessary not only for growth, but also for long-term prosperity. The difference between profit and loss is now so thin they need to ensure: About the author Neil Davidson is Managing Director at the Deltek UK offices. Neil Davidson has worked in the projectfocused software industry for 15 years. • full transparency for every hour billed • real-time, fact-based decision-making • dvanced technology is implemented on a the basis of best-practice processes. Growth in demand for enterprise solutions Let’s look specifically at the growth in demand for enterprise technology. According to research firm IDC’s 2011 European Software Survey, the IT industry is bouncing back from the financial crisis. Naturally, businesses such as PSOs want to ensure that their IT investments yield the expected ROI. In short, they are looking for specialized standard solutions that can be delivered and implemented quickly, and which work from day one. “The survey yielded many interesting results related to enterprise applications. Customer relationship management (CRM) continues with strong indications of spending growth, and the outlook for enterprise resource planning (ERP) and HR/payroll applications has significantly improved since 2010,” commented Bo Lykkegaard, European enterprise applications at IDC. With our focus on the professional services market, we can see first-hand how our clients are reacting to market conditions. In our view, those running best-practice methodologies, and utilizing enterprise solutions such as ERP, CRM, and HR/payroll to underpin them, are best placed to manage the current economic challenges and forge a path forward in 2011 and beyond. Walking the Profit Loss tightrope 7
Standardized business processes The key benefits of enterprise solutions for PSOs include: This ability to standardize business processes is vital. This is backed up by a recent report by SPI Research1, which revealed that when PSOs use stan­ dard business processes, more than 80% of the time, they grow almost twice as fast as those that do not. • Improving profitability on each client A large part of this growth is due to PSOs being better able to plan work and resources, essentially “packing” more work into the schedule. Business process standardization also enables an organization to increase annual revenue per billable consultant. • Balancing a portfolio of products and services proactively Developing excellent project plans, optimizing the workforce, and implementing standard business processes can, according to the SPI Research report, help PSOs operate more efficiently and effectively, and achieve higher margins and client satisfaction. • nsuring that daily management and decision-making are E based on facts • Spotting under- and over-utilization in time to act • Being in control of project deadlines and deliverables • Having full visibility of project profitability • Capturing and sharing knowledge across the business • Freeing up working capital from operations • Having efficient internal processes in order to do more Walking the tightrope – what lies ahead? So how will the next decade or so play out for PSOs? Well, based on discussions with industry analysts and decision-makers representing bestin-class PSOs, as well as our experience of delivering enterprise solutions to PSOs, we believe the trends ahead include: • ncreased focus on streamlining the sales process and managing client i relations • roject management customized for the unique challenges and p demands faced by project-focused organizations • strong interest in improved capacity and resource planning • reater demands for proactivity and usability – for example, by having a g solution that actively notifies and alerts users on their pending actions via web portal, email or SMS. We perceive a growing number of PSOs starting to realize how valuable it is for them to develop their capabilities to make forward-looking analyses and fact-based decisions based on proactive planning and forecasting. With the difference between profit and loss being so thin now for PSOs, this is essential, together with complete client billing transparency, underpinned with the advanced technology to ensure best practice processes. All of this should make walking the tightrope so much easier. ■   Building Lasting Value – Growth Strategies for the Services Organization; Service Performance Insight (SPI Research), 2011 1 8 Walking the Profit Loss tightrope Who benefits in a project-focused organization? W ith a role-based, process-oriented ERP solution, employees at all levels can benefit. For example: • Sales managers can see which clients deliver on the bottom line • ccount managers can track all on-going activities on their clients A across departments • R managers can support the individual career development of staff H through an auditable, controlled HR process • roject and Account managers can control project progress and P financials by unifying all key elements of project governance with financial project control • esource managers can spot under- and over-utilization in time to act R • usiness and Line managers can help streamline the business through B increased collaboration and knowledge sharing • inance managers can gain full insight into project data, and they F can also reconcile accounts payable against the appropriate project, which helps ensure accurate project PLs.
Top 10 Key Attributes of a Successful Project ■ By Jacob Thaning, SVP, Global Consulting, Deltek, Inc. For many years Deltek has worked together with professional services organizations to implement their business solutions. This collaboration has given us insight into all the pitfalls and risks that are worth being aware of when working on large projects. Below are a number of subjects and recommendations concerning these top 10 key attributes of a successful project. These 10 items are essential when an organization is launching or considering a large project. 1. Executive sponsorship 2. Strong Project Governance 3. User Involvement 4. Clear Company Goals 5. Well-Defined Scope 6. Well-Defined Base Requirements 7. Proven Methodology 8. Application Software 9. Experienced Project Manager 10. Experienced Resources This is a good check list to use for matching thoughts and expectations among the team members when establishing and executing projects. The description is our recommendation for how a project should be executed. We furthermore recommend that these items – and how they should be managed – are discussed among project managers during the initial phase of the project as well as on the first steering committee meeting. If this is done, and if a common recommendation for the handling of the project is provided by the project managers of the customer and the vendor, respectively, the project and its execution will be considered more as a partnership rather than a traditional customer/vendor relationship. 10 Top 10 Key Attributes of a Successful Project About the author Jacob Thaning has more than 20 years’ experience in the management IT consulting industry. Since 1998, he has been at Deltek and is now heading Global Consulting in the Professional Services business unit.   1 Below, we have based our recommendations on a case in which an organization wishes to replace its current business solution. The organization therefore faces a great task and change. The organization has initiated this project in order to strengthen ownership and responsibility across the organization. Furthermore, the organization aims to streamline operations, e.g. when it comes to project management and revenue. Executive Sponsorship Description: The cornerstone of any successful project revolving around the business solutions of an organization is to put the executive team of both customer and vendor in charge of the implementation. This is partly because the project will affect most of the employees and because the support from the executive team is crucial in order to enable effective change management. In many projects, the executive team forms both management and daily line management. Executive sponsorship must: • acilitate communication of the project objective and the reason for f launching it • otivate the affected parts of the organization to take part in the m project and to adapt to new and changed routines • nsure general support to the project managers as well as support e of the decisions and changes which some employees consider to be adverse. Risks: If the project is not 100% supported by the various parts of the organization, it will not be possible to change habits and behavior across the organization. This could very well cause the organization to fall short of achieving project goals. Risk aversion: The most important parameters are communication, visibility and participation within the steering committee as well as relevant project meetings and meetings regarding the functional areas. The participants must be active and the individual meetings must be given high priority. Furthermore, a clear communication strategy must be prepared with emphasis on the areas that require modified behavior or new habits. Top 10 Key Attributes of a Successful Project 11
We recommend: • a highly relevant steering committee composition • high awareness of the importance of change management • hat e.g. the CFO or COO is appointed chairman of the steering t committee • hat project managers are granted direct access to the steering t committee • hat a communication strategy is prepared and presented to the t steering committee at one of the first meetings • hat an internal executive within the organization is given responsibility t for change management. Strong Project Governance Description: In every implementation project it is important to ensure that all project managers are working efficiently towards the same goals and that they all stay within the scope of the project. In large projects with greater complexity and a large number of project team members, it is important to have fixed project follow-up procedures. This is to ensure satisfactory project progress and identify any deviation from the plan. 3 2 Risks: • he allocated employees cannot be sufficiently freed from other tasks t • sers are selected on the basis of other criteria than qualifications and u skills (e.g. who has got the time). It is important to select users who wish to participate in a change process, who have the necessary skills in relation to their field/functional area and who are respected internally. Risk aversion: It is recommendable to enter into an explicit agreement on how to handle the tasks from which the allocated employees are freed. When the employee and the line management involved commit themselves to such an agreement, it reduces the risk of having the employee perform double work with deteriorating quality as a result. Risk aversion: In the project scope it should be determined how to follow up on the proj­ ect. It is recommendable to establish the frequency of steering committee meetings, project management meetings and project team meetings right from the start. We recommend: • that project managers meet on a regular basis (e.g. weekly) • hat steering committee meetings are held on a regular basis t (e.g. monthly) • hat a scope document is produced and thereafter approved by the t steering committee • fixed procedures for the project • solid project method and usage of related project documents. a 12 Top 10 Key Attributes of a Successful Project Description: In order for the project to be successful, it is crucial to involve relevant user representatives in the entire implementation process from the analytical phase to testing and training and finally the go-live phase. The purpose is: • o ensure that users with the greatest knowledge of the individual t processes are involved in the design of the solution which comprises these processes. This is one of the most important methods to ensure high quality of the solution as well as making processes and functions tangible • o ensure that the organization is staffed with a number of employees t acting as ambassadors for the new solution. Risks: If no project follow-up procedures have been established, there is a risk that deviations such as deadline overruns, scope creep etc. are not spotted in time. One of the steering committee’s tasks is to ensure the right project scope. This not least includes access for the project managers to give greater priority to deviations from the plan as well as any issues which should be addressed at management level. User Involvement 4 We recommend: • nvolvement of users with knowledge of the various business areas of i the organization • having ambassadors/change agents within the organization • anaging the resource situation as a fixed item on the agenda at the m steering committee meetings • ongoing measuring of the adaption (e.g. using surveys). Clear Company Goals Description: It is a prerequisite for an efficient implementation that the organization knows the objectives of the organization and the project, and that these objectives are broken down into operational goals for all relevant levels of the organization. This way, the project group can manage the project in the right perspective and make the right decisions based on clear objectives. Top 10 Key Attributes of a Successful Project 13
Risk aversion: The process of preparing the scope should be led by the project managers who should make sure to sufficiently allocate their own time and the most important stakeholders’ time. Risks: If the project objectives have not been clarified, some of the risks would be: • hat various clarifications regarding the solution should be discussed t before a decision can be reached and this could potentially cost time and resources • that prioritization becomes more difficult than necessary. Risk aversion: It is recommendable to give the detailed scope high priority. In this scope, all success criteria and objectives of the project should be determined at a detailed level. Subsequently, this should be communicated to everybody in the project group on an ongoing basis to ensure that everybody is aware of the objective through the whole project. In the training phase, the objectives should be made clear to both super users and end users. We recommend: • hat organizations looking to e.g. replace their business solution t consider a number of aspects and elaborate their needs and current processes as part of the project • hat focus is kept on the objective of the project and that details, t current systems and workflows do not draw attention from why the project has been started and the overall objectives of the project. Well-Defined Scope Description: A well-defined scope is crucial for the project managers because it also sets the scope for the project managers’ authorization. Important elements in the scope are: • determining what the implementation does and does not cover • breakdown into deliveries and/or activities • n objective and measurable articulation of the success criteria of the a project – preferably in order of priority • procedure for change management and communication • definition of process for escalation in the project organization • determining the division of work between the project parties. Risks: It is important to allocate sufficient time to the preparation of the scope right from project launch. Otherwise project stakeholders and team members may perceive the objectives and scope of the project differently, which means they will not have the same focus. The time saved by rushing through the scope in the start-up phase is very quickly spent by the project managers if they need to follow up on and coordinate various activities and discuss what lies within the project scope and what does not. 14 Top 10 Key Attributes of a Successful Project 6 We recommend: • preparation and communication of scope • hat the steering committee approves the scope document. This is t to ensure that everybody in the steering committee has the same perception of the project and its objectives • a clear process for handling suggestions and changes to the scope. Well-Defined Base Requirements Description: It is a good starting point for any implementation project that the organization has an overview of the business and all significant processes and needs. This way, the organization will be able to define the associated requirements for the solution. Risks: If the requirements for the solution have not been established, there is a risk of: 5 • asting a lot of time during the project process due to internal w discussions of how the solution should look • wasting time and money if the project objective is altered. Risk aversion: An efficient way of ensuring well-defined requirements for the solution is to establish processes and requirements for the new solution and document these. This way, it will always be possible to compare suggested solutions and requirements. Every project contains areas in which it will be necessary to consider various alternative solutions which cannot necessarily be evaluated on the basis of the requirement specification. It is therefore crucial that the project team is formed by employees who possess a deep knowledge of the organization’s needs, and that they have proper decision-making competence in order to avoid unnecessary project delays. Organizations typically make a great effort to identify their needs before they can specify their requirements for a new solution. We recommend: • hat organizations be open and flexible in relation to how their needs t and requirements are met. This will open up for a discussion of what may be the best solution for them • hat you pay attention to needs, best practices, technology and opportut nities that are either provided with the selected solution or evaluated. Top 10 Key Attributes of a Successful Project 15
Proven Methodology Description: Over the years it has proved to be a great advantage on implementation projects to apply a project methodology which matches the scope set for the project type in question. This ensures that: 7 8 Application Software Description: When implementing a new business solution, there are crucial benefits associated with using standard solutions also used by similar customers. For instance, risks related to development projects are eliminated. Risks: Even if standard software is used, all implementation projects need customization. This carries two obvious risks: • time is only spent on activities that create value for the project • he methodology matches the specific solution and the consultants t involved are familiar with the work process • t is possible to use standard templates that the project team members i are familiar with from the beginning of the project. • he scope for what should be customized/developed evolves t constantly • he scope evolves because every implementation process requires t creative skills. Therefore, it can be tempting to keep thinking of new ways to improve the solution as you gain more and more knowledge of all the possibilities. This would lead to an expansion of the scope and increased time consumption. Risks: An obvious risk for our customers – who are primarily project-oriented – is that they let their preferences for a specific project methodology determine which methodology is applied in the implementation. Another risk is that the stringent and methodical approach to the project gradually becomes a looser model and that there is suddenly no control over the project. Risk aversion: In the scope phase it will be useful to determine not only the project methodology but also what documents should be used in the project. Risk aversion: In the scope it is crucial to determine which customizations should be made for the solution. It is extremely important that the project managers make sure to keep the project within this scope. This can be done by ensuring that no customizations are made without the use of design documents approved by both parties. Deltek’s project methodology contains a large number of document templates that can be leveraged. By making these decisions from the beginning, it is possible to oblige all project team members to this methodology and thereby minimize the risks stated above. We recommend: • hat the organization is open and willing to adjust. Preferably, t requirements should be met by means of standards (different workflow/slightly different handling) if possible. We recommend: • hat the project methodology is discussed and agreed upon at an early t stage rather than having to change the methodology later on in the project • hat Deltek’s project methodology and the related documents are t used. The project methodology PEAK has been developed on the basis of many years of experience with hundreds of projects. Among other things, it contains standardized document templates. 16 Top 10 Key Attributes of a Successful Project 9 Experienced Project Manager Description: Both the customer’s project manager and the vendor’s project manager play a vital role in the project. In order to achieve mutual success, it is important for both project managers to have gained knowledge as described below: • nowledge of their own organization and the power and ability to k handle various obstacles in the most efficient way • knowledge of ERP implementation projects • nowledge of and dedication to the technical content of the project. k This is to ensure that the project manager does not focus exclusively on administrative processes but also seeks insight into the substance of the project. Top 10 Key Attributes of a Successful Project 17
Risks: The risk of having project managers with limited experience implement large projects is that they become either very detail-oriented with lack of overview and focus on progress as a result, or conversely, that they overlook important details. Furthermore, less experienced project managers may have problems gaining the necessary trust from the project team as well as the rest of the team. This becomes a potential challenge when it is time to handle problems that require various forms of support or effort from the rest of the team. Risk aversion: Project managers should be carefully selected on the basis of the above criteria! Regardless of who the project manager is, a role with responsibility for quality assurance of the project management should be established. Furthermore, it is important that the steering committee challenges the project managers with constructive questions to ensure overview and control of details. From the initial phase of the project, focus should be on building and maintaining collaborative relations rather than a traditional customer/vendor relationship. If one of the project managers has a weakness in relation to the items above, it should be considered whether this weakness can be mitigated in practice. We recommend: • hat the customer and the vendor focus on the project manager role t and the experience of the project manager • hat the project manager role on large projects is separated from the t solution design role even though it can be tempting to attempt to combine these two roles. This is to eliminate the risk of being “caught between two stools” • hat both the customer’s project managers and those of the vendor t lead the way by joining forces to make sure the project is executed in a partnership. 18 Top 10 Key Attributes of a Successful Project 10 Experienced Resources Description: Project managers – regardless of their function – should have experience within their own field in order to be able to contribute to the project. Depending on their role, they should: • be respected in their own organization • ct as ambassadors for the objective of the project and the necessary a changes • actively take part of the project • have expert knowledge of their own field • be open to new input and consider different alternatives. Risks: The risks are more or less the same as the ones stated in section 3 “User Involvement”, namely that the employees might not be sufficiently allocated and that they are selected on the basis of other criteria than qualifications and skills. An internal project may be perceived as less interesting and less prestigious than an external project and therefore it may be difficult to recruit employees internally. Risk aversion: The risk aversion methodology is also very similar to the methodology described in section 3 “User Involvement”. It is recommendable to agree explicitly on how to handle those tasks from which the users involved in the project are freed. When the employee and the involved line management commit themselves to this, it eliminates the risk of having the employee perform double work with deteriorating quality as a result. We recommend: • hat project managers are officially acknowledged and rewarded for t successful project execution. This way, it will be more appealing to participate in the project • hat participation in the project is evaluated positively in accordance t with the individual employee’s career in the organization. ■ Top 10 Key Attributes of a Successful Project 19
Top 5 Best Practices to Increase Your Resource Utilization How to increase your utilization rates and reduce the need for subcontractors 1 2 ■ By Henrik J. Brandt, Product Director, Deltek, Inc. Through good or bad times, business success for Professional Services Organizations (PSOs) remains the same: Optimizing resources = increased profitability. While the maths may be simple, delivering the optimization can prove more challenging. 3 Resource Management (RM) is emerging as the solution for solving this equation. It effectively provides a framework within which PSOs can easily and effectively plan, implement and deploy their people skills. What is Resource Management? In essence Resource Management is a solution for planning, managing and deploying the right people skills at the right time on the right projects. In my experience, only around 20 percent of PSOs actually recognize and use RM as a high-value, stand-alone discipline in its own right – which is surprising given that the management of resources is, by definition, PSOs’ raison d’etre. And a surprising 75 per cent of companies surveyed by The Aberdeen Group admitted to having no overview of their resource situation more than one month ahead. In PSOs, planning resources at least six months in advance enables you to get the most out of your employees. Resource Management – Key Best Practices So what are the ‘Key Best Practices’ that PSOs should be aware of, and adopt, in order to increase people utilization and attain higher profitability? 20 Top 5 Best Practices to Improving Your Bottom Line About the author Henrik Brandt has worked in the IT industry for more than 25 years in business development and product management. Since beginning of 2011, he is Product Director at Deltek, Inc. 4 Recognize that ‘busy’ doesn’t necessarily mean billable There is a very big difference between staff being busy and being billable. Look around your organization and you’ll probably see people who seem to be busy, yet their utilization rates – and therefore their billable hours – are at an unsatisfactorily low level. You may also experience a complete disparity across the resource pool, with some people overloaded, while others remain under-utilized. Don’t base projects on ‘guesstimates’ All too often PSOs do not align project estimation, execution and existing capacity. Making ‘guesstimates’ on projects is often the key driver in resource under- or over-utilization. Under-estimate and you’ll be scrambling to find additional resources. If you are in danger of missing a deadline on a project, because resource management hasn’t been at the top of the agenda, you can either recruit additional staff or hire external subcontractors. Either way, the impact on project costs and profitability can be significant. Match your long term project pipeline against your planned capacity It is essential to ensure that the projects in your pipeline can be resourced efficiently. Integrating your sales pipeline system with RM means you can achieve a better understanding of resource impacts, as well as effectively support your strategic and tactic recruiting, subcontracting, and organizational development. Avoid different versions of the truth Having a uniform RM system that spans all departments and all resources will help ensure consolidation of all account and project information. And, more importantly, it will provide you with a single and accurate version of the ‘truth’. 5 Regard Resource Management as the ultimate in Business Intelligence ROI Managers should have a dashboard that they look at every day when they log into the system, displaying KPI’s such as Utilization, Billability, Project Resource Load 3/6/12 months out, and subcontractors’ usage. The ROI story is compelling. If you have a resource pool of 100 people, with an average hourly rate of $150, finding just one extra hour per month, through the use of RM, will result in $180,000 extra revenue per year. With acquisition and implementation costs typically below this, a payback period of less than a year is most possible. ■
Agile Business Intelligence Today, Business Intelligence is no longer just the domain of the highly technical analyst or Executive Management, but of all business users. Now, users in Marketing, Sales, Project Management, Consulting, Finance and any other department in your company can be empowered with information and made more capable to handle business questions more efficiently and effectively. With immediate access to up-to-date information, thanks to Business Intelligence, answers to questions are based on facts – not assumptions. Furthermore, isolation of the office’s knowledge is eliminated. In other words, your company is now agile enough to take on the market. How to win in the 21st century business climate ■ By Marta Jagebro, Senior Product Manager, Business Intelligence, Deltek, Inc. It is hard to imagine a world without intelligence. What would today’s landscape be like if those who regularly made business decisions had no capacity of insight or understanding? Yet, there are still many within the Professional Services industries that do not acknowledge the importance of “being intelligent about your business” – or in other words, the necessity of Business Intelligence (BI). Business Intelligence refers to computer-based techniques used for learning, analyzing and predicting problems – thus eliminating problems before they arise, helping organizations reach their goals. As a platform for analyzing data, BI enables users with immediate self-service access to data which then allows for timely and accurate responses. Being a vehicle that delivers insights and foresights by providing users with historical, current and predictive views of business operations, BI bestows users with high-levels of information that before would have been out of their reach. The importance of agile Business Intelligence The report Trends 2011 and beyond: Business Intelligence1 from Forrester Research Group states the importance of agility when accounting for and implementing BI. In my opinion, nothing could be truer. The idea of agility means to be able to adjust quickly to changing conditions, which BI exemplifies perfectly. Since using BI is all about providing users with immediate access to up-to-date information, it allows them to both explore and analyze data, and then quickly apply the findings to the appropriate business practices – granting the user the agility to change processes to fit best practices. Without agility, BI serves little purpose. What this means, is that BI puts the power in the hands of the users. In utilizing a single platform where all users can access up-to-date information from each side of the organization, a company holds the power to diminish its lack of knowledge sharing or divisibility. 22 Agile Business Intelligence With the current economic downturn, BI is not just effective, it is vital to a company’s sustenance. BI can be used to monitor performance, discover new market opportunities, map out customer trends and drive cost reductions – all imperative capabilities for keeping business afloat in today’s turbulent economy. However, BI solutions are just as imperative even without the background of a recessive economy. Despite potential concerns from customers regarding the value of Business Intelligence in a post recession market, BI solutions only stand to put you farther ahead of competition when the economy gets back on track. About the author Marta Jagebro has worked in Business Intelligence for the past 6 years for companies such as SAP and Sony Ericsson. Since 2010, she is Senior Product Manager, Business Intelligence, at Deltek, Inc. The idea is that when the market is behind, BI puts your company’s head above water and helps you maintain performance optimization and increase profitability. When the market is ahead, BI serves to keep you further ahead of competition – and yes, generate higher profitability. In this way, “BI software is now prevalent in all successful business models”, as both Forrester 1 and research group Gartner2 states in a 2011 report on the intense growth of BI the past years. What does Business Intelligence need in order to be successful? It can’t be stressed enough that Business Intelligence it is not just a software solution – it’s a change of mindset. Business Intelligence helps improve organizations performance, and the way it operates with maximum agility is by ensuring that all users in the organization have access to it. But, if only a few analysts, or only Executive Management, within a company have access to Business Intelligence, how can Business Intelligence help improve organizations performance? The answer is easy: it can’t. Business Intelligence is no longer just the domain of the highly technical analyst or Executive Management, but of all business users. Agile Business Intelligence 23
If only a few users in the company can access business information, then only a few users within the company will have the flexibility to react to data proactively. In other words, improperly administering Business Intelligence means that an organization is only as strong as its weakest link. Other Business Intelligence success factors are just as simplistic, though no less imperative. Most importantly, a BI platform must be an integrated rolebased solution. This allows every person within the organization to target their role, and contribute to actions that will serve to make their department (in addition to the organization as a whole) more efficient. Without this element, other critical benefits of your solution will not be able to fall into place. The next key element is to ensure that your business’s BI solution provides users with either live data or data close to real time. If this aspect is not defined, your solution will be rendered irrelevant and not fact-based, thus defeating the whole purpose of the solution. Other necessary qualities of a BI solution tend to have a domino effect: The solution has to perform fast, and data must be reliable – or else it risks the same consequences of becoming an “assumption-based system” that does not provide proactive action ability. Finally, what those who develop Business Intelligence often forget is that a BI solution must be both easy to use and have an appealing interface. It does not matter if BI is available to all users cross-departmentally – if it is not intuitive and appealing to the user, it will not be used effectively. To summarize, the below components serve as key aspects of a successful BI platform, and missing even one of these aspects can leave your BI solution completely ineffectual. • • • • • • • Accessible for all users Integrated role-based solution Live data or data close to real time Reliable data Fast performance Easy to use Appealing interface Lesson learned Unsurprisingly, the correct way to utilize a successful BI solution is not accomplished in a day. The most significant point to be considered in order to achieve a positive return on investment is a business’ commitment to the solution. Though it sounds obvious, just because an organization buys and installs a BI solution, does not guarantee that it will be used. 24 Agile Business Intelligence
But, if only a few analysts, or only Executive Management, within a company have access to Business Intelligence, how can Business Intelligence help improve organizations performance? The answer is easy: it can’t. Time and time again, experts in the industry have seen a familiar situation, where a company has been using the same process of delivering insight and foresight for 20 years and results are not optimal. Management then decides to invest in a BI solution to improve business performance. However, when the solution is implemented, the change management process is forgotten; users do not receive proper training on how to use the solution, or motivation for why it would be beneficial to use it in both their independent job and for the organization as a whole. This is one of the biggest mistakes a company can make. It results in a waste of money and ensures that your BI solution will remain useless to your business and ultimately provide no benefit to your profitability. But here is the lesson learned: In order to get the staff motivated to use a new solution, it takes a considerable amount of dedication from Management. Once those in supervisory roles lead by example by using the solution, training their employees, explaining them the benefits of the solution and demonstrating that the solution is intended for standard practices, the process for accurate utilization from the rest of the organization can begin. Though this in no way means that the effort to effectively implement BI ends here, it is a critical starting point for incorporating the importance of your BI solution as part of the office’s IT culture. The effectiveness of a BI implementation depends highly on Management’s predisposition to follow through on the investment, by making sure that the staff will use this solution in a way that successfully benefits the entire organization. Business Intelligence helps companies take proactive rather than reactive approaches to challenges. Though statistics show BI’s popularity, does it really make a difference if a company chooses not to have a Business Intelligence solution? Gartner’s study2 says it does and depicts that 35% of global companies lacking BI solutions will regularly fail to make insightful decisions about business practices. The research group also points out that without insightful decisionmaking capabilities, organizations will not be able to appropriately adapt to industry or market fluctuations, and they are more likely to experience profit loss. Complimentary to the Gartner report2, Forrester’s report Trends 2011 and beyond: Business Intelligence1, reaffirms the importance of agility in BI. This study notes that enabling all users to being agile enough to quickly self-access around-the-clock information is critical to Business Intelligence, and will stay critical even as the idea of BI develops and expands to fit future needs. What all these studies tell us is that the role of Business Intelligence as a “business-game-changer” will remain, even through turbulent economic fluctuations and changing market priorities. Through careful analyses of the solution’s properties and capabilities, we have learned that an integrated BI solution with a proper role-based architecture empowers Professional Services firms to review and react to information in a way that is new and exciting to the industry – yet nonetheless a requirement of today’s successful business practices. ■ Know More Seeing Business Intelligence in the future At its core, Business Intelligence helps companies take proactive rather than reactive approaches to challenges. With that in mind, it is easy to see that Business Intelligence will grow and retain a huge role in business development as we move into the future. According to Gartner2, by 2012, 50% of users within individual organizations will work with Business Intelligence. In the same study, 20% of organizations are expected to have industry specific BI solutions, while project-oriented firms will lead in terms of BI implementations. 26 Agile Business Intelligence You can read the full article “Agile Business Intelligence. How to win the 21st century business climate” at www.deltek.com/agileBI Trends 2011 and Beyond, by Forrester Research, issued by Boris Evelson Business Intelligence and Performance Management Will Deliver Greater Business Value, by Gartner Inc., issued by Kurt Schlegel, Mark A. Beyer, Bill Hostmann, Rita L. Sallam, Bill Gassman, Nigel Rayner, Neil McMurchy, Neil Chandler, Matthew W. Cain 3 Business Answers at Your Fingertips, by Aberdeen Group, issued by Michael Lock 1 2 Agile Business Intelligence 27
Accounting Firms “One of the biggest trends we are now seeing is a sense of cautious optimism. We’re really starting to hear clients voice their optimism, indicating that the economy is starting to come around,” says Ron Overson, Partner of Boulay, Heutmaker, Zibell Co., in an interview discussing the trends and challenges facing the accounting industry. In this section, you can also read the intriguing article by Gary Boomer, CEO of Boomer Consulting, about the value pricing method for accounting firms.
Accounting Firms Cautious Optimism ■ By Rachel Lore, Copy Writer, Deltek, Inc. Partner of Boulay, Heutmaker, Zibell Co., Ron Overson explains how the recessive economy has actually prompted this North American accounting and financial consultancy to step back and adjust their business practices for the better. 2011 was a tricky year for almost any industry - enough to keep any firm down. It kicked off with the hopeful belief that the economy could finally get its head above the recession, only to face a shadow of another financial crisis mid-way through. But for Boulay, Heutmaker, Zibell Co. P.L.L.P (Boulay), one of the American Midwest’s leading independent accounting and financial consulting firms, the backdrop of today’s economy has not been enough to keep this firm from maintaining its laser-focus on profitability. The claim of Boulay is that it operates as a traditional accounting firm with audit and tax areas of focus, but it’s obvious that the company is so much more than your run-of-the-mill business. Highlighting both national and regional services, Boulay matches the breadth and competency of a large, multinational accounting firm with the personal attention of a local business partner. What’s more, Boulay operates under what it calls a ‘concierge approach’, wherein different groups within the firm train and specialize in a variety of service offerings, ranging from audit and tax management all the way to small business consulting. Under this model, each client service partners of Boulay is personally accountable for delivery to their clients. This varied specialization allows the firm to offer services similar to large firms, while still remaining competitive in the regional sphere - not something that many companies can boast from one centralized location. “The bulk of our firm’s clients are privately owned business,” says Boulay Partner Ron Overson, shedding light on the company’s regional appeal. “While we do get many large and publicly-owned organizations that look to us, we really see concentrated appeal to private companies that need special attention to their accounting and finances.” 30 Cautious Optimism Located in beautifully named Eden Prairie, Minnesota, Boulay has a strong dedication and commitment to progress that shows a lot about the company’s ‘glass-half-full’ perspective amidst today’s recessive backdrop. Finding opportunity even in troubling times, Overson notes that 2011’s turbulent economy compelled the accounting and financial industry to put its focus on staffing and process optimization - a trend that will more than likely continue into 2012. “I can really only speak for the public accounting world, which has been really strong for us,” Overson states. “Though we - like most other industries - have seen less rapid growth, it has allowed us to sharpen our pencils and really put our focus on improving our infrastructure.” Any Place, Any Time Overson explains that another significant trend in today’s business arena surrounds today’s newer electronic devices that enable flexibility in work time and place. Noting that the “best tools in today’s business sectors are the electronic devices that let you work from any place at any time,” Overson believes that the trend towards mobilization is something that will stay in style as IT advancements continue. “As with so many of our clients and other businesses, family relationships and activities are a core value of our firm,” Overson says. “Because our professionals also have a strong commitment to their clients, we believe that it is imperative to provide our team with the tools they need to serve clients well, while still maximizing their family experiences.” With Boulay’s deep understanding of the importance of IT mobility, Over­ son states that his firm, like others throughout the industry, continues investing in creative ways to maximize profitability. Like many other accounting and financial consulting firms, Boulay discovered that knowing where to look was the first step. About Ron Overson With over 25 years of experience in audit and management consulting, Overson specializes in due diligence and structure aspects of mergers and acquisitions. As a Partner of Boulay’s Audit group, Overson has provided these services to private equity, search fund, corporate and individual buyers throughout the American Midwest. Cautious Optimism 31
Accounting Firms To assist with our bottom line growth, Maconomy gives our company an awareness of what needs to be done to move a project along the correct path. Ron Overson, Partner of Boulay, Heutmaker, Zibell Co. “We invested in Maconomy to depict contribution margins for our service lines, industry and ownership groups and project types so we can better focus our attention in the exact areas that need it,” Overson says. “All in all, there really weren’t any huge swings to our business. Just the question ‘what can we do better?’” Internal Adaption Overson also notes that late 2011 indicated changes in staffing trends that other accounting and financial firms would do well to recognize, including modifications to the less aggressive recruiting and hiring strategies of recent years. Yet even in moving back towards the more assertive hiring practices seen in the industry’s pre-recession days, Boulay’s professionals have found opportunities to step their game up, becoming leaders within their groups. “Instead of highlighting overwhelming challenges, we are more than ever seeing those in associate positions step up and proactively demonstrate their interest and abilities for promotions into higher roles,” Overson says. “So instead of worrying about the competitiveness of outside hiring, we are embracing the challenge to really figure out how our firm can facilitate the kind of training that will maximize an individual’s professional development.” Though Boulay itself has luckily not been forced to impart significant changes to its business operations, the implications of the recession has kept the company positively focused on what tools it can utilize to increase efficiencies. “To assist with our bottom line growth, Maconomy gives our company an awareness of what needs to be done to move a project along the correct path,” he explains. “For process optimization, we’ll also continue watching the development of electronic tools that allow our employees to work whenever and wherever.” 32 Cautious Optimism Cautious Optimism 33
An Around-the-World Approach Electronic tools and an emphasized focus on infrastructure are not the only trends to be aware of as the world moves into 2012, however. As burgeoning markets begin to pick themselves up from the past recessions, many industries will begin turning their thoughts to stabilization and growth of profits, Overson states. So how are businesses in the financial and accounting industry planning to do just that? Overson says that many of those well-positioned to do so are leaning towards international offerings. And with over 25 years of experience under his belt, Overson has an eye for trends with longevity. “I believe many companies are trending toward an international playing field, i.e. providing services to clients all over the world,” he states. “Foreign companies are always going to want to tap into our markets, and now we’re seeing that, vice versa.” In Boulay’s case, its affiliation with IGAF Polaris - a global association of independent firms - allows the firm to provide its clients with assurance and tax services matching its own throughout the world. Whether through this method or other international offerings, Overson notes that this will definitely be a trend that many larger companies will follow in the upcoming years. Industry Challenges The accounting and financial industries will face some challenges in the upcoming year, Overson acknowledges - and the continued pace of regulation change and complexity is a big one for 2012 and beyond. To keep these fast-paced changes under wraps, Overson again stresses the importance of continuing the search for industry-best tools and education. However this search, he says, can also be a challenge to keep up with. Creating relationships with peer firms and software vendors to share best practices and develop appropriate tools is critical to designing a firm’s future technology system, he continues. Likewise, while regional firms like Boulay provide the kind of invested, interpersonal atmosphere that attracts both clients and employees for the long-term, Overson does admit that bigger companies within the industry will more than likely open up their hiring practices - making it an industrywide challenge for smaller firms to maintain their workforce. 34 Cautious Optimism Creating relationships with peer firms and software vendors to share best practices and develop appropriate tools is critical to designing a firm’s future technology system. Ron Overson, Partner of Boulay, Heutmaker, Zibell Co.
Accounting Firms Business succession planning, managing the financial needs of the retiring baby boomer population and international services are all trends that we will very much see in 2012 and beyond. As for bottom line growth, Overson says Boulay plans to do more of the same strategies that helped the company retain its success. In doing this, Overson claims that Boulay - like other firms within the industry striving for process optimization - will continue taking a critical eye to the practices that have the potential to hinder long-term performance. The Light at the End of the Tunnel So what does Boulay predict for 2012? Opportunity, claims Overson. Ron Overson, Partner of Boulay, Heutmaker, Zibell Co. “Retaining people in smaller firms will always be a high priority,” Overson says. “Now that the market is opening up a little we’re seeing a reawakening to the past’s more assertive hiring practices from bigger firms. Our task is to show people why smaller firms with a regional focus - some of which, like Boulay, also have a national presence - are indeed equally critical to a variety of different business needs. We provide our professionals with the opportunities to be positive and personal influences in their clients’ successes, which for many is an unequaled sense of accomplishment.” What’s On the Agenda? Apart from positioning the company to maneuver around the expected challenges of 2012 and on, Overson says that Boulay’s focus for next year will remain on the company’s top line growth. “Grow your top line with efficient business practices, and profitability will come,” he affirms. “To enable this, we have some really good processes in place, and adjust the ones that need attention.” One of this firm’s key practices - an ideal that could benefit any diversified consultancy - is the stress of constant communication and sharing of best practices and solutions to its clients. “We know that we’re going to see double digit growth,” he states. Though this in part is due to the recent completion of a firm merger, Boulay also has a lot to look forward to in terms of clients coming in to look for a more in-depth, personal, consultant relationship. What’s more, Overson notes that opportunities for the financial industry will arise from international development and the increasing age of the population in general. “Business succession planning, managing the financial needs of the retiring baby boomer population and international services are all trends that we will very much see in 2012 and beyond,” explains Overson. “However one of the biggest trends we are now seeing is a sense of cautious optimism. We’re really starting to hear clients voice their optimism, indicating that the economy is starting to come around. Yet they’re still cautious with their investments, and that’s where we come in.” As a professional service industry, it comes as no surprise that the accounting and financial consulting firm's progress stems from an unwavering commitment to people - both clients and staff. Planning, looking at regulation optimization and developing electronic tools in 2012, Boulay provides a great example that mirrors the accounting and financial industry’s overall, continued success - in good times and in bad. ■ “We constantly talk to our professionals about the need for marketing, which to us is more than just ad space or campaigning,” Overson states. “As our clients trusted advisor, we listen for their needs and bring forth appropriate additional services.” This, says Overson, is what helps to keep the firm building its clientele. An example that Overson gives, is communicating with an internal professional to reach out to a client after overhearing him or her speak of an upcoming retirement - even if he or she is there for tax-related or auditing services. “It’s our job to connect to the right service provider within the firm and ask them to reach out in a compelling way,” he finishes. “Keeping our ears open for client needs allows us to bring them the comfort of appropriate resolution. With fewer financial concerns, clients are more able to focus attention on their own business, as well as quality personal time.” 36 Cautious Optimism About Boulay, Heutmaker, Zibell Co. P.L.L.P Boulay, Heutmaker, Zibell Co is an independent accounting and financial consulting firm located in Eden Prairie, Minnesota in the United States. Since 1934, Boulay has helped clients reach both business and personal goals through expert advice and strategic accounting, tax, business planning and wealth management services. To learn more, visit www.Boulay.com Cautious Optimism 37
Accounting Firms A New Way to Measure Value Value Pricing Billing – Billing Does Not Equal Value It’s difficult to separate discussions about value billing from billing procedures and practices, as many firms that are trapped by poor billing practices often get them confused with value. To maintain successful billing procedures, firms should: ■ By Gary Boomer, CEO, Boomer Consulting, Inc. For the past two decades, I have watched accountants time and time again use the same pricing strategy for their services – cost of labor plus desired profit – yet without truly delving into the actual value of the service itself. This method is commonly referred to as the effort-based economy trap. But our teams at Boomer Consulting, Inc weren’t content with constantly falling into that trap. After all, how could we advise our clients toward profit optimization, if no one had ever stepped outside the box of the same old pricing strategy? So about 15 years ago, Boomer Consulting, Inc developed a pricing matrix for consulting services in an attempt to capture the perceived value of the services from the eyes of our clients. To complement our pricing matrix, we coupled it with a strong engagement letter that clearly defined both the scope and utilized change orders as engagements expanded. Then we determined the profile of desired clients and named and packaged our unique processes into service offerings for clients. Our method was not without critics. Industry experts said this model was fine for us, but claimed it didn’t have the functionality to perform in the accounting industry. Yet being a partner in a regional accounting firm at the time gave me the first-hand experience to say that fixed price agreements do work with traditional services, and in fact, are great differentiators. With many of these same experts re-emphasizing the importance of the time sheet, I have dedicated many of my professional years to studying pricing, intellectual capital and performance. Though some accounting firms are looking into more modern pricing strategies, for most the effort-based economy trap lives on. But why? In today’s world, businesses are continuously moving work infrastructures to technologically-driven processes and procedures, yet most firms continue to rely on outdated billing methods or are even stuck considering the wrong things when measuring value. 38 A New Way to Measure Value About Gary Boomer Gary Boomer is CEO at Boomer Consulting, Inc. which he started in 1995. Boomer Consulting, Inc. provides consulting services to CPA firms with solutions which target five areas critical to a firm’s success: Leadership Management, Client Development, Talent Development, Technology and Compensation. • Communicate with clients up front about billing and pricing • tilize value pricing and engagement agreements that define the scope U of rendered services with a provision for change orders. Get a signed agreement before commencing work • xpect clients to pay all or a portion in advance with any balance due E upon delivery. The value of a service decreases (from the client’s perspective) after delivery • o not work on clients who are behind in payments per the terms of D the value price agreement • imit pro bono work to those engagements approved by the Chief L Value Officer as Ron Baker names the person in charge of the company values in his book Pricing on Purpose Though these practices should be basic to most partners in accounting firms, they are vital to ensuring successful billing processes. Why Value Billing – You Must Want to Change The profession has used the term “value billing” for years, but frankly, few firms have implemented an actual value billing system. Why not? Some of the most often cited responses are: • Prior training about value is based upon cost plus • esistance to communicate with clients about fees (in advance) R • ash flow (improves under a value billing system if implemented C correctly) • Value billing takes too much time • Clients won’t like it • Fear of change (summarizes all of the above) The fear of change, or the fear of experiencing any number of the responses above, can act like gravity, pulling everything down. The only way to overcome this fear is through strong leadership, communication, clear understanding and adherence to processes, discipline and training. The first step on this journey is wanting to change. A New Way to Measure Value 39
Accounting Firms And here is a good reason to want to change. Unlike what most firms believe, clients actually prefer value billing for the following reasons: • They know the price and agree to terms before the work begins • They see the options up front and can choose from a menu of services • ash flow (from the client’s perspective) is spread out over the time C services are rendered • hange orders protect them if additional services are needed or C services need to be reduced Like a true win-win system, a firm should also benefit from a value billing system. When properly implemented, the firm should see the following improvements: • Cash flow improvements due to the nature of how clients pay for services: As an initial, up-front fee, and then as regular payments over a specified period of time. If agreements are drafted properly, work-inprocess and accounts receivable will be reduced to an insignificant level • ess billing turnaround time needed after implementation than L traditional billing systems, as value billing disregards the unimportant (when it comes to value), lagging indicators. • igher recognition and closing of opportunities from more effective H and efficient selling practices • bility to bill for the services of all team members – not just A accountants. The US average for percent chargeable is currently between 50 and 51 percent (all partners and staff) • Increase of overall profitability • Enhancements to its client base • ccountability for partners and managers who continuously exercise A poor billing habits • Expansion of the client’s perception of value Conclusion Value pricing within the accounting industry is no longer a shadow of a thought, but is rather a proven alternative to effort-based pricing and a direct result of the changing, customer-driven marketplace. Given a firm’s overall commitment and senior management’s triumph over the company’s natural aversion to change, the rewards of a value billing system can truly be an amazing asset to your firm. 40 A New Way to Measure Value A New Way to Measure Value 41
Accounting Firms Recommendations To get the most out of a value billing pricing model, we recommend the following 5 strategies:   elect Someone to Champion Value in Your Firm S If instituting titles are part of your firm’s company culture, make this person the “Chief Value Officer” (CVO). In addition to pricing services, one of the CVO’s main functions should be to create value from the clients’ perspective. Since value is subjective, accountants often have difficulty looking at this from a client’s perspective, meaning that the CVO should communicate frequently with clients to assess their perceptions. More importantly, he or she should also investigate your clients’ dangers, opportunities and strengths, in order to better provide services that they perceive as valuable. Assign an Intellectual Capital Task Force This team should manage your firm’s intellectual capital from start to finish: Including doing inventory of it, documentation and naming of it, and finally packaging it. This will allow the rest of the firm to focus training on its unique processes and price on value, rather than hours times dollars. Reach Outside the Firm for Help Don’t continue to let old paradigms limit value and profitability. Even though people known as “cautious realists” mean well, the things they don’t know to look for are what end up costing the firm. Lack of knowledge limits growth and value. To combat hitting this wall, read up on trends, educate yourself and solicit coaching from outside consulting firms like Jason Lawhorn’s Lawhorn Associates (who has successfully implemented a value billing system). I also specifically recommend reading Ron Baker’s Pricing on Purpose 1 2 3 4 5 Define the Profile of “Ideal” Clients and Filter Out Those Who Do Not Fit It Again, it’s important not to limit yourself. The plans, people, processes, technology and pricing that got your firm to this level will not carry it through transformation into an emerging industry. Embrace a Culture in which Training and Learning is a Two-Way Street: Everyone Learns and Everyone Teaches Adequate training involves far more than technical CPE – it has to be comprehensive as well. Make sure that your firm is learning the necessary soft skills that are required for maintaining top performance, in addition to the technology side (which can then serve as an accelerator for improved billing strategy). While these recommendations may sound simple, don’t disregard them. Bad habits of past processes and the ‘gravitational’ fear of change can make adherence to the system difficult to accomplish. ■ Know More F or more information on value pricing, we recommend reviewing the Boomer Advantage Premium E-Guide “Guide to Pricing For Value” which can be ordered at www.Boomer.com. Ron Baker: Pricing on Purpose. Ron Baker is the founder of VeraSage Institute. He is a well-known educator on pricing and has written numerous books on pricing and knowledge management. 42 A New Way to Measure Value A New Way to Measure Value 43
Agencies “2011 without a doubt has brought a number of challenges to the industry, but ensuring that you engage with your clients at a strategic level is going to remain critical”, states Steve Cramer, COO, Leagas Delaney. Read the entire interview in this section and also the latest research from Jonathan Bourke, Managing Partner, Encompass Digital on Agency 3.0: The Destination For Advertising Agencies in a Digitally Focused World.
Agencies Talking the Talk Steve Cramer, Leagas Delaney’s Group Chief Operating Officer, discusses how a frank and open relationship with clients can lead to strong performance, holistic advertising approaches and opportunities in untapped markets ■ By Rachel Lore, Copy Writer, Deltek, Inc. More than one person has watched the internationally-syndicated show Mad Men with a hint of jealousy. The dramatic American television show, following the fast and sometimes morally ambiguous world of advertising agencies in the 1960’s, shows viewers one undeniable truth: advertising is cool. For agencies like Leagas Delaney – a creative advertising agency with offices in key markets all over the world – the world of ‘drinking-at-lunch’ advertising may have rapidly changed since the 1960’s, but the intrigue of their work is definitely still apparent. Working with top-brand clients like Patek Philippe, Timberland, InterContinental Hotels and Resorts, and Skoda, the agency maintains an excitement and commitment to the marketing craft that goes beyond the group’s independent status. About Steve Cramer Steve Cramer has been Group Chief Operating Officer at Leagas Delaney since 2009. He has over 20 years experience working with professional services businesses, ranging from large multinationals including Ernst Young to a number of fast growth entrepreneurial businesses. In addition to his role in Leagas Delaney, Cramer is also co-founder and director of Financial Professional Support Services (FPSS) Group. 46 Talking the Talk Talking the Talk 47
Steve Cramer, Group Chief Operating Officer of the firm’s London office, says that for Leagas Delaney, encouraging communication is a top priority. And if the organization’s world-spanning offices in Hamburg, Milan, Prague, Shanghai, Tokyo and London note anything about this strategy, they would say it’s been a success. “As an independent agency, our focus is on bringing a level of creative integrity to the clients that we work with,” Cramer says. “Core to our values is having a frank and open relationship with our clients to make sure we are bringing exactly what they need to the table. Besides our creative talent, our focus is on having the kind of conversations with the client that will empower the most strategic and captivating advertising possible.” While Cramer owns responsibility for the financial aspects of the business, his coordinated success of the London office breeds an innate sense of confidence into the client’s mind – something that he uses to make sense of 2011’s tough-but-active advertising market. Murky Waters Time and time again, it’s been noted that 2011 was a tough year. Yet Cramer alludes that it was no more than expected for the advertising industry. “Because the recession was still an influential force in 2010, I would say that this year has really been no worse,” he claims. Though Cramer admits that some in the advertising industry may have seen different results, he explains that it’s really based on individual factors such as the depth of client relationships. “It’s clear that clients are being cautious with their marketing budgets, and are basing their decisions even more on whether they’re getting good value for their investments,” he states. “Really, the biggest issue – particularly in Europe – is uncertainty. It means that everyone is holding their breath to see what happens and many people are holding back from investments,” he states, referring to the economy’s rise and fall over the past few years. For advertising agencies experiencing the uncertainty of winning new business, they know that it’s a bitter chain of events. In downturn markets, people begin buying less to save money, which in turn affects business’ sales, which then impacts clients’ monetary ability to seek external advertising expertise. Fortunately, Leagas Delaney’s client-focused business model has made them one of the few agencies to retain and win new business over the past few years. 48 Talking the Talk Top line growth is already a priority on our agenda. This means not only deepening the connection with existing customers, but also making sure that we identify new client opportunities when they arise. We are therefore putting a lot of effort into developing our relationships across Asia and other growing markets. Steve Cramer, COO, Leagas Delaney
Agencies The bottom line is that this economy is tough, but there are opportunities. When the right kind of business comes in with an open mind towards their customers, that’s when we can provoke their thinking and come up with the absolute best advertising solution. Steve Cramer, COO, Leagas Delaney “Again, communication is key,” Cramer explains. “Because consumers are tending to hold back from uncertain investments, it’s now more important than ever for a company selling a product or service to differentiate from its competitors. Our industry is very similar.” “Leagas Delaney has secured a lot of new clients – even in this past troubled year – just by engaging and conversing with clients to make their customer communication stronger. As an advertising agency, knowing what your clients want in the future is a big part of it. To do that, we make sure we ask ourselves ‘What does this client need to say to their customers to keep going forward?’” “Developing a fully joined-up operation that includes the right amount of traditional, digital and social media advertising is something that agencies really need to focus on,” he says. “Often, advertising agencies have too much of one and not the others, and it’s critical that agencies begin to utilize all of these marketing routes in a way that truly benefits the individual client. Interestingly, this is both a challenge and a continuing trend for the advertising world in 2012,” he adds. Even more intriguing in today’s world of advertising are the challenges surrounding technology. Like most other businesses, advertising agencies around the globe have been embracing technology to help determine the most appropriate medium for each audience – yet there are some challenges that are unique to this industry alone. One example Cramer gives is the fact that many consumers have moved beyond television and jumped to the increasing capabilities of today’s mobile phones. Unlike the advertising methodologies that defined the 1960s and 1970s, the time has come to adapt to newer markets that require a strategic balancing act. “Giving clients more options and communicating how the offering should be advertised opens up a world of more effective marketing,” Cramer says. “Encouraging clients to embrace all media challenges appropriate to them is a key part of the business.” Performance Outweighs Price Eastern Opportunity Stressing that it’s just as important for advertising agencies to stand out amongst the competition, Cramer notes that there will be challenges along the way – some of which Leagas Delaney have already experienced. Size of the agency is one of them. Again both a challenge and opportunity for the industry, advertising agencies around the world are beginning to see the opportunities of previously untapped markets. For 2012, Cramer states that this aspect of the business is critical. “As an independent agency, the way that we compete against big advertising networks is through our creative strengths and the ability to produce the right message for the right client,” he says. “For smaller firms however, competing against a level of price and efficiency that multi-national powerhouses can offer is going to continue to be a challenge – though not one that is insurmountable. The way that we distinguish ourselves is by focusing on creative process and talent, and I think this can result in success with high-level clients, no matter the size of the advertising firm.” “The latest challenge that we’ll see in the coming years will follow an agency’s ability to expand its business into the newly developing and growing advertising markets. In our case, Leagas Delaney has been expanding into South America and Asia, as these markets have proven to hold huge opportunities.” No More One-Way Methodology Obviously, in today’s realm of iPad and Facebook campaigning, the days of Mad Men’s sole reliance on print advertising have long gone. Yet Cramer emphasizes that dependence of one advertising vehicle over the other can be just as dangerous as utilizing ‘outdated’ forms of networking. 50 Talking the Talk “In China particularly, we’re seeing a major change,” he adds. “Previously, global advertising agencies had focused on helping western brands advance into Chinese markets. Going in to 2012, we are increasingly seeing newly confident Chinese businesses wanting to expand outside of their home market. It’s a completely different direction, but holds just as many new opportunities for agencies that understand the Chinese market.” This growing belief in Chinese and South American businesses opens up untold potential to both advertising agencies and their international clients. Talking the Talk 51
Agencies “For Leagas Delaney and our clients alike, the places that present increasing opportunity are high-growth markets such as China, India, Latin America and the United Arab Emirates.” Another factor that can help those in the advertising industry stay afloat is by continuing to concentrate on top line growth – especially for independent agencies like Leagas Delaney. Guessing Game “Top line growth is already a priority on our agenda,” Cramer acknowledges. “This means not only deepening the connection with existing customers, but also making sure that we identify new client opportunities when they arise. We are therefore putting a lot of effort into developing our relationships across Asia and other growing markets.” When asked what external or economic factors lay in store for the advertising industry, Cramer responds with both wisdom and frankness. “If someone knows, they’re guessing,” he states honestly. “No one foresaw the continuing length and depth of the challenges that are facing the Euro zone countries, and the outcome is still very uncertain. However, this uncertainty means it is now even more important for businesses to communicate effectively with their customer to ensure they maintain or grow market share. Doing this will create opportunities for agencies who can engage their clients at a strategic level.” A Global Experience Despite differences in market health across continental borders, Cramer states that “These really are global issues for both businesses and advertising agencies.” “2011 without a doubt has brought a number of challenges to the industry, but ensuring that you engage with your clients at a strategic level is going to remain critical. Agencies who want to succeed have to form a real partnership with their clients and have the conversation about what will speak to both their messages and customers.” So despite the economic downturns and the end of Mad Men-era campaigning, the industry’s reach into new markets continues to excite today’s forward-thinking agencies. “The bottom line is that this economy is tough, but there are opportunities,” concludes Cramer. “When the right kind of business comes in with an open mind towards their customers, that’s when we can provoke their thinking and come up with the absolute best advertising solution”. ■ About Leagas Delaney Leagas Delaney is a privately-owned, fully-integrated communications agency offering strategic and creative services across all channels. Established in 1980, Leagas Delaney has an international network of offices spanning London, Hamburg, Milan, Prague, Shanghai, Tokyo and Hong Kong (in 2012). Clients include Timberland, InterContinental Hotels Resorts, Patek Phillipe, Glenfiddich, Prudential, Champagne Bollinger, Ministry of Tourism of Ecuador, Skoda and the United Nations World Food Programme. Talking the Talk 53
Agencies Agency 3.0: The Destination For Advertising Agencies in a Digitally Focused World Keeping up with the Evolution of Agencies Themselves through Innovation, Operational Advancements and Digitalization ■ By Jonathan Bourke, Managing Partner, Encompass Digital To paraphrase the movie high school wise guy Ferris Bueller, agency life moves pretty fast. The past 30 years alone have seen not only the desktop publishing explosion, but also the advent of digital marketing – both indisputable game-changers. And as with society in general, technology is either driving the change, or the reason it’s created. The recent “Agency 2.5” movement is based on the belief that the digital space is the new frontier, where online innovation will change the landscape of advertising, the way Burma-Shave did in the 1940s and ‘50s, and David Ogilvy did starting in the ‘60s. Most of all, it delivers what most consumers value – a real relationship with the brands they believe in. Today, digital creativity connects consumers and brands on a visceral, organic level, from real-time customer service via Twitter, to word-of-mouth advocacy on Facebook, Yelp, or TripAdvisor. Consumers also have access to more information on brands and products than ever before. It all excites, engages and empowers them, providing more than Super Bowl spot production pizzazz and print ads to hang in their cubes. No doubt, digital has changed the landscape, and there’s no looking back. About Jonathan Bourke Jonathan Bourke is Managing Partner at Encompass Digital, providing Strategic Advisory and consulting to the advertising and media industries. He has dealt with the issues facing the industry as Chief Information Officer and Strategy Lead for a number of global agencies – supporting client facing, front, middle and back-office agency operations. Prior to advertising and media, he held senior leadership positions in banking, financial services and technology companies. This is what we refer to as “the Work” and is at the core of the Agency 3.0 philosophy. These are the non-creative activities such as time and expense collection, billing, accounting, etc. that every agency must perform, and successful agencies excel at. Until now, the technology discussion for traditional agencies has been confined to strategic and creative development. But we all know that while the creative output gets the spotlight, there’s a lot of “behind-the-curtain” work that supports it – in addition to the “up-front” staffers that could also really benefit from getting their hands on the most current technology available. In fact, implementation of these types of tools is what separates the movers and shakers from those left in the dust – enabling the digital agencies to eat the lunch of the held-back, traditional ones. Ultimately, an agency’s livelihood revolves around the Work. Indeed: the survival and client approval of an agency rests very solidly in the hands of the Work. Though elements of the Work will differ based on the agency itself, without the Work there is no agency. If this behind-the-scenes effort, including the all-important results and ROI, cannot be presented, delivered and executed in a context that makes sense, then your agency has lost the battle before it’s even begun. Agency 3.0 is that next step – taking the lessons learned from Agency 2.5 on the creative side, and applying them to the business of the firm. Agency 3.0 is the effort of increasing efficiency and profitability through finance and production systems that benefit both the agency as a whole and each individual department. Once fully adopted, Agency 3.0 conceptual initiatives provides users with the abilities to improve resource and talent management, link real-time schedules to both internal and external resources and leverage integrated data to better provide both advertising and business-to-business ideas for clients – all with the scale and flexibility for both networked and global offices. Agency 3.0 also provides the clarity to better manage people and workflows, enabling a stronger service to clients no matter where they are located. It delivers real time data – meaning that insight is based only on the most consistent and accurate metrics or business intelligence. And best of all, your firm – like other top firms embracing the digitalization of today – will see technology as an enabler of business, rather than an obstacle. That’s Agency 2.5 But what about the Traffic Manager who’s now a Project Manager, who’s still walking the halls with job jackets – the same ones that often go missing midway through the approval process? Or the Finance department facing off with clients that require more accountability than agencies can provide? 54 The Destination For Advertising Agencies in a Digitally Focused World The Destination For Advertising Agencies in a Digitally Focused World 55
Agencies • Brands are more than ever driving compliance and other standards • gency 3.0 provides more visibility into projects, something that clients A are increasingly expecting from top-level agencies • gency 3.0 lets your business do more with less – incredibly important A in today’s turbulent economy, as many companies are forced to lower their advertising budgets As an agency, you want to focus on the Work at hand, not the complex and expensive infrastructure. Agency 3.0 lets you meet that need, while also enabling your firm to: • • • • B etter manage the people, workflows and delivery of the Work E mphasize resource management and related disciplines I mprove operations and manage costs through best practices R ely on simple, trusted systems that meet your needs so they can do the “grunt-work” for you • ove past day-in and day-out tasking so your firm can tap into new M opportunities • Fast track past Agency 2.5 • ot just survive, but THRIVE with the changing advertising world around you N Maintaining integrated, out-of-the-box CRM capabilities, Agency 3.0 also provides agencies with the ability to: • ddress agency compensation challenges through improved A performance • chieve more with less time spent A • fficiently track job and universal job numbers E • asily complete routine, yet critical agency tasks E • ree up staff to focus on their core tasks by eliminating time spent F dealing with a redundant, complex infrastructure • entralize client and vendor information that is fully integrated with C project management, job and financial tasks Why Your Agency Needs to be a 3.0 Agency Darwin said it best when he coined the term “survival of the fittest”. As an agency in today’s technologically driven world, those who don’t get on board with modern concepts get left behind in the process. Even so, there are more reasons than just the above for why every agency has something to gain from embracing the ideas and tactics that make up Agency 3.0. Consider these key factors: • ore than anybody, clients want to see innovation and adoption of M technology, and Agency 3.0 is running your business the way they are asking you to • y going global, brands are changing how and why they work, so B maintaining a system that supports globalization is critical 56 The Destination For Advertising Agencies in a Digitally Focused World In Summary Agency 3.0 isn’t a revolution, it’s an evolution – understanding the value of the tools already at your agency’s disposal, borrowing best practices from other departments and service industries and creating an environment where every staff member affected by the process or workflow has the proper access to it. With the right implementation and customization, Agency 3.0 initiatives will help your entire agency become more efficient, increase visibility and recognize and cultivate both the best talent and the best clients to keep your business at the top of its game – all while capturing and centralizing most of the “paper” functions across the organization, to keep the Work running smoothly. ■ Know More R ead the entire white paper Agency 3.0: The Destination for Advertising Agencies in a Digitally Focused World at www.deltek.com/agency3.0 J oin Tim Williams of Ignition Consulting to hear his insight on the market trends, client demands, and how your agency can respond to the ever-changing environment. Watch the webinar at www.deltek.com/agency3.0webcast The Destination For Advertising Agencies in a Digitally Focused World 57
Architecture Engineering Firms According to Rasmus Ødum, Executive Vice President of Danish engineering consulting firm COWI, “Globalization has undoubtedly intensified competition within the engineering consultancy sector. But on the other hand, it has brought greater opportunities, especially to those who have established a close working relationship with customers.” Flip to the Architecture Engineering industry section to read Rasmus Ødum’s interview in its entirety, while also diving into a perspective article about decision-making at the best run AE firms.
Architecture Engineering Firms Building a Bridge to Growth in a Financial ‘Earthquake’ ■ By Barry Monk, Consultant, Next Communications Rasmus Ødum, Executive Vice President of Danish engineering consulting firm, COWI, explains how building solid foundations can help counteract seismic shifts in the global economy As an engineering challenge, it doesn’t get much bigger. COWI, a leading international engineering consulting firm headquartered in Denmark, is working with the Japanese contractor IHI to build what will be the world’s fourth-longest suspension bridge, spanning Izmit Bay in Turkey, due for completion in 2015. As if that challenge wasn’t big enough, the USD 1.1 billion Izmit Bay Bridge will be built in one of the most seismically active areas in the world. In contrast to the Great Belt Bridge in Denmark, which COWI was also involved in, the design team elected to use steel pylons that can ‘slide’ on a concrete foundation in the event of a major earthquake, effectively making the bridge earthquake resistant. Seismic activity The fact that, in the bidding phase, COWI prepared a bridge design that IHI would be able to build faster and at lower cost than its competitors, primarily Chinese and Korean contractors, at a time of seismic activity in the global economy is in itself a major achievement. “Globalization has undoubtedly intensified competition within the engineering consultancy sector, but on the other hand, it has brought greater opportunities, especially to those who have established a close working relationship with customers,” says Rasmus Ødum, COWI’S Executive Vice President, Denmark. Global reach With offices all over the world, COWI provides state-of-the-art consultancy services within the fields of engineering, environmental science and economics, and plans projects using its extensive knowledge of local markets 60 Building a Bridge to Growth in a Financial ‘Earthquake’ while drawing on its global experience. The firm’s 6,000 employees include engineers, biologists, geologists, economists, surveyors, anthropologists, sociologists and architects. COWI, like all consulting firms, has undoubtedly felt the shifts in the global economy’s tectonic plates. So in COWI’s view, how did 2011 turn out in the engineering consultancy industry? “We thought 2010 was tough, but 2011 was probably one of the toughest in 15 years,” says Rasmus Ødum. “Building and construction in particular has become highly competitive. Consolidation is the name of game at the moment, with the growth of a lot of bigger players.” Major challenges Given this scenario, what does he see as the top three key challenges facing the engineering consultancy industry in 2012? “Firstly, I think low growth rates in Europe and the US in the first six months of 2012 will undoubtedly impact on the industry, and this is likely to have a tremendous effect on a willingness to invest in major infrastructure projects,” he says. “Secondly, it will be a challenge to maintain competitiveness in the market. If you look back five years, we were able to move people around the world to service the big global infrastructure projects. Local presence is a prerequisite for competitive players in the global market place: A criterion which we have aimed to fulfil in the past years by regionalizing COWI in line with our strategy. Now we have to ensure that people are ‘on the ground’ to service projects, so it’s all about ensuring process optimization in order to maintain a healthy bottom line.” He added: “Thirdly, projects are getting bigger and more wide-ranging, and they therefore require consultants with a wide variety of skills under their belts. The challenge is to ensure that we have the right skills, in the right place at the right time.” About Rasmus Ødum Mr Rasmus Ødum, MSc Agricultural Economics, is Executive Board Member, COWI Group, and Executive Vice President and Managing Director, COWI Denmark. The company with 6000 employees world-wide provides services within the fields of engineering, environmental science and economics. Mr Ødum has been with COWI for 15 years and has headed COWI Denmark since 2008 and is also a member of COWI's executive board. From 2005 to 2008 Mr Ødum had the overall responsibility for the business unit 'Geographical information and IT. Building a Bridge to Growth in a Financial ‘Earthquake’ 61
Architecture Engineering Firms Growth by acquisition In 2009, COWI grew 25% to 6,000 employees, but averaged 3-5% in the last two years. “You really need to make acquisitions to take the big steps and increase the speed at which you can onboard new employees,” says Rasmus Ødum. “The ability to attract and retain the best minds should be high on every engineering consultancy’s agenda.” He adds: “In 2012, we expect organic growth of around 5%, but we constantly look proactively for the right acquisition opportunities in line with our strategy. In our business, there is undoubtedly a strong link between headcount and revenue.” Investment in systems Process optimization at COWI is being achieved via an investment in a new, group-wide Deltek Maconomy project management and financial management system. “The new system is empowering our project managers to more effectively control their projects, including creation, resource allocation, budgeting, invoice preparation, and follow-up. We have around 15,000 ongoing projects, so this front line driven technical and financial responsibility is fundamental for our business success.” He adds: “Moreover, strong business reporting capabilities are creating greater transparency at the executive level so company leaders can get a real-time view into the performance of the business. The system alone will power growth by around 1-1.5% and enable us to acquire and integrate new companies faster.” Opportunities go East So does he see any differences when comparing markets in Europe and the US with the rest of the world? “Certainly we see huge opportunities in China and India, especially on large infrastructure projects,” he explains. “On the other hand, engineering consultancies from China and India are now extending their global reach, so that’s a challenge we haven’t faced in the past because they have largely stayed in their own countries. Having these new players coming up is really changing the game on a global basis.” Urbanization is indeed a key driver. If a recent report* is to be believed, urban infrastructure is one of the most pressing challenges that the world is facing today. More than half the global population lives in cities, and this figure is estimated to rise to more than 70 percent before 2050 as a further 3 billion people move to urban areas in search in of work and prosperity. Rasmus Ødum believes the demand for engineering consultancy will grow accordingly. “It has just been announced that there are 7 billion people on Earth. This growth in population inevitably means more people moving towards big cities, with the demand for urbanization projects, huge transport solutions, intelligent energy distribution, water management, and so on. In China and India in particular, water management will be a huge undertaking that will demand our services. Also, with an ageing population in many countries, an intelligent investment in health services will also create huge demands in our industry. We envisage enormous long-term growth potential in these areas.” Looking at China in particular, after a busy Year of the Tiger (2010) which saw COWI secure participation on the Hong Kong-Zhuhai-Macau link – the most important infrastructure project in China – the government unveiled a new Five-Year Plan in the Year of the Rabbit (2011). “You could call it a plan for ‘China Incorporated’,” says Rasmus Ødum. “China's Five-Year Plans in the past three decades have had one key success parameter: Economic growth. And to a large extent, the growth strategy has worked: The world's most populous country has been transformed into the world's second largest economy. But the new Five-Year Plan will shift the focus from flat-out growth to more sustained, balanced growth rates of around eight per cent that target societal imbalances.” He adds: “The urbanization rate in China is unprecedented and this is where we already have strong competences within building, energy, water and infrastructure. When this is coupled with sustainability, I believe we can differentiate ourselves in this emerging market.” Key goals The world’s fourth-longest suspension bridge, spanning Izmit Bay in Turkey, due for completion in 2015. Copyright: Dissing + Weitling 62 Building a Bridge to Growth in a Financial ‘Earthquake’ For Rasmus Ødum, the key objectives for 2012 and beyond are to “increase efficiency and effectiveness”. He explains: “We’re looking to achieve steady but solid growth rates, so it’s all about really tuning our machinery for next year. That means achieving process optimization, increasing our effectiveness, and ensuring a distributed engineering model whereby we can deploy the skills we need, wherever the projects are.” Building a Bridge to Growth in a Financial ‘Earthquake’ 63
Architecture Engineering Firms Of course, no company in this industry operates in a bubble, so what does Rasmus Ødum see as the key external factors – political and/or economic – that will impact the engineering consulting industry in 2012? “A great deal depends on the outcome of the economic crisis in Europe,” he says. “One thing is for sure: Uncertainty can and will paralyze business activities. In 2011 we all had the feeling that we were on track in Q1 and Q2, then everything grounded to a halt. The sooner we have clarification as to what is going to happen, the better. The one thing we all need is stability.” We have to ensure that people are ‘on the ground’ to service projects, so it’s all about ensuring process optimization in order to maintain a healthy bottom line. Rasmus Ødum, Executive Vice President and Managing Director, COWI Denmark. He believes that, whatever the outcome, different measures will be taken across every country, and this will affect the work available to engineering consulting firms. “There is currently a backlog of infrastructure initiatives in different countries, so this will need to be cleared, but I suspect it will not be at the same speed as previously,” he says. “The possibility that these projects could be rolled back even further if the crisis continues is a major concern.” Even though there seems to be a surplus of consultants, and prices are falling on the world market, COWI is looking optimistically to the future. “We have especially focused on four important high-growth areas, where we have secured significant breakthroughs – transport, water, energy and healthcare – all of which have enormous long-term growth potential,” says Rasmus Ødum. He believes that financial strength will continue to be decisive in these years, where projects grow in size and complexity. “For this reason, investments must ensure that we can continue to bid on mega-projects so we can continue to be among the world leaders in, for example, designing bridges,” he says. “This will give us a significant competitive advantage in the coming years.” He concludes: “The risk of an earthquake places unique demands on our services, whether it’s a real one that affects our bridge designs, or a financial one that can impact our industry. We’re very well placed to withstand either.” ■ About COWI With offices all over the world, COWI offers consultancy services and plans projects using its extensive knowledge of local markets while drawing on the international experience of its entire organization. COWI’s 6,000 employees in 26 countries include engineers, biologists, geologists, economists, surveyors, anthropologists, sociologists and architects. For more information, visit www.cowi.com Building a Bridge to Growth in a Financial ‘Earthquake’ 65
Architecture Engineering Benchmark Reports Deltek have been studying and reporting on the AE industry for over two decades. As you move forward into 2012 and beyond, it is our hope that our AE reports will help you chart your course for success. Read them. Discuss them. Benchmark your performance. Above all, use the insight contained within to make improvements in your own operations. Clarity: AE Industry Study 2011 Comprehensive Report Trends and needs in the engineering sector The report provides information on the overall health of the Architecture Engineering (AE) industries as well as important benchmarks for each AE firm to evaluate their performance. How do engineering consultancies themselves see the future of the sector? In this year’s Clarity 2011 AE Report we are focusing on: • ow firms like yours manage these dynamic times h • how performance is trending • what strategies have worked • what to expect from the future Download the report free of charge at www.deltek.com/clarity 66 The Dutch engineering association NLingenieurs and Deltek conducted a study in 2011 on the trends and needs in the engineering market in the Netherlands and Belgium. Consulting firm Synovate interviewed employees of 112 engineering consultancies. The study offers in-depth insight into the consultancies’ vision of their market and of their own future. Download the report free of charge at www.deltek.com/AEreport2011 67
Architecture Engineering Firms Decision Making at the Best Run AE Firms ■ By Jon Bornstein, Manager, Deltek, Inc. Creating a Culture of Fact versus Gut Historically, Architecture and Engineering (AE) firms have been able to rely on the merits of their work for success, growth and profitability. Accordingly, decision making used to be relatively informal, and was largely guided by gut instinct and considering past performance as a barometer for future performance. While that is still true in many organizations, the opportunity for AE businesses is changing based on the emergence of Business Intelligence (BI) as one of today’s most popular business disciplines. BI, also known as fact-based decision making, performance management or analytics, is significant because of its ability to significantly impact growth and profitability. Equally important, Business Intelligence gives firms the ability to foresee and proactively avoid problems that could negatively impact performance. BI flips the historical decision making process on its head: in the past, decisions were based on intuition, without the benefit of a concrete, data-driven foundation. Today, firms are instead achieving a competitive advantage by creating cultures where BI sits at the core. In this new AE business dynamic, the premium is on decisions informed by data and data analysis. Because of its many merits, BI has been widely discussed and adopted in other industries – especially in financial services and retail. Little attention has been paid, however, to how AE firms can harness the power of BI in their own organizations. 68 Decision Making at the Best Run AE Firms Decision Making at the Best Run AE Firms 69
Smarter Decisions, Better Results Firms that have formal BI strategies in place are taking a deliberate and methodical approach to decision making, resulting in an accurate perspective of their business. Consider having a historical, current and future view of firm performance with which you can: • pend more time analyzing data and making decisions than running S reports • Share performance data across the firm in role-appropriate ways • Use goals to drive the decision making process A nd perhaps most importantly: Predict the impact of decisions on firm performance 1 AE firms have their own distinct processes and cultures. In considering how to apply BI within their organizations, it’s important to start with three factors: 1. A firm’s maturity level, 2. Defining and measuring as specifically as possible and 3. Creating a clear bias towards action. Know More In the webcast Back to Black: Decision Making at the Best Run AE Firms Christine Brack, Principal, Strategic Business Planning, ZweigWhite, Vicky Morton, Information Systems Manager, Bonestroo and Bret Tushaus, Product Director, Deltek discuss how to design and leverage BI strategies to optimize the aspects of firm performance. Watch the webcast at www.deltek.com/webcastBestAE 70 Decision Making at the Best Run AE Firms Christine Brack, principal, business planning for ZweigWhite, stresses the importance of assessing a firm’s ’maturity level’ first and foremost. “How committed are you to changing? This factor is key”, Brack says, noting “A firm using business information to make decisions about growth and using metrics to improve, has to have a culture that is prepared for these initiatives and expect change.” 2 These are the distinct, and sometimes critical, advantages that BI provides. When looking at what BI offers, it’s clear that firms that systemize their BI or fact-based decision making processes have a strong competitive advantage over those that don’t. The challenge then becomes where to begin and/or how to best manage the existing BI programs in place. Moving a Culture of BI forward: Three Considerations Consider Your Firm’s Maturity Level 3 Be As Specific As Possible Once you’ve decided that BI has a role within your firm, it is time to create specific initiatives. After identifying what you’ll measure and improve, it’s imperative to be laser focused on ensuring the data is easy to access, easy to read and relevant to the appropriate decision makers. Additionally, it is essential that firms identify goals for all of the data that is being measured so that it’s clear what success looks like. Without goals, measurement becomes irrelevant. Brack emphasizes this, stating, “Leaders and managers need to concentrate on data that is actionable, rather than informational. In other words, get the right data and do something with it.” Take Action Finally, once a firm has quantifiable data, it needs to be able to apply it accurately. This means that someone has to look at the numbers and be able to decide if they can be changed in a favorable manner. Christine Brack comments: “If it has been determined that proactive action can be taken, the firm also has to decide how much change it wants and be willing to make the necessary changes to produce results.” As the last step, a feedback loop must be in place so that the effect of a change can later be evaluated (measurement is, after all, BI’s fundamental principle). Conclusion Given the availability of reliable data provided by today’s powerful software tools, AE firms have no reason to continue to strictly use intuition to make decision that could put their firm at risk. As the adage goes, “Data does not lie”. And while it can be misinterpreted, if you do your due diligence and balance your decision making with a three parts data and one part intuition, you should rarely be questioning your course. ■
Law Firms In his interview regarding today’s trends within the legal industry, Knut-Magnar Aanestad, Chief Knowledge Officer at Schjødt law firm, discusses market expansions, international offerings and modernization of the industry as a whole. Also in this section, read our interview with PA Consulting Group’s Claus Fadum Nissen and Henrik Zeberg where they disclose how today’s legal sector is adapting to become more of a ‘business’ and less of a ‘profession’.
Modernizing the Legal Industry Interview with Knut-Magnar Aanestad, Chief Knowledge Officer, Schjødt law firm ■ By Lauran Cacciatori, Senior Manager, Deltek, Inc. If you have access to any form of media, you’ve probably heard of Amanda Knox. With her incredibly high-profile murder case overturned in October of 2011, the face of the ‘student-abroad-in-Italy murder suspect’ has been broadcast over all corners of the earth. And like many of 2011’s other highprofile courtroom dramas -including the murder trials of Casey Anthony, and Michael Jackson’s doctor, Conrad Murray - each defendant retained an equally attention-grabbing lawyer. But despite the similarities of infamy, the difference between Amanda Knox and other news-breaking cases was the sense of internationality that the case had in and of itself. While both Casey Anthony and Conrad Murray’s murder cases were executed, defended and sentenced in the United States, the Amanda Knox trial showcased the extraordinary differences between legal systems across the world. With U.S. and Italian law proceedings so drastically varied, challenges arose for the legal teams to ensure that the American girl abroad received the proper extent of the law for both countries. About Knut-Magnar Aanestad Graduating with a Law degree in 1997 from University of Oslo, with a specialty in IT-law. Knut-Magnar started his career at Datatilsynet (The Norwegian Data Protection Authority). With over 14 years experience, he is now the Chief Knowledge Officer. Knut-Magnar Aanestad leads the Knowledge and IT-department. Currently, in addition to developing KM-activities, Knut-Magnar Aanestad is working with Schjødt to redesign its IT-infrastructure and implement new basic applications, such as ERP (PMS) and Document Management (DMS). Other main tasks include developing EUREKA, Schjødt’s database of documents for reuse and development. 74 Modernizing the Legal Industry
Law Firms … there is a spark to make firms more professional and knowledge-driven than before. While the legal industry may have previously been content to perform ‘oldfashioned’ traditions and processes, there is now a stronger pull towards workers and leaders utilizing more modern technologies. Knut-Magnar Aanestad, Chief Knowledge Officer, Schjødt For law firms like Schjødt, overcoming international challenges is just another day at the office. While the firm may not practice criminal law, the idea of being an international firm and crossing country lines is still paramount to its business. As a Norwegian-based firm, Schjødt – a leading provider of business law services –gives clients access to lawyers in Oslo, Bergen, Stavanger, Alesund and Brussels, while simultaneously working with international clients and assignments that reach Scandinavia, Europe and beyond. Focusing its practice on areas including competition law, corporate MA, intellectual property, litigation, real estate, stock exchange securities, and tax amongst other areas, Schjødt tailors legal advice to its clients’ professional and geographical business objectives. The firm helps businesses navigate the supreme parliament of Norway (called The Storting) and international legislatures alike. To accomplish this, its expertly-staffed legal consultancy has to be aware of laws and procedures all over the world. Schjødt’s Take on 2011 As the legal industry continues to look in new directions for business and international offerings, it faces a bumpy road moving into 2012. However, amidst a year full of economic ups and downs, representatives from Schjødt believe that 2011’s tumultuous state has actually forced the legal industry to embrace some positive changes. “For the legal industry, 2011 turned out pretty well,” says Knut-Magnar Aanestad, Schjødt’s Chief Knowledge Officer. Staying optimistic as the year comes to a close, Aanestad does not feel that the business arena of the legal industry held unwanted surprises. “Speaking for both our company 76 Modernizing the Legal Industry and the industry as a whole, we were not as negatively affected by the crisis as many other industries.” “However, there is a spark to make firms more professional and knowledgedriven than before,” he continues. “While the legal industry may have previously been content to perform ‘old-fashioned’ traditions and processes, there is now a stronger pull towards workers and leaders utilizing more modern technologies.” These technologies, like in many of today’s fast-developing industries, can be viewed as the new lifeblood of a legal firm intent on growing its clientbase. And according to Aanestad, there are still plenty of projects for the legal industry to take on - meaning more chances to optimize processes and make more streamlined and efficient business decisions. “There are a lot of pros in terms of modernizing, especially when it comes to how management setup is done,” he states. “Our company, for example, is amongst other measures, starting to use Business Intelligence in an increasingly advanced way where we can now develop different types of reports to incentivize our leaders and managers.” Global Predicaments Though Aanestad emphasizes the positives of 2011’s economic instability, he does note that a major challenge of the upcoming year will be the unpredictability of the market itself. Depending on the market, he admits, costs and incomes for legal firms could fluctuate. What’s more, the challenge of unpredictability is something that all markets have to stay on top of, meaning that this global concern will affect firms at international, national and regional levels alike. The second challenge Aanestad discusses is also a global issue, but one that most firms are excited to tackle: expansion into new markets. “There are a lot of ways to do this,” Aanestad explains. “A firm has the more obvious option of setting up a local office in the market it’s trying to tap, but penetrating a new market is never easy, even with local resources at your disposal. Another way that has become increasingly common is to specialize and cooperate with legal firms that have already established a solid footprint in the desired market.” With the second option summarized as “setting up a desk at another office”, Aanestad notes that there is a final, more internally-driven strategy to market expansion within the legal industry. Like the technology Aanestad Modernizing the Legal Industry 77
Law Firms There are a lot of pros in terms of modernizing, especially when it comes to how management setup is done. Our company, for example, is amongst other measures, starting to use Business Intelligence in an increasingly advanced way where we can now develop different types of reports to incentivize our leaders and managers. Knut-Magnar Aanestad, Chief Knowledge Officer, Schjødt mentions earlier, this strategy focuses on project managers, under the idea that management from another country can help focus the business strategies in a way that will attract that manager’s home markets. “For example,” Aanestad says, “As our firm looks to expand its business towards China, we might hire a Chinese project manager who knows the Chinese business landscape and can help focus the business strategies Beyond 2011: Growth Rates Slow, But Don’t Surrender “The last few years, we’ve seen a lot of growth on both our top and bottom line,” states Aanestad, reflecting on 2011’s limited economic impact on both Schjødt and the legal industry. “However, we may be expecting a year that won’t deliver the same growth that we’ve recently had.” The position of the firm is still a good one, though. While not planning on as much growth as seen in the previous two years, Schjødt is still expanding - taking the firm’s reach all the way to China and other international partnerships. The challenge, Aanestad notes, again revolves around the unpredictability of what 2012’s economy has in store. “It’s really hard to say what will happen in 2012, as the landscape is still so murky,” he acknowledges. “Organic growth certainly is not expected to be so strong, but some companies may still hold on to the trends of last decade and consider mergers. Honestly though, mergers are not a huge trend that the legal industry sees as much, since firms now have more options to tap into markets outside their own.” The impact these trends will have on legal firms is clear: to keep pace and continuing growing top and bottom lines, firms must think outside the box and modernize in 2012 and beyond. ■ accordingly. What’s more, this method of internal employment can help motivate those under the project manager to follow suit and align their strategies in a more accurate target towards that same market.” But in discussing the trials of market expansion, Aanestad taps into a much deeper challenge of the legal industry, one that has not yet reached Norway but is being seen more and more as a growing trend - and that challenge is liberalization. Liberalization: A Growing Trend Becoming more and more commonplace outside of Norway, countries are liberalizing the market for legal services, developing a market where businesses other than law firms can give legal advice. “A great example of the liberalization we are seeing is when a larger consultancy firm would offer legal advice connected to its core business area. The United Kingdom has been affected by liberalization, forcing law firms to professionalize to compete. While liberalization has not yet reached Norway or affected our market, we will still keep a keen eye on this trend,” said Aanestad. 78 Modernizing the Legal Industry About Schjødt Founded on a high professional standard, sectoral expertise and staunch tradition, Schjødt supplies services in commercial law that provide a secure foundation for our clients’ decisions and safeguard their objectives. Schjødt aims to be Norway’s most competent commercial law firm within its priority areas. We will participate in social change and progress. The firm gives its clients access to lawyers in Oslo, Bergen, Stavanger, Ålesund and Brussels, and has the ability and resources to lead the development in Norwegian business law. On a daily basis, Schjødt’s lawyers work with international clients and assignments. Schjødt has alliance partners in Scandinavia, Europe and beyond; is a member of the World Law Group; and has experience collaborating with other law firms in respect of numerous projects and transactions. In order to ensure complete flexibility and the requisite highlevel expertise in the carrying out its remits, Schjødt's philosophy is always to remain independent in its choice of cooperation partners, thereby ensuring they meet all their clients’ requirements to the fullest possible extent. www.schjodt.no Modernizing the Legal Industry 79
Law Firms Change is the Name of the Game For the legal sector, a new wave of client expectations puts focus on developing the business ■ Claus Fadum Nissen and Henrik Zeberg, management consultants, PA Consulting Group, interviewed by Rachel Lore, Copy Writer, Deltek, Inc. We’ve all heard a joke or two about how bad lawyers are when it comes to interpersonal relationships with clients but market driven evolution within the realm of legal sector business may change that. A new study by international consulting firm PA Consulting Group shows that a budding landscape of strong lawyer-client relationships is currently arising out of the legal industry’s development into commercialized business. “Change for the legal sector is indeed coming,” summarizes Claus Fadum Nissen, a management consultant based in PA's Copenhagen offices together with his colleague, Henrik Zeberg. As two of the company’s 2,000plus employees, they are not being ominous. Actually, Nissen states this very matter-of-factly, as if the change hitting the legal sector of business is in no way a negative or even unexpected thing, but rather is all in due course. “Law firms are simply being hit by the same client expectations that hit the consulting industry many years ago,” Nissen says. To simplify, Nissen explains that the recent call-to-action for the legal industry’s business evolution can be boiled down to four things: 1. A call for clear value-for-money 2. Raised expectations for understanding client needs 3. Increased use of tenders for large-scale assignments, and 4. Client preference to seek top lawyers within the needed specialty – even if it means changing legal service suppliers to get there All together, these changes have been underway for years. Nonetheless, it’s clear from the company’s legal sector research how imperative it is for law firms to be prepared for these changes – especially now that this pace of change is steadily increasing. In monitoring global legal sector trends, PA has determined that adaptability to these new client expectations can mean the difference between success and struggle, and can even be detrimental 80 Change is the Name of the Game enough to contribute to a firm’s demise. Adaptability in this case means the willingness to look into the business’ infrastructure, including looking for operational efficiencies and even re-examining the basic business model of the firm. But why study the legal sector? PA provides services within management, IT and technology consulting to a wide range of sectors, yet Zeberg claims that in PA’s study the legal sector stood out, as its challenges actually mirrored those of PA's own over the years. Inspired by PA's work with some of the most successful law firms in Denmark and the UK over the last few years, it dawned on Nissen and Zeberg that if these firms were experiencing the need for internal efficiencies and business improvements, law firms in other geographies were probably seeing many of the same challenges. Additionally, the recent collapse of many highly regarded firms, and an increasing level of competition within the sector, confirmed to many in the legal sector that it was time to change strategies. At the same time, new websites such as legalzoom.com are providing potential clients with the ability to retrieve fast and uncomplicated online advice from a range of legal questions. Through what basically amounts to three easy steps, websites like legalzoom.com eliminate many users’ needs to seek professional advice from traditional ‘brick-and-mortar’ law establishments. This new electronic option may over time force firms in the legal industry to provide more than just solid legal advice when called upon, and instead look to a way of systematically developing and maintaining longterm relationships with their clients. The Study With the study PA began its research into the future of the legal sector. Through one-on-ones, surveys, seminars and open forums, PA was able to utilize its project-based experience and insight as a foundation for analysis. From there, PA uncovered a wealth of information that helped solidify the presence of evolving market trends. The highlights of their findings included three important aspects: 1. client demand for increased service value as an addition to genA eral legal expertise – supporting the development of alternative pricing models, risk sharing models and a deeper understanding of client challenges and overall ambitions 2. An increase in competition – amplifying the need for performancedriving, internal efficiencies within both the administrative processes and the efficient use of free-earner resources Change is the Name of the Game 81
Law Firms 3. A war for talent – attracting the best legal talent through a combination of market-leading compensation packages, offering challenging client work and personal and professional development With the research results stemming from a number of international legal markets, Nissen admits that the similarities across geographies – in addition to the focus points – were actually somewhat surprising to the PA team. “We were a bit skeptic that the challenges identified were as large, as many of the firms mentioned in our survey seemed so successful,” Nissen states. “Though we had some hunches, we did not imagine that there was that much similarity in company performance and the challenges faced. Zeberg adds “What our survey showed however, was that almost all firms in the legal sector, in some shape or form, are going through the same process. And that process is business commercialization.” Law’s Commercial Journey Nissen and Zeberg are refering to what PA calls “The Commercial Journey of the Law Firm”, wherein law firms facing the pressure of increased competition and selectiveness of clients, are remodeling business models to become increasingly client-focused. The journey starts in the “good old days” where the backbone of success was expertise alone and where companies could pick their clients as they suited, all the way to today’s market where IT and framework consolidation are often necessary for firms to conjoin and optimize efficiency. In this new journey, the key for law firms is to become even savvier about running the business itself, not just legal capacity and quality alone. Nissen suggests that those who can reach the “nirvana” of the business model – that is, those that can consistently transform client satisfaction into a strong bottom-line – are firms that have full client focus in addition to maintaining clear commercial and operational targets and goals for all employees. What’s more, these firms will be the ones that are the best at using alternative pricing models, organizing case portfolios and managing resource utilization. While Zeberg contends that larger, more competitive legal markets such as the US and UK are probably farther along this journey when it comes to key aspects, he notes that it’s more important for an individual firm to successfully develop client-focused practices along the way, than to rush through the process and ignore company inefficiencies. 82 Change is the Name of the Game ... the legal sector is becoming more of a business and less of a profession. Henrik Zeberg, management consultant, PA Consulting Group Going Forward To give your law firm a better chance of long-term success, Nissen recommends embracing these changes whole-heartedly. Emphasizing the importance of developing relationships, opening up to the option of partnering with like-minded firms and focusing on what it takes to establish and develop clients, the research translates into understanding the value chain of case work. Noting that this is also true for other struggling professional services organizations, Zeberg proposes five questions that law firms should ask themselves to better focus their business commercially: 1. Do we have the right pipeline of work? 2. we managing risk profitably when it comes to pricing, scoping, Are etc.? 3. we consistently allocate our resources efficiently, given the case Do work in question? 4. we efficient in our order-to-cash process (i.e. billing efficiently, Are ensuring timely payment, etc.)? 5. Are we creating value for our owners on all cases we take on? “This forward-looking focus on business highlights the monumental change taking place in the legal sector,” concludes Nissen. “The most interesting part is that we’re now seeing the importance of developing a business that focuses both on developing and maintaining best-in-class legal skills and on building deep client relationships. And these relationships will increasingly be based on a thorough understanding of the clients sector, competitive situation and unique challenges and needs, not just on the individual cases previously solved on behalf of the client, Zeberg adds “These changes imply a new era of better, more resilient business for the legal sector. In short, the legal sector is becoming more of a business and less of a profession.” ■ About PA Consulting Group PA Consulting Group is a management and IT consulting and technology firm. Independent and employee-owned, they operate globally in more than 30 countries and transform the performance of major organizations in both the private and public sectors. www.paconsulting.com Change is the Name of the Game 83
Management IT Consulting Companies Victor Allis, CEO of Dutch software company Quintiq, explains how and why ‘making the 6 meter jump’ can help businesses leap over the competition. Read his interview in full in the Management and IT Consulting section, and check out an industry perspective piece on how these firms can capitalize on the temporal opportunities brought to us by the social, economic and market factors around us.
Management IT Consulting Companies Businesses Must 'Clear The Bar' to Stay On Top ■ By Barry Monk, Consultant, Next Communications Victor Allis, CEO of Dutch software company Quintiq, explains why ‘making the 6 meter jump’ can help businesses leap over the competition Meeting challenges, aiming to win, working together, overcoming adversity, going the ‘extra mile’, breaking records. There are indeed a lot of similarities between sporting and business success. With this in mind, Dr Victor Allis, CEO of Quintiq – himself a six-fold gold medal winner at four computer Olympiads – draws comparisons between his company’s business objectives and one sporting event in particular – pole vaulting. Achieving and maintaining market leadership in its target markets, he says, means encouraging his people to ‘make the 6 meter jump’, i.e. make that extra leap to secure business, stay on top of the competition – and win. Winning strategy For Quintiq, it’s a strategy that appears to work. Founded in 1997, Quintiq achieved its first installation in 2000 and now has solutions in use at over 500 sites in 77 countries. The firm has dual headquarters in The Netherlands and Philadelphia, USA, and international offices in  Australia, China, Finland, Germany, Italy, Malaysia, and the United Kingdom. It has been recognized by industry analyst Gartner as a ‘Visionary’ in its 2010 Magic Quadrant for Supply Chain Planning, and was the winner of Deloitte’s 2010 Best Managed Companies. The company – which provides advanced planning, scheduling and supply chain optimization software solutions and consultancy – has grown on average 40% per annum in recent years, with revenues in 2011 of around US$ 65 million and 376 employees worldwide. The company is charting the same course for growth in 2012, and hopefully beyond. 86 Businesses must ‘clear the bar’ to stay on top Whoever heard of the word ‘recession’? Not Quintiq, it seems. Of course, this growth needs to be put into the context of a difficult period for IT consulting in recent years. Consulting, as we all know, is a somewhat cyclical industry. Consultancies generally posted significant growth from 2005 through 2007. However, 2008-09 marked a challenging period throughout the world, in light of the global economic slowdown and shrinking corporate budgets. Many IT consulting engagements focused on delivering cost-cutting operational enhancements and performance improvement benefits. However, as the business climate started to improve by mid-2010, the focus on IT cost cutting diminished. Today, many client organizations have shifted their focus and are engaging software and consulting practices such as Quintiq to develop a sustainable IT platform and an approach that focuses on innovation and growth. When it comes to providing innovation in its software solutions and consultancy to organizations in order to solve their complex scheduling, planning, and supply chain challenges, Quintiq not only ‘talks the talk’ but also ‘walks the walk’. Examples include: • LM Catering Services optimizes the daily distribution of 40,000 K meals to aircraft at Amsterdam’s Schiphol Airport • DHL Express plans and manages the daily delivery and pick-up of thousands of parcels in more than 50 countries • Novelis, the world leader in aluminum rolling and recycling, performs production planning across its manufacturing centers, and • he US Federal Aviation Administration (FAA) uses Quintiq’s T advanced planning and scheduling software to perform employee scheduling of all air traffic controllers. About Victor Allis Victor Allis and Arjen Heeres jointly run Quintiq and have divided portfolios between them. Victor Allis’ focus is on all non-European Business Units, the Global Development Center, RD, Project Delivery, Product Development and Finance. His awards include: • Ernst Young Entrepreneur of the Year, 2008 • Silver medal winner at the International Mathematical Olympiad in Paris 1983 as representative of the Netherlands. Businesses must ‘clear the bar’ to stay on top 87
Management IT Consulting Companies Dr Allis explained: “Clients today are looking to maximize asset utilization, drive down operational costs, improve on-time delivery, reduce production lead time, and much more. These are day-to-day business pressures, whether or not there’s downturn. For us, it’s about building long-term partnerships with our customers, and this is absolutely crucial in a good or bad economic climate.” Delivering quality and efficiency Dr Allis explained that in recent years, the company has landed some significant, multi-million dollar contracts, accounting for approximately 50% of its revenues, with the rest coming from a large number of smaller contracts averaging several hundreds of thousands of dollars each. But maintaining growth and leadership in its target markets is not easy. So how have they achieved it? And what’s the lesson for other firms? Dr Allis explained: “Through the years and numerous successful implementation projects, we have identified the principles that determine the success of a project and developed a methodology called the Quintiq Project Life Cycle, or QPLC. Underlying this is a number of important principles that can be summed up in two key words: quality and efficiency. It is through this focus on quality and efficiency that we are able to achieve a 100% fit for our customers.” Customer service goals The company’s approach is evident in the business it secured in 2011 with one of its customers, PO Ferrymasters, one of Europe’s leading providers of transportation and logistics services, which selected Quintiq’s Advanced Planning and Scheduling (APS) software solution. In the competitive logistics industry, PO Ferrymasters differentiates itself by offering ‘grade A’ customer service, including tailoring logistics solutions to its customers’ specific operational processes. “Our planning solution helped the company surpass its customer service goals by decreasing transport costs, improving communication between the firm and its customers and reducing its carbon footprint with efficient transportation utilization,” said Dr Allis. But isn’t landing deals like this a really tough challenge for any firm in the rollercoaster of a global economic turmoil? “The recent economic downturn hasn’t really affected us too much,” said Dr Allis. “We’re pretty much recession-proof. In difficult times, businesses focus even more on their quest for quality and efficiency, they need solutions to achieve that, and they come to us – so we can benefit from downturns.” Businesses must ‘clear the bar’ to stay on top 89
Management IT Consulting Companies We need to look at what we can do in order to create value for our customers. If each business concentrates on creating its own growth, however small, then this will have a positive impact on growth in the global economy. Victor Allis, CEO, Quintiq Key challenges But running a successful and rapidly growing business like Quintiq isn’t without its challenges, as Dr Allis explained: “Our biggest challenge is to achieve growth with the right people. Finding the right talent at just the right time is absolutely at the top of the list in our business. People are undoubtedly our firm’s strongest asset.” He added two further challenges for software and consulting firms: Breaking new territories and finding new vertical markets. He explained: “Our next biggest challenge is extending the business geographically to break new territories such as China, Japan, Brazil and India. In some countries they don’t have the data infrastructure required to implement our solutions, so we need to work harder to make them work. Our next big challenge is to break into new vertical markets, such as oil and gas and, in some countries, the steel industry. It’s absolutely vital for our industry to find and maximize these new opportunities.” Reaching new heights When Ukranian pole vaulter Sergey Bubka set the indoor world record of 6.15 meters in 1993, he couldn’t anticipate that Dr Allis would look to this achievement in terms of setting the bar high for his company. He explained: “In telling all our sales people to go for the 6 meter jump, I want them to reach new heights for the customer. In Quintiq, we’re selling value, not just solutions, to our customers, so we need to keep aiming high.” He gives an example of this in practice. “When we started out as a small company, with only 8 employees at the time, we were pitching for some business against a major league competitor. In some areas of the evaluation we scored higher than the competitor, but the customer took the safe option and went with the larger company.” 90 Businesses must ‘clear the bar’ to stay on top He continued: “We said that this was unacceptable, we have the best solution, so we came up with a proposal they couldn’t refuse. We offered to install our software for one month at no cost, and supported it 24/7. After a month, they liked it so much they opted to buy it. We went for the 6 meter jump, and we won the deal.” Making a difference It is probably fair to say that, when it comes to external factors – both political and economic – Dr Allis takes a fairly pragmatic view. “Many politicians and economists have appeared to be ‘clueless’ about what’s going on in the economy. While some countries, such as the UK and France, have been introducing austerity measures, there doesn’t seem to have been a universally agreed direction. They have all been too busy fighting over the details rather than looking at the bigger picture. There’s been a lot of ‘crying wolf’ going on.” He believes it is the responsibility of every business to take care of its own future, rather than relying heavily on any doom-laden forecasts coming from politicians and economists. “It is fundamentally about answering the question: “What can we do to make a difference?”, he says. “We need to look at what we can do in order to create value for our customers. If each business concentrates on creating its own growth, however small, then this will have a positive impact on growth in the global economy.” The key question for consulting firms is: Where will future growth come from? “Consulting firms need to realize the extent to which globalization and specialist knowledge will be the driving force of competition over the next five years,” said Dr Allis. “Many firms will be forced to re-think what it means to be international and the skills and experience that will differentiate them in an increasingly sophisticated competitive industry.” Meanwhile, to help maintain global market leadership, Quintiq has secured private equity investment. “We have a five-year plan to grow to a US$ 0.25 billion company,” concluded Dr Allis. “We’re setting our own bar high.” ■ About Quintiq Quintiq focuses on providing the most advanced planning, scheduling and supply chain optimization software solutions for targeted markets. Founded in 1997, Quintiq achieved its first installation in 2000 and now has solutions in use at over 500 sites in 77 countries. With dual headquarters in The Netherlands and Philadelphia, Pa, and international offices in Australia, China, Finland, Germany, Italy, Malaysia, and the United Kingdom. Quintiq has been recognized by industry analyst Gartner as a Visionary in its 2010 ‘Magic Quadrant’ for Supply Chain Planning. The company has also been cited as a winner of Deloitte’s 2010 Best Managed Companies. Businesses must ‘clear the bar’ to stay on top 91
Management IT Consulting Companies Adapting to the Times How your firm can take advantage of the events that make headlines ■ By Henk Jan Onstwedder, Managing Director, Deltek Benelux We all know that adapting to the changes around us is part of being a successful business. Otherwise, we’d still be using typewriters and relying solely on radio broadcast for our marketing strategies. Today however, these trends indicate much more for consulting firms. IDC demonstrates that there are indeed better opportunities out there for consulting firms who master two key elements: the first, that they align themselves around the core capabilities that match their own niche market. And second, that they adapt to the changes of the business environment and then incorporate those changes into their offerings. Through the practice of what IDC calls “grasping temporal opportunities”, consultancies can keep their operations at a stronger operational level. In the report, entitled Evolution and Future of Business Consulting: Grasping Temporal Opportunities, the temporal opportunities are defined as “any business opportunity triggered by an event, unexpected market or demand requirements or by a change in regulatory regime.” The most recent–and maybe one of the most frightening – temporal occurrence firms face today is the Euro crisis of 2011. With the Euro at an all-time low and economies collapsing under the pressure of widespread debt, it has become absolutely critical that consultancies adopt the market changes into the way they offer services. About Henk Jan Onstwedder Henk Jan Onstwedder has worked in the IT consulting industry for more than 15 years with business development, sales and marketing. Since 2010, he is the Managing Director of Deltek’s offices in the Benelux region. Increasingly, firms are leveraging areas of deep industry, domain, technical or analytical expertise, often providing specialty services build on rich, data-driven analysis. Evolution and Future of Business Consulting: Grasping Temporal Opportunities; by Cushing Anderson, IDC Deepening the Client Relationship As the industry has evolved, IDC reports that the manner of consulting in and of itself has changed. Moving from previous “theoretical advisories” to practical implementation, IDC confirms that consultancies are now more than ever leveraging deeper technical and analytical expertise to boost their offerings to clientele. 92 Adapting to the Times 93
Management IT Consulting Companies “Increasingly, firms are leveraging areas of deep industry, domain, technical or analytical expertise, often providing specialty services build on rich, data-driven analysis,” the report notes. “Collaborating on the successful execution and integration of solutions brings a greater level of intimacy and deepens the firm/client relationship. Deeper knowledge of individual client organizations allows firms to recognize temporal opportunities and capitalize on them with timely proposals.” From IDC’s research, we see a prominent cause-and-effect relationship. In moving to practical implementation – wherein consultancies no longer just develop a plan, but also do the implementation and support the client’s staff during it – firms deepen their relationships with clients, which then in turn opens them up to temporal opportunities. All of this together builds up to the ultimate payoff for consultancies – growth. But where are the connections to today’s market? For that we look to the fact that clients want tangible returns now more than ever. With today’s markets in an uproar, consultancies depend on aligning their core capabilities to the needs of clients within their niche markets – requiring necessary shifts in their offerings. Future Success Though times are tough, there are still big opportunities out there that are ready to be grasped – and it’s the consulting firms who know how to adapt to these times that will be in the best position to grasp them. Being able to capitalize on today’s market developments and incorporate them in your customer-targeted portfolio of services will empower your company your company towards success. Taking what we’ve learned through our years of extensive client interaction and our agreement with IDC’s report conclusion, we’ve solidified the criteria that will help consulting firms thrive in today’s rocky business landscape. 1. Employ a niche strategy in your service offerings – getting the right customers within your nice or core competency means that your business needs to have an understanding of the profitability of your customer segments 2. Create a network of relationships with the key players within your customer’s organization – focusing on CRM is critical to serving your clients needs and delivering the desired results. 3. Deliver measurable results 4. Capitalize on the market developments – Adapting and establishing best practices specifically for these temporal opportunities can ensure that your business is taking advantage of potential profitability. 94 Adapting to the Times 95
Management IT Consulting Companies With all this in mind, how can consultancies take this information and place it into practical application throughout their enterprise? The best way is to stay agile. By extending your niche offerings or creating new ones to accommodate the changing business environment, you ensure that your firm is staying ahead of the game. Final Recommendations With all this in mind, how can consultancies take this information and place it into practical application throughout their enterprise? The best way is to stay agile. By extending your niche offerings or creating new ones to accommodate the changing business environment, you ensure that your firm is staying ahead of the game. Again, the question is how. How can our business mold our offerings to niche markets? How can we create solid relationships with key customer contacts, or deliver measurable results that will increase our competitiveness in the market? The answer is by having the right tools to deliver the data capabilities you need, capabilities such as workflow enhancers and automatic, daily alerts that let you know critical information when you need it most. With the right information your company could have information on the profitability of customer segments streamlined to the right personnel, and at the same time, track and maintain all the relevant information on your customers and prospects. If you incorporate such integrated processes throughout your business, you will remain efficient. This means that if your company has optimized its performance through cooperation and information and knowledge sharing, you will be able to better deliver measurable results. This will then allow your firm to grasp hold of those temporal opportunities and thereby be on the right path to success and growth – even in today’s challenging times. ■ Know More Evolution and Future of Business Consulting: Grasping Temporal Opportunities; by Cushing Anderson, IDC. Copyright 2010 IDC. All rights reserved. 96 Adapting to the Times 97
Scientific Research and NGOs In an interview about today’s trends within the field of Scientific Research, Oddgeir Hov, Financial Advisor for the Institute of Marine Research, explains the similarities between the institute’s data-exploration practices and the meticulous reporting practices and careful administration of funding sources. Additionally, look to the Scientific Research section to read the latest piece describing the United Nations Environment Program’s initiatives to put authoritative knowledge at the center of decision-making.
Scientific Research and NGOs Data Explorers in the Norwegian Sea ■ By Patricia Baagø Ishøj, Client Insight Manager, Deltek Oddgeir Hov, Financial Advisor, Institute of Marine Research, aptly explains that the institute not only researches aquaculture and ecosystems, but also uses its powers of exploration to better maintain data that adheres to the meticulous reporting practices and careful administration of funding sources. The aim of the Institute of Marine Research’s research and advice is to help ensure that Norway’s marine resources are harvested in a sustainable way. Capacity on the agenda With more than 700 employees, the Institute of Marine Research (IMR) is the largest marine science community in Norway. IMR’s main task is to provide advice to the Norwegian authorities on aquaculture and on the ecosystems of the Barents Sea, Norwegian Sea, North Sea and the Norwegian coastal zone. While IMR’s headquarters are located in Bergen, highly critical projects are also carried out at a plethora of other locations: IMR’s department in Tromsø, the organization’s research stations in Matre, Austevoll and Flødevigen, and even on board its research vessels, which are at sea for a combined total between the vessels of 1,600 days a year. Around half of IMR’s activities are funded by the Norwegian government. While the remainder of its funding stems largely from governmental entities, including the Research Council of Norway, EU, and NORAD, the company also receives financing from private sources. Despite the recent economic downturn in the global economy, IMR has not experienced the same funding challenges or restrictions that many other industries have faced in the past year. Even better, as IMR looks into 2012, there is no indication that its number of projects will decrease, meaning that the real challenge is ensuring the capacity to execute more projects. 100 Data Explorers in the Norwegian Sea The company’s true challenge is explained by Oddgeir Hov, who is an experienced Financial Advisor and has been with IMR for over a decade. “The financial crisis has had a small impact on our funding from private sources, yet it is still not really a problem to obtain funding for our future projects. Instead, our main challenge is our ability to execute all our projects on time and within scope, while successfully reporting on funding allocations, progress and expenses.” Meticulous reporting requirements In scientific research organizations, meticulous reporting practices and careful administration of funding sources, programs, projects, activities, people, output and outcome and underlying financials are essential for demonstrating efficient use of funds and resources. “The largest change that we have experienced, compared to previous years, is the external requirements on project reporting. Today, all our funding sources – including government as well as private sources – require that we meticulously report back on how we are utilizing their funds,” says Hov. In order to both meet these requirements and be able to report on the status and progress of the individual projects, IMR needed efficient routines for time capture, project management and project reporting. Yet these challenges more appropriately reflect day-to-day business pressures for any organization within the scientific research industry – whether or not there’s downturn. Though still maintaining success amidst a troubled economy, increased requirements on reporting have also had a noticeable influence on the way in which IMR organizes project work and daily routines. “We have been a project-centric organization since the late nineties, but the level of detail in project data which we report on today is much more comprehensive than what we have ever had before,” Hov elaborates. About Oddgeir Hov Oddgeir Hov is a financial advisor at the Institute of Marine Research (IMR). As an economist he is involved in most parts of IMRs financial management. For the last couple of years, Hov has been especially engaged in developing and customizing IMRs project management systems and creating an efficient project based reporting structure throughout the organization. Data Explorers in the Norwegian Sea 101
Scientific Research and NGOs The largest change that we have experienced, compared to previous years, is the external requirements on project reporting. Today, all our funding sources – including government as well as private sources – require that we meticulously report back on how we are utilizing their funds. Oddgeir Hov, Financial Advisor, Institute of Marine Research Fish know no boundaries Excitingly, the IMR is also breaking into new territories and new verticals. The Centre for Development Cooperation in Fisheries (CDCF) under IMR runs international development cooperation projects in the fields of research and resource management on behalf of the Institute of Marine Research and the Directorate of Fisheries. Prudent use of resources As is the case in other scientific research organizations, IMR also have challenges when it comes to finding the right balance between the Project Manager (who draws up the project plan in hours) and the Resource Manager (who has to come up with staff to deliver on those hours). “We have looked very carefully on how we use our human resources,” affirms Hov. “After all, it is essential that we utilize the resources that we have in a way where we get the most research for our funds.” Over the past 30 years, the centre has run projects in more than 40 countries in various parts of the world. Through long-term initiatives such as the Nansen program – a project that supports developing countries attain self-sufficiency through sustainable use of marine resources – a number of countries in West Africa have received assistance with mapping their fish resources, building up national research capabilities and developing fish­ eries management systems. In recent years, aquaculture has also become an important part of IMR’s international development cooperation with countries such as Cuba and Thailand. ■ Hov also notes that this challenge is no five-minute fix. “We are looking to strike an optimized balance between projects and people, which, in my opinion, is a challenge for any project centric organization. Though we have been working on this for a while, there is still room for improvement – something that will very much be on our agenda in 2012,” Hov concludes. About IMR On top of the agenda according to Oddgeir Hov • Optimizing work processes • Improving utilization of resources • Being able to meet reporting requirements 102 Data Explorers in the Norwegian Sea With more than 700 employees, the Institute of Marine Research (IMR) is the largest marine science community in Norway. IMR’s main task is providing advice to the Norwegian authorities on aquaculture and on the ecosystems of the Barents Sea, Norwegian Sea, North Sea and the Norwegian coastal zone. The institute is also heavily engaged in international development work through the Centre for Development Cooperation in Fisheries (CDCF). For more information visit www.imr.no Data Explorers in the Norwegian Sea 103
Scientific Research and NGOs Decision Making Based on Facts How the United Nations Environment Program is putting authoritative knowledge at the center of decision-making. “We chose Deltek’s solution because it offers a fully integrated solution that really has everything: strong project management functionality, crossfunctional financial management capabilities, custom dashboards and reports that provide instant access to project status,” added Gee. “Easily the best product, Deltek’s solution also fit our budget and met our goals of gaining real-time access to client, project, employee and company performance data.” Partner implementation To help with the implementation, UNEP-WCMC selected Cambridge-based KPI-Insight consulting, a provider of business management and consulting services, and a leading Deltek UK partner. ■ By Barry Monk, Consultant, Next Communications and Patricia Baagø Ishøj, Client Insight Manager, Deltek, Inc. Smarter Decisions, Better Results The United Nations Environment Program and World Conservation Monitoring Center (UNEP-WCMC) is an internationally recognized center of excellence for the synthesis, analysis and dissemination of global biodiversity knowledge. Providing authoritative, strategic and timely information for conventions, companies and even entire countries, UNEP-WCMC enables the development and implementation of proven policies and decisions. To accomplish its mission, the center employs over 70 people and undertakes around 100 projects a year, each ranging in value from anywhere between $10,000 to over $3.5 million. Since many of UNEP-WMCM’s projects are multi-partner, multi-currency and complex to manage, the organization found its previously disparate systems unable to piece together project-related financial and management information. “Analyzing our staff timesheets to complete our month-end reporting was a long-winded process,” affirmed Alex Gee, Head of the Project Coordination Unit at UNEP-WCMC. “Staff often had to be chased to enter timesheets into an archaic system.” “Likewise, our long-winded process of ensuring the right amount of hours were booked against the right projects, then extracting and manually entering data into a different system – not to mention the back and forth of extracting and analyzing the metrics after that – pushed us about 10 working days into the following month.” Time for change To overcome this internal obstacle, the company embarked on a sixmonth scoping exercise which resulted in a tender for a new ERP system. 104 Decision Making Based on Facts UNEP-WCMC’s implementation plan was to go for a ‘soft launch’, which allowed the company’s ‘super users’ to test the system and see what did and didn’t meet their daily needs. “With their feedback, we were able to work with KPI-Insight and make changes to the configuration before we actually went ‘live’ six months later,” stated Gee. Cash flow focus Another major challenge for UNEP-WCMC was moving from monthly to weekly time and expense reporting. Though better for project planning and reporting, the organization faced obstacles in retrieving data that would enable more accurate cash- flow forecasting. “Project plans are essentially linked to cash flow forecasts, so if project managers don’t plan, there is no cash flow forecast,” explained Gee. “The net effect of our improved capabilities under the Deltek solutions is that we can see which departments are under- or over-committed, identify billable and non-billable activities and draw up accurate cash flow forecasts based on real-time information.” According to Gee, the newly-acquired accuracy of project reporting is a key advantage. “We can report on anything in the system, from global reports to drill downs so that we can see things like the amounts invoiced against expenses, work in progress and so on. With KPI-Insight’s help we’ve also been able to train our employees to create their own reports.” About UNEP-WCMC UNEP-WCMC is a collaboration between the United Nations Environment Program and the World Conservation Monitoring Center (a UK registered Charity). UNEP-WCMC provides expert synthesis, analysis and dissemination of knowledge about global biodiversity and ecosystem services. For more information visit www.unep.org Decision Making Based on Facts 105
Scientific Research and NGOs Absolutely critical to the organization’s monthly results, timesheet analysis is another benefit seen from UNEP-WCMC’s new system. Knowing how much time has been charged to projects and what it equates to in billable time used to be a tall order for the company. “It used to take forever to forecast how each unit was performing, and now it takes just a minute,” Gee confirmed. “That’s brilliant. It gives the senior management team much more visibility of resourcing and performance across the organization.” It used to take forever to forecast how each unit was performing, and now it takes just a minute. It gives the senior management team much more visibility of resourcing and performance across the organization. Alex Gee, Head of the Project Coordination Unit, UNEP-WCMC Increases in efficiency Gee estimates that the finance and administration unit has saved a whole working week per month in putting together the month-end reporting. “That’s a massive difference to us,” he noted. “It gives us more time to spend on work that we used to never be able to get around to. Enabling increased revenue and more proactive decision making, this system has also allowed us to take a more meaningful look at how we can better plan and utilize our resources.” This statement has been proven to be more than just an opinion. In March 2011, UNEP-WCMC had the fastest month ever to get their first cut results. In submitting the staff’s timesheets weekly, the company wasn’t left to scramble for numbers by the close of the month. Under Deltek systems, Gee testifies that it was as simple as reminding staff to submit their approved timesheets a couple of days before the end of the month. “On April 1st we posted all the completed timesheets. By 10am on April 3rd everything was completed: timesheets were posted, revenue generation was reported, income and expenditures were reconciled, work in progress was validated, and our time analysis was finalized,” he said. “By 11am that same day we had disseminated the initial results to the management teams.” Though it’s too early to evaluate a concrete return on investment, Gee believes it won’t be long. “ROI will be easy to measure in another 12 months, as we get to grips with using the solution and maximize its full potential,” he concluded. ■ About KPI-Insight The Deltek UK partner, KPI-Insight consulting provides consulting services and business management software for organizations throughout all levels of the Professional Services industry. Under the company’s client-focused mission, KPI-Insight strives to make businesses more efficient and profitable through world-class software and services. To learn more, please visit www.kpi-insight.com. Decision Making Based on Facts 107
About Deltek, Inc. Deltek (Nasdaq: PROJ) is the leading global provider of enterprise software and information solutions for professional services firms and government contractors. For decades, we have delivered actionable insight that empowers our customers to unlock their business potential. Over 14,500 organizations and 1.8 million users in approximately 80 countries around the world rely on Deltek to research and identify opportunities, win new business, optimize resources, streamline operations, and deliver more profitable projects. deltek.com

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Professional Services Insights Magazine 2012/13

  • 1.
  • 2.
    Contents 10 Key Attributesof a Successful Project Jacob Thaning, SVP of Global Consulting at Deltek, walks through the pitfalls and risks that are worth being aware of when working on large projects. 10 38 60 74 86 A New Way to Measure Value Gary Boomer, CEO of Boomer Consulting, discusses how value pricing within the accounting industry has become a proven alternative to effort-based pricing and a direct result of the changing, customer-driven marketplace. Building a Bridge to Growth in a Financial 'Earthquake' Rasmus Ødum, Executive Vice President of Danish Engineering consulting firm COWI, details how building solid foundations can help counteract seismic shifts in the global economy. Modernizing the Legal Industry Knut-Magnar Aanestad, Chief Knowledge Officer at Schjødt law firm, discusses how the legal industry continues to look in new directions for business and international offerings. Businesses Must 'Clear The Bar' to Stay On Top Victor Allis, CEO of Dutch software company Quintiq, e ­ xplains what ‘making the 6 meter jump’ means and how it can help businesses leap over the competition. An Executive Opportunity. . . . . . . . . . . . . . . . . . . . . . . . . . Walking The Profit and Loss Tightrope. . . . . . . . . . . . . . . . . Top 10 Key Attributes of a Successful Project. . . . . . . . . . . . Top 5 Best Practices to Increase Your Resource Utilization . . Agile Business Intelligence. . . . . . . . . . . . . . . . . . . . . . . . . . Accounting Firms. . . . . . . . . . Cautious Optimism. . . . . . . . . A New Way to Measure Value. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Agencies. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Talking the Talk. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Agency 3.0: The Destination For Advertising Agencies in a Digitally Focused World. . . . . . . . . . . . . . . . . . . . . . . . . Architecture & Engineering Firms. . . . . . . . . . . . . . . Building a Bridge to Growth in a Financial ‘Earthquake’. Architecture & Engineering Benchmark Reports . . . . . . Decision Making at the Best Run A&E Firms . . . . . . . . Law Firms. . . . . . . . . . . . . . . . . . . Modernizing the Legal Industry . . . . Change is the Name of the Game .. 44 46 . . . . . . . . . . . 54 . . . . . . . . . . . . . 58 60 66 68 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Scientific Research and NGOs . . . . . Data Explorers in the Norwegian Sea. Decision Making Based on Facts . . . . . 28 30 38 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Management & IT Consulting Companies . . . . . Businesses Must 'Clear The Bar' to Stay On Top. . Adapting to the Times. . . . . . . . . . . . . . . . . . . . . 4 6 10 20 22 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 72 74 80 84 86 92 98 100 104
  • 3.
    1 An Executive Opportunity ■ ByHugo Dorph, Executive VP and General Manager, Deltek, Inc. 2 "In today's challenging economic climate…" Now, how often have you heard that opening in recent years? The thing is: it really shouldn't matter. Today the professional services industries are so global and so competitive that up-cycle or down-cycle simply determines whether we're balancing closer to 15% profits or closer to zero. And whether it's one or the other we're constantly under pressure to squeeze the most out of our business. In recent years many firms have been balancing closer to zero - they've walked the tightrope between profit and loss. And nothing sharpens your senses like walking a tightrope. I like to see that as an executive opportunity. Let's always think that way. Let’s sharpen our senses and act on what we learn from that. The first thing is to focus on the most important issue. Consider for a moment, what, in your current business environment, is going to have the biggest impact on improving your bottom line? Getting better at your profession or getting better at managing your business? In this magazine you will meet some of the industry leaders within Professional Services who every day strive to make the most out of their businesses. They will share with you what they have learnt from walking the tightrope and how they are acting on their executive opportunities. At Deltek we work with thousands of clients around the world to help them improve their business processes. We see the best (and worst) practices in action, every day. And there are three take-aways that the best companies do well and always strive to improve: - this has much to do with the quality of your work and fee negotiations, but it also has a lot to do with the quality of your business processes. Example: billing. Clients expect to pay less and they scrutinize every single line item. You must be able to provide full transparency for every hour billed and execute timely and accurate billing. And by the way, you can't leave that to the finance department. Best practice is to have fiscally accountable Project Managers and Client Executives. Be better at standardizing your business processes - this doesn't talk about the quality of your processes, but how good you are at sticking to them. A recent SPI Research report reveals that Professional Services firms who use standard business processes more than 80% of the time grow almost twice as fast as those that do not! And I would add, if you're acquisitive you won't be successful without standard processes. Make it a priority and get personally engaged - you, the business executives, have the most power to effect difficult change and you have more cross-company perspective than anyone on your team. By the way that's the same perspective your clients have. They look across your business so your processes have to support that perspective too. About the author Hugo Dorph has worked professionally with project-focused enterprise applications for more than 15 years. He is EVP and General manager of Deltek's Profesional Services business unit. Be better at proving your value 3 Be better at managing your resources - this is obvious, but effectively managing people resources based on fact is the one area where we see the biggest gap, even in large firms. • Busy doesn't mean billable - know the difference at all time. • Never use guesstimates - base everything on recorded fact. • atch long-term project pipeline against planned capacity to stay M ahead of any resource issue. These take-aways all add up to managing your business on real-time, factbased decision making. Manufacturing companies have done this for decades. Professional Services firms are only now catching on. Whether you are already a Deltek client or not there is a good chance you are only scraping the surface of what your systems can do for your business. Deltek can help with that and we can start by helping you better understand how. Our commitment to the Professional Services industries as well as our ability to support you globally is stronger than ever. Happy Reading! ■ 4 An Executive Opportunity An Executive Opportunity 5
  • 4.
    Walking The Profit andLoss Tightrope Proving value Even with the best people on board, PSOs need to prove their value to clients by accurate billing. Why? Because today clients are not only paying less money for the same services, but also demanding that professional services companies keep track of every minute they pay for. ■ By Neil Davidson, Managing Director, Deltek UK So what’s the game-changer in this challenging landscape? Well, a PSO’s profit invariably comes from the ability to charge x-times actual labour costs. Most consultants are paid even when they are not billing, so professional services firms need to work hard to keep them utilized, and at acceptable billing rates. In these challenging economic times, what is the outlook for Professional Services Organizations and how can they best maximize profitability? In these challenging economic times, Professional Services Organizations (PSOs) know only too well that there can be a very thin line between m ­ aking a profit and incurring a loss. In walking this PL ‘tightrope’, they need to meet the challenges of doing more with less, maximizing resource planning and staff utilization and ultimately increasing profitability. Today’s PSO landscape PSOs - including consulting firms, agencies, accounting firms and law firms - are fairly unique in business. Unlike manufacturers, who make profits by making products and selling them at a mark-up, PSOs have people assets. Therefore, they need to create value through applying the specialized knowledge and skills of their people to solve clients’ business problems. In today’s vulnerable economic landscape, PSOs are realizing that, having already cut their operations to the bone, they simply cannot further reduce their people assets. So it’s time for executives in these companies to get smart and look at how they can maximize the potential for additional optimization of their people and processes. It’s time for executives in these companies to get smart and look at how they can maximize the potential for additional optimization of their people and processes. 6 Walking the Profit Loss tightrope In other words, PSOs must execute efficiently in order to generate the profit necessary not only for growth, but also for long-term prosperity. The difference between profit and loss is now so thin they need to ensure: About the author Neil Davidson is Managing Director at the Deltek UK offices. Neil Davidson has worked in the projectfocused software industry for 15 years. • full transparency for every hour billed • real-time, fact-based decision-making • dvanced technology is implemented on a the basis of best-practice processes. Growth in demand for enterprise solutions Let’s look specifically at the growth in demand for enterprise technology. According to research firm IDC’s 2011 European Software Survey, the IT industry is bouncing back from the financial crisis. Naturally, businesses such as PSOs want to ensure that their IT investments yield the expected ROI. In short, they are looking for specialized standard solutions that can be delivered and implemented quickly, and which work from day one. “The survey yielded many interesting results related to enterprise applications. Customer relationship management (CRM) continues with strong indications of spending growth, and the outlook for enterprise resource planning (ERP) and HR/payroll applications has significantly improved since 2010,” commented Bo Lykkegaard, European enterprise applications at IDC. With our focus on the professional services market, we can see first-hand how our clients are reacting to market conditions. In our view, those running best-practice methodologies, and utilizing enterprise solutions such as ERP, CRM, and HR/payroll to underpin them, are best placed to manage the current economic challenges and forge a path forward in 2011 and beyond. Walking the Profit Loss tightrope 7
  • 5.
    Standardized business processes Thekey benefits of enterprise solutions for PSOs include: This ability to standardize business processes is vital. This is backed up by a recent report by SPI Research1, which revealed that when PSOs use stan­ dard business processes, more than 80% of the time, they grow almost twice as fast as those that do not. • Improving profitability on each client A large part of this growth is due to PSOs being better able to plan work and resources, essentially “packing” more work into the schedule. Business process standardization also enables an organization to increase annual revenue per billable consultant. • Balancing a portfolio of products and services proactively Developing excellent project plans, optimizing the workforce, and implementing standard business processes can, according to the SPI Research report, help PSOs operate more efficiently and effectively, and achieve higher margins and client satisfaction. • nsuring that daily management and decision-making are E based on facts • Spotting under- and over-utilization in time to act • Being in control of project deadlines and deliverables • Having full visibility of project profitability • Capturing and sharing knowledge across the business • Freeing up working capital from operations • Having efficient internal processes in order to do more Walking the tightrope – what lies ahead? So how will the next decade or so play out for PSOs? Well, based on discussions with industry analysts and decision-makers representing bestin-class PSOs, as well as our experience of delivering enterprise solutions to PSOs, we believe the trends ahead include: • ncreased focus on streamlining the sales process and managing client i relations • roject management customized for the unique challenges and p demands faced by project-focused organizations • strong interest in improved capacity and resource planning • reater demands for proactivity and usability – for example, by having a g solution that actively notifies and alerts users on their pending actions via web portal, email or SMS. We perceive a growing number of PSOs starting to realize how valuable it is for them to develop their capabilities to make forward-looking analyses and fact-based decisions based on proactive planning and forecasting. With the difference between profit and loss being so thin now for PSOs, this is essential, together with complete client billing transparency, underpinned with the advanced technology to ensure best practice processes. All of this should make walking the tightrope so much easier. ■   Building Lasting Value – Growth Strategies for the Services Organization; Service Performance Insight (SPI Research), 2011 1 8 Walking the Profit Loss tightrope Who benefits in a project-focused organization? W ith a role-based, process-oriented ERP solution, employees at all levels can benefit. For example: • Sales managers can see which clients deliver on the bottom line • ccount managers can track all on-going activities on their clients A across departments • R managers can support the individual career development of staff H through an auditable, controlled HR process • roject and Account managers can control project progress and P financials by unifying all key elements of project governance with financial project control • esource managers can spot under- and over-utilization in time to act R • usiness and Line managers can help streamline the business through B increased collaboration and knowledge sharing • inance managers can gain full insight into project data, and they F can also reconcile accounts payable against the appropriate project, which helps ensure accurate project PLs.
  • 6.
    Top 10 KeyAttributes of a Successful Project ■ By Jacob Thaning, SVP, Global Consulting, Deltek, Inc. For many years Deltek has worked together with professional services organizations to implement their business solutions. This collaboration has given us insight into all the pitfalls and risks that are worth being aware of when working on large projects. Below are a number of subjects and recommendations concerning these top 10 key attributes of a successful project. These 10 items are essential when an organization is launching or considering a large project. 1. Executive sponsorship 2. Strong Project Governance 3. User Involvement 4. Clear Company Goals 5. Well-Defined Scope 6. Well-Defined Base Requirements 7. Proven Methodology 8. Application Software 9. Experienced Project Manager 10. Experienced Resources This is a good check list to use for matching thoughts and expectations among the team members when establishing and executing projects. The description is our recommendation for how a project should be executed. We furthermore recommend that these items – and how they should be managed – are discussed among project managers during the initial phase of the project as well as on the first steering committee meeting. If this is done, and if a common recommendation for the handling of the project is provided by the project managers of the customer and the vendor, respectively, the project and its execution will be considered more as a partnership rather than a traditional customer/vendor relationship. 10 Top 10 Key Attributes of a Successful Project About the author Jacob Thaning has more than 20 years’ experience in the management IT consulting industry. Since 1998, he has been at Deltek and is now heading Global Consulting in the Professional Services business unit.   1 Below, we have based our recommendations on a case in which an organization wishes to replace its current business solution. The organization therefore faces a great task and change. The organization has initiated this project in order to strengthen ownership and responsibility across the organization. Furthermore, the organization aims to streamline operations, e.g. when it comes to project management and revenue. Executive Sponsorship Description: The cornerstone of any successful project revolving around the business solutions of an organization is to put the executive team of both customer and vendor in charge of the implementation. This is partly because the project will affect most of the employees and because the support from the executive team is crucial in order to enable effective change management. In many projects, the executive team forms both management and daily line management. Executive sponsorship must: • acilitate communication of the project objective and the reason for f launching it • otivate the affected parts of the organization to take part in the m project and to adapt to new and changed routines • nsure general support to the project managers as well as support e of the decisions and changes which some employees consider to be adverse. Risks: If the project is not 100% supported by the various parts of the organization, it will not be possible to change habits and behavior across the organization. This could very well cause the organization to fall short of achieving project goals. Risk aversion: The most important parameters are communication, visibility and participation within the steering committee as well as relevant project meetings and meetings regarding the functional areas. The participants must be active and the individual meetings must be given high priority. Furthermore, a clear communication strategy must be prepared with emphasis on the areas that require modified behavior or new habits. Top 10 Key Attributes of a Successful Project 11
  • 7.
    We recommend: • ahighly relevant steering committee composition • high awareness of the importance of change management • hat e.g. the CFO or COO is appointed chairman of the steering t committee • hat project managers are granted direct access to the steering t committee • hat a communication strategy is prepared and presented to the t steering committee at one of the first meetings • hat an internal executive within the organization is given responsibility t for change management. Strong Project Governance Description: In every implementation project it is important to ensure that all project managers are working efficiently towards the same goals and that they all stay within the scope of the project. In large projects with greater complexity and a large number of project team members, it is important to have fixed project follow-up procedures. This is to ensure satisfactory project progress and identify any deviation from the plan. 3 2 Risks: • he allocated employees cannot be sufficiently freed from other tasks t • sers are selected on the basis of other criteria than qualifications and u skills (e.g. who has got the time). It is important to select users who wish to participate in a change process, who have the necessary skills in relation to their field/functional area and who are respected internally. Risk aversion: It is recommendable to enter into an explicit agreement on how to handle the tasks from which the allocated employees are freed. When the employee and the line management involved commit themselves to such an agreement, it reduces the risk of having the employee perform double work with deteriorating quality as a result. Risk aversion: In the project scope it should be determined how to follow up on the proj­ ect. It is recommendable to establish the frequency of steering committee meetings, project management meetings and project team meetings right from the start. We recommend: • that project managers meet on a regular basis (e.g. weekly) • hat steering committee meetings are held on a regular basis t (e.g. monthly) • hat a scope document is produced and thereafter approved by the t steering committee • fixed procedures for the project • solid project method and usage of related project documents. a 12 Top 10 Key Attributes of a Successful Project Description: In order for the project to be successful, it is crucial to involve relevant user representatives in the entire implementation process from the analytical phase to testing and training and finally the go-live phase. The purpose is: • o ensure that users with the greatest knowledge of the individual t processes are involved in the design of the solution which comprises these processes. This is one of the most important methods to ensure high quality of the solution as well as making processes and functions tangible • o ensure that the organization is staffed with a number of employees t acting as ambassadors for the new solution. Risks: If no project follow-up procedures have been established, there is a risk that deviations such as deadline overruns, scope creep etc. are not spotted in time. One of the steering committee’s tasks is to ensure the right project scope. This not least includes access for the project managers to give greater priority to deviations from the plan as well as any issues which should be addressed at management level. User Involvement 4 We recommend: • nvolvement of users with knowledge of the various business areas of i the organization • having ambassadors/change agents within the organization • anaging the resource situation as a fixed item on the agenda at the m steering committee meetings • ongoing measuring of the adaption (e.g. using surveys). Clear Company Goals Description: It is a prerequisite for an efficient implementation that the organization knows the objectives of the organization and the project, and that these objectives are broken down into operational goals for all relevant levels of the organization. This way, the project group can manage the project in the right perspective and make the right decisions based on clear objectives. Top 10 Key Attributes of a Successful Project 13
  • 8.
    Risk aversion: The processof preparing the scope should be led by the project managers who should make sure to sufficiently allocate their own time and the most important stakeholders’ time. Risks: If the project objectives have not been clarified, some of the risks would be: • hat various clarifications regarding the solution should be discussed t before a decision can be reached and this could potentially cost time and resources • that prioritization becomes more difficult than necessary. Risk aversion: It is recommendable to give the detailed scope high priority. In this scope, all success criteria and objectives of the project should be determined at a detailed level. Subsequently, this should be communicated to everybody in the project group on an ongoing basis to ensure that everybody is aware of the objective through the whole project. In the training phase, the objectives should be made clear to both super users and end users. We recommend: • hat organizations looking to e.g. replace their business solution t consider a number of aspects and elaborate their needs and current processes as part of the project • hat focus is kept on the objective of the project and that details, t current systems and workflows do not draw attention from why the project has been started and the overall objectives of the project. Well-Defined Scope Description: A well-defined scope is crucial for the project managers because it also sets the scope for the project managers’ authorization. Important elements in the scope are: • determining what the implementation does and does not cover • breakdown into deliveries and/or activities • n objective and measurable articulation of the success criteria of the a project – preferably in order of priority • procedure for change management and communication • definition of process for escalation in the project organization • determining the division of work between the project parties. Risks: It is important to allocate sufficient time to the preparation of the scope right from project launch. Otherwise project stakeholders and team members may perceive the objectives and scope of the project differently, which means they will not have the same focus. The time saved by rushing through the scope in the start-up phase is very quickly spent by the project managers if they need to follow up on and coordinate various activities and discuss what lies within the project scope and what does not. 14 Top 10 Key Attributes of a Successful Project 6 We recommend: • preparation and communication of scope • hat the steering committee approves the scope document. This is t to ensure that everybody in the steering committee has the same perception of the project and its objectives • a clear process for handling suggestions and changes to the scope. Well-Defined Base Requirements Description: It is a good starting point for any implementation project that the organization has an overview of the business and all significant processes and needs. This way, the organization will be able to define the associated requirements for the solution. Risks: If the requirements for the solution have not been established, there is a risk of: 5 • asting a lot of time during the project process due to internal w discussions of how the solution should look • wasting time and money if the project objective is altered. Risk aversion: An efficient way of ensuring well-defined requirements for the solution is to establish processes and requirements for the new solution and document these. This way, it will always be possible to compare suggested solutions and requirements. Every project contains areas in which it will be necessary to consider various alternative solutions which cannot necessarily be evaluated on the basis of the requirement specification. It is therefore crucial that the project team is formed by employees who possess a deep knowledge of the organization’s needs, and that they have proper decision-making competence in order to avoid unnecessary project delays. Organizations typically make a great effort to identify their needs before they can specify their requirements for a new solution. We recommend: • hat organizations be open and flexible in relation to how their needs t and requirements are met. This will open up for a discussion of what may be the best solution for them • hat you pay attention to needs, best practices, technology and opportut nities that are either provided with the selected solution or evaluated. Top 10 Key Attributes of a Successful Project 15
  • 9.
    Proven Methodology Description: Over theyears it has proved to be a great advantage on implementation projects to apply a project methodology which matches the scope set for the project type in question. This ensures that: 7 8 Application Software Description: When implementing a new business solution, there are crucial benefits associated with using standard solutions also used by similar customers. For instance, risks related to development projects are eliminated. Risks: Even if standard software is used, all implementation projects need customization. This carries two obvious risks: • time is only spent on activities that create value for the project • he methodology matches the specific solution and the consultants t involved are familiar with the work process • t is possible to use standard templates that the project team members i are familiar with from the beginning of the project. • he scope for what should be customized/developed evolves t constantly • he scope evolves because every implementation process requires t creative skills. Therefore, it can be tempting to keep thinking of new ways to improve the solution as you gain more and more knowledge of all the possibilities. This would lead to an expansion of the scope and increased time consumption. Risks: An obvious risk for our customers – who are primarily project-oriented – is that they let their preferences for a specific project methodology determine which methodology is applied in the implementation. Another risk is that the stringent and methodical approach to the project gradually becomes a looser model and that there is suddenly no control over the project. Risk aversion: In the scope phase it will be useful to determine not only the project methodology but also what documents should be used in the project. Risk aversion: In the scope it is crucial to determine which customizations should be made for the solution. It is extremely important that the project managers make sure to keep the project within this scope. This can be done by ensuring that no customizations are made without the use of design documents approved by both parties. Deltek’s project methodology contains a large number of document templates that can be leveraged. By making these decisions from the beginning, it is possible to oblige all project team members to this methodology and thereby minimize the risks stated above. We recommend: • hat the organization is open and willing to adjust. Preferably, t requirements should be met by means of standards (different workflow/slightly different handling) if possible. We recommend: • hat the project methodology is discussed and agreed upon at an early t stage rather than having to change the methodology later on in the project • hat Deltek’s project methodology and the related documents are t used. The project methodology PEAK has been developed on the basis of many years of experience with hundreds of projects. Among other things, it contains standardized document templates. 16 Top 10 Key Attributes of a Successful Project 9 Experienced Project Manager Description: Both the customer’s project manager and the vendor’s project manager play a vital role in the project. In order to achieve mutual success, it is important for both project managers to have gained knowledge as described below: • nowledge of their own organization and the power and ability to k handle various obstacles in the most efficient way • knowledge of ERP implementation projects • nowledge of and dedication to the technical content of the project. k This is to ensure that the project manager does not focus exclusively on administrative processes but also seeks insight into the substance of the project. Top 10 Key Attributes of a Successful Project 17
  • 10.
    Risks: The risk ofhaving project managers with limited experience implement large projects is that they become either very detail-oriented with lack of overview and focus on progress as a result, or conversely, that they overlook important details. Furthermore, less experienced project managers may have problems gaining the necessary trust from the project team as well as the rest of the team. This becomes a potential challenge when it is time to handle problems that require various forms of support or effort from the rest of the team. Risk aversion: Project managers should be carefully selected on the basis of the above criteria! Regardless of who the project manager is, a role with responsibility for quality assurance of the project management should be established. Furthermore, it is important that the steering committee challenges the project managers with constructive questions to ensure overview and control of details. From the initial phase of the project, focus should be on building and maintaining collaborative relations rather than a traditional customer/vendor relationship. If one of the project managers has a weakness in relation to the items above, it should be considered whether this weakness can be mitigated in practice. We recommend: • hat the customer and the vendor focus on the project manager role t and the experience of the project manager • hat the project manager role on large projects is separated from the t solution design role even though it can be tempting to attempt to combine these two roles. This is to eliminate the risk of being “caught between two stools” • hat both the customer’s project managers and those of the vendor t lead the way by joining forces to make sure the project is executed in a partnership. 18 Top 10 Key Attributes of a Successful Project 10 Experienced Resources Description: Project managers – regardless of their function – should have experience within their own field in order to be able to contribute to the project. Depending on their role, they should: • be respected in their own organization • ct as ambassadors for the objective of the project and the necessary a changes • actively take part of the project • have expert knowledge of their own field • be open to new input and consider different alternatives. Risks: The risks are more or less the same as the ones stated in section 3 “User Involvement”, namely that the employees might not be sufficiently allocated and that they are selected on the basis of other criteria than qualifications and skills. An internal project may be perceived as less interesting and less prestigious than an external project and therefore it may be difficult to recruit employees internally. Risk aversion: The risk aversion methodology is also very similar to the methodology described in section 3 “User Involvement”. It is recommendable to agree explicitly on how to handle those tasks from which the users involved in the project are freed. When the employee and the involved line management commit themselves to this, it eliminates the risk of having the employee perform double work with deteriorating quality as a result. We recommend: • hat project managers are officially acknowledged and rewarded for t successful project execution. This way, it will be more appealing to participate in the project • hat participation in the project is evaluated positively in accordance t with the individual employee’s career in the organization. ■ Top 10 Key Attributes of a Successful Project 19
  • 11.
    Top 5 BestPractices to Increase Your Resource Utilization How to increase your utilization rates and reduce the need for subcontractors 1 2 ■ By Henrik J. Brandt, Product Director, Deltek, Inc. Through good or bad times, business success for Professional Services Organizations (PSOs) remains the same: Optimizing resources = increased profitability. While the maths may be simple, delivering the optimization can prove more challenging. 3 Resource Management (RM) is emerging as the solution for solving this equation. It effectively provides a framework within which PSOs can easily and effectively plan, implement and deploy their people skills. What is Resource Management? In essence Resource Management is a solution for planning, managing and deploying the right people skills at the right time on the right projects. In my experience, only around 20 percent of PSOs actually recognize and use RM as a high-value, stand-alone discipline in its own right – which is surprising given that the management of resources is, by definition, PSOs’ raison d’etre. And a surprising 75 per cent of companies surveyed by The Aberdeen Group admitted to having no overview of their resource situation more than one month ahead. In PSOs, planning resources at least six months in advance enables you to get the most out of your employees. Resource Management – Key Best Practices So what are the ‘Key Best Practices’ that PSOs should be aware of, and adopt, in order to increase people utilization and attain higher profitability? 20 Top 5 Best Practices to Improving Your Bottom Line About the author Henrik Brandt has worked in the IT industry for more than 25 years in business development and product management. Since beginning of 2011, he is Product Director at Deltek, Inc. 4 Recognize that ‘busy’ doesn’t necessarily mean billable There is a very big difference between staff being busy and being billable. Look around your organization and you’ll probably see people who seem to be busy, yet their utilization rates – and therefore their billable hours – are at an unsatisfactorily low level. You may also experience a complete disparity across the resource pool, with some people overloaded, while others remain under-utilized. Don’t base projects on ‘guesstimates’ All too often PSOs do not align project estimation, execution and existing capacity. Making ‘guesstimates’ on projects is often the key driver in resource under- or over-utilization. Under-estimate and you’ll be scrambling to find additional resources. If you are in danger of missing a deadline on a project, because resource management hasn’t been at the top of the agenda, you can either recruit additional staff or hire external subcontractors. Either way, the impact on project costs and profitability can be significant. Match your long term project pipeline against your planned capacity It is essential to ensure that the projects in your pipeline can be resourced efficiently. Integrating your sales pipeline system with RM means you can achieve a better understanding of resource impacts, as well as effectively support your strategic and tactic recruiting, subcontracting, and organizational development. Avoid different versions of the truth Having a uniform RM system that spans all departments and all resources will help ensure consolidation of all account and project information. And, more importantly, it will provide you with a single and accurate version of the ‘truth’. 5 Regard Resource Management as the ultimate in Business Intelligence ROI Managers should have a dashboard that they look at every day when they log into the system, displaying KPI’s such as Utilization, Billability, Project Resource Load 3/6/12 months out, and subcontractors’ usage. The ROI story is compelling. If you have a resource pool of 100 people, with an average hourly rate of $150, finding just one extra hour per month, through the use of RM, will result in $180,000 extra revenue per year. With acquisition and implementation costs typically below this, a payback period of less than a year is most possible. ■
  • 12.
    Agile Business Intelligence Today, BusinessIntelligence is no longer just the domain of the highly technical analyst or Executive Management, but of all business users. Now, users in Marketing, Sales, Project Management, Consulting, Finance and any other department in your company can be empowered with information and made more capable to handle business questions more efficiently and effectively. With immediate access to up-to-date information, thanks to Business Intelligence, answers to questions are based on facts – not assumptions. Furthermore, isolation of the office’s knowledge is eliminated. In other words, your company is now agile enough to take on the market. How to win in the 21st century business climate ■ By Marta Jagebro, Senior Product Manager, Business Intelligence, Deltek, Inc. It is hard to imagine a world without intelligence. What would today’s landscape be like if those who regularly made business decisions had no capacity of insight or understanding? Yet, there are still many within the Professional Services industries that do not acknowledge the importance of “being intelligent about your business” – or in other words, the necessity of Business Intelligence (BI). Business Intelligence refers to computer-based techniques used for learning, analyzing and predicting problems – thus eliminating problems before they arise, helping organizations reach their goals. As a platform for analyzing data, BI enables users with immediate self-service access to data which then allows for timely and accurate responses. Being a vehicle that delivers insights and foresights by providing users with historical, current and predictive views of business operations, BI bestows users with high-levels of information that before would have been out of their reach. The importance of agile Business Intelligence The report Trends 2011 and beyond: Business Intelligence1 from Forrester Research Group states the importance of agility when accounting for and implementing BI. In my opinion, nothing could be truer. The idea of agility means to be able to adjust quickly to changing conditions, which BI exemplifies perfectly. Since using BI is all about providing users with immediate access to up-to-date information, it allows them to both explore and analyze data, and then quickly apply the findings to the appropriate business practices – granting the user the agility to change processes to fit best practices. Without agility, BI serves little purpose. What this means, is that BI puts the power in the hands of the users. In utilizing a single platform where all users can access up-to-date information from each side of the organization, a company holds the power to diminish its lack of knowledge sharing or divisibility. 22 Agile Business Intelligence With the current economic downturn, BI is not just effective, it is vital to a company’s sustenance. BI can be used to monitor performance, discover new market opportunities, map out customer trends and drive cost reductions – all imperative capabilities for keeping business afloat in today’s turbulent economy. However, BI solutions are just as imperative even without the background of a recessive economy. Despite potential concerns from customers regarding the value of Business Intelligence in a post recession market, BI solutions only stand to put you farther ahead of competition when the economy gets back on track. About the author Marta Jagebro has worked in Business Intelligence for the past 6 years for companies such as SAP and Sony Ericsson. Since 2010, she is Senior Product Manager, Business Intelligence, at Deltek, Inc. The idea is that when the market is behind, BI puts your company’s head above water and helps you maintain performance optimization and increase profitability. When the market is ahead, BI serves to keep you further ahead of competition – and yes, generate higher profitability. In this way, “BI software is now prevalent in all successful business models”, as both Forrester 1 and research group Gartner2 states in a 2011 report on the intense growth of BI the past years. What does Business Intelligence need in order to be successful? It can’t be stressed enough that Business Intelligence it is not just a software solution – it’s a change of mindset. Business Intelligence helps improve organizations performance, and the way it operates with maximum agility is by ensuring that all users in the organization have access to it. But, if only a few analysts, or only Executive Management, within a company have access to Business Intelligence, how can Business Intelligence help improve organizations performance? The answer is easy: it can’t. Business Intelligence is no longer just the domain of the highly technical analyst or Executive Management, but of all business users. Agile Business Intelligence 23
  • 13.
    If only afew users in the company can access business information, then only a few users within the company will have the flexibility to react to data proactively. In other words, improperly administering Business Intelligence means that an organization is only as strong as its weakest link. Other Business Intelligence success factors are just as simplistic, though no less imperative. Most importantly, a BI platform must be an integrated rolebased solution. This allows every person within the organization to target their role, and contribute to actions that will serve to make their department (in addition to the organization as a whole) more efficient. Without this element, other critical benefits of your solution will not be able to fall into place. The next key element is to ensure that your business’s BI solution provides users with either live data or data close to real time. If this aspect is not defined, your solution will be rendered irrelevant and not fact-based, thus defeating the whole purpose of the solution. Other necessary qualities of a BI solution tend to have a domino effect: The solution has to perform fast, and data must be reliable – or else it risks the same consequences of becoming an “assumption-based system” that does not provide proactive action ability. Finally, what those who develop Business Intelligence often forget is that a BI solution must be both easy to use and have an appealing interface. It does not matter if BI is available to all users cross-departmentally – if it is not intuitive and appealing to the user, it will not be used effectively. To summarize, the below components serve as key aspects of a successful BI platform, and missing even one of these aspects can leave your BI solution completely ineffectual. • • • • • • • Accessible for all users Integrated role-based solution Live data or data close to real time Reliable data Fast performance Easy to use Appealing interface Lesson learned Unsurprisingly, the correct way to utilize a successful BI solution is not accomplished in a day. The most significant point to be considered in order to achieve a positive return on investment is a business’ commitment to the solution. Though it sounds obvious, just because an organization buys and installs a BI solution, does not guarantee that it will be used. 24 Agile Business Intelligence
  • 14.
    But, if onlya few analysts, or only Executive Management, within a company have access to Business Intelligence, how can Business Intelligence help improve organizations performance? The answer is easy: it can’t. Time and time again, experts in the industry have seen a familiar situation, where a company has been using the same process of delivering insight and foresight for 20 years and results are not optimal. Management then decides to invest in a BI solution to improve business performance. However, when the solution is implemented, the change management process is forgotten; users do not receive proper training on how to use the solution, or motivation for why it would be beneficial to use it in both their independent job and for the organization as a whole. This is one of the biggest mistakes a company can make. It results in a waste of money and ensures that your BI solution will remain useless to your business and ultimately provide no benefit to your profitability. But here is the lesson learned: In order to get the staff motivated to use a new solution, it takes a considerable amount of dedication from Management. Once those in supervisory roles lead by example by using the solution, training their employees, explaining them the benefits of the solution and demonstrating that the solution is intended for standard practices, the process for accurate utilization from the rest of the organization can begin. Though this in no way means that the effort to effectively implement BI ends here, it is a critical starting point for incorporating the importance of your BI solution as part of the office’s IT culture. The effectiveness of a BI implementation depends highly on Management’s predisposition to follow through on the investment, by making sure that the staff will use this solution in a way that successfully benefits the entire organization. Business Intelligence helps companies take proactive rather than reactive approaches to challenges. Though statistics show BI’s popularity, does it really make a difference if a company chooses not to have a Business Intelligence solution? Gartner’s study2 says it does and depicts that 35% of global companies lacking BI solutions will regularly fail to make insightful decisions about business practices. The research group also points out that without insightful decisionmaking capabilities, organizations will not be able to appropriately adapt to industry or market fluctuations, and they are more likely to experience profit loss. Complimentary to the Gartner report2, Forrester’s report Trends 2011 and beyond: Business Intelligence1, reaffirms the importance of agility in BI. This study notes that enabling all users to being agile enough to quickly self-access around-the-clock information is critical to Business Intelligence, and will stay critical even as the idea of BI develops and expands to fit future needs. What all these studies tell us is that the role of Business Intelligence as a “business-game-changer” will remain, even through turbulent economic fluctuations and changing market priorities. Through careful analyses of the solution’s properties and capabilities, we have learned that an integrated BI solution with a proper role-based architecture empowers Professional Services firms to review and react to information in a way that is new and exciting to the industry – yet nonetheless a requirement of today’s successful business practices. ■ Know More Seeing Business Intelligence in the future At its core, Business Intelligence helps companies take proactive rather than reactive approaches to challenges. With that in mind, it is easy to see that Business Intelligence will grow and retain a huge role in business development as we move into the future. According to Gartner2, by 2012, 50% of users within individual organizations will work with Business Intelligence. In the same study, 20% of organizations are expected to have industry specific BI solutions, while project-oriented firms will lead in terms of BI implementations. 26 Agile Business Intelligence You can read the full article “Agile Business Intelligence. How to win the 21st century business climate” at www.deltek.com/agileBI Trends 2011 and Beyond, by Forrester Research, issued by Boris Evelson Business Intelligence and Performance Management Will Deliver Greater Business Value, by Gartner Inc., issued by Kurt Schlegel, Mark A. Beyer, Bill Hostmann, Rita L. Sallam, Bill Gassman, Nigel Rayner, Neil McMurchy, Neil Chandler, Matthew W. Cain 3 Business Answers at Your Fingertips, by Aberdeen Group, issued by Michael Lock 1 2 Agile Business Intelligence 27
  • 15.
    Accounting Firms “One ofthe biggest trends we are now seeing is a sense of cautious optimism. We’re really starting to hear clients voice their optimism, indicating that the economy is starting to come around,” says Ron Overson, Partner of Boulay, Heutmaker, Zibell Co., in an interview discussing the trends and challenges facing the accounting industry. In this section, you can also read the intriguing article by Gary Boomer, CEO of Boomer Consulting, about the value pricing method for accounting firms.
  • 16.
    Accounting Firms Cautious Optimism ■By Rachel Lore, Copy Writer, Deltek, Inc. Partner of Boulay, Heutmaker, Zibell Co., Ron Overson explains how the recessive economy has actually prompted this North American accounting and financial consultancy to step back and adjust their business practices for the better. 2011 was a tricky year for almost any industry - enough to keep any firm down. It kicked off with the hopeful belief that the economy could finally get its head above the recession, only to face a shadow of another financial crisis mid-way through. But for Boulay, Heutmaker, Zibell Co. P.L.L.P (Boulay), one of the American Midwest’s leading independent accounting and financial consulting firms, the backdrop of today’s economy has not been enough to keep this firm from maintaining its laser-focus on profitability. The claim of Boulay is that it operates as a traditional accounting firm with audit and tax areas of focus, but it’s obvious that the company is so much more than your run-of-the-mill business. Highlighting both national and regional services, Boulay matches the breadth and competency of a large, multinational accounting firm with the personal attention of a local business partner. What’s more, Boulay operates under what it calls a ‘concierge approach’, wherein different groups within the firm train and specialize in a variety of service offerings, ranging from audit and tax management all the way to small business consulting. Under this model, each client service partners of Boulay is personally accountable for delivery to their clients. This varied specialization allows the firm to offer services similar to large firms, while still remaining competitive in the regional sphere - not something that many companies can boast from one centralized location. “The bulk of our firm’s clients are privately owned business,” says Boulay Partner Ron Overson, shedding light on the company’s regional appeal. “While we do get many large and publicly-owned organizations that look to us, we really see concentrated appeal to private companies that need special attention to their accounting and finances.” 30 Cautious Optimism Located in beautifully named Eden Prairie, Minnesota, Boulay has a strong dedication and commitment to progress that shows a lot about the company’s ‘glass-half-full’ perspective amidst today’s recessive backdrop. Finding opportunity even in troubling times, Overson notes that 2011’s turbulent economy compelled the accounting and financial industry to put its focus on staffing and process optimization - a trend that will more than likely continue into 2012. “I can really only speak for the public accounting world, which has been really strong for us,” Overson states. “Though we - like most other industries - have seen less rapid growth, it has allowed us to sharpen our pencils and really put our focus on improving our infrastructure.” Any Place, Any Time Overson explains that another significant trend in today’s business arena surrounds today’s newer electronic devices that enable flexibility in work time and place. Noting that the “best tools in today’s business sectors are the electronic devices that let you work from any place at any time,” Overson believes that the trend towards mobilization is something that will stay in style as IT advancements continue. “As with so many of our clients and other businesses, family relationships and activities are a core value of our firm,” Overson says. “Because our professionals also have a strong commitment to their clients, we believe that it is imperative to provide our team with the tools they need to serve clients well, while still maximizing their family experiences.” With Boulay’s deep understanding of the importance of IT mobility, Over­ son states that his firm, like others throughout the industry, continues investing in creative ways to maximize profitability. Like many other accounting and financial consulting firms, Boulay discovered that knowing where to look was the first step. About Ron Overson With over 25 years of experience in audit and management consulting, Overson specializes in due diligence and structure aspects of mergers and acquisitions. As a Partner of Boulay’s Audit group, Overson has provided these services to private equity, search fund, corporate and individual buyers throughout the American Midwest. Cautious Optimism 31
  • 17.
    Accounting Firms To assistwith our bottom line growth, Maconomy gives our company an awareness of what needs to be done to move a project along the correct path. Ron Overson, Partner of Boulay, Heutmaker, Zibell Co. “We invested in Maconomy to depict contribution margins for our service lines, industry and ownership groups and project types so we can better focus our attention in the exact areas that need it,” Overson says. “All in all, there really weren’t any huge swings to our business. Just the question ‘what can we do better?’” Internal Adaption Overson also notes that late 2011 indicated changes in staffing trends that other accounting and financial firms would do well to recognize, including modifications to the less aggressive recruiting and hiring strategies of recent years. Yet even in moving back towards the more assertive hiring practices seen in the industry’s pre-recession days, Boulay’s professionals have found opportunities to step their game up, becoming leaders within their groups. “Instead of highlighting overwhelming challenges, we are more than ever seeing those in associate positions step up and proactively demonstrate their interest and abilities for promotions into higher roles,” Overson says. “So instead of worrying about the competitiveness of outside hiring, we are embracing the challenge to really figure out how our firm can facilitate the kind of training that will maximize an individual’s professional development.” Though Boulay itself has luckily not been forced to impart significant changes to its business operations, the implications of the recession has kept the company positively focused on what tools it can utilize to increase efficiencies. “To assist with our bottom line growth, Maconomy gives our company an awareness of what needs to be done to move a project along the correct path,” he explains. “For process optimization, we’ll also continue watching the development of electronic tools that allow our employees to work whenever and wherever.” 32 Cautious Optimism Cautious Optimism 33
  • 18.
    An Around-the-World Approach Electronictools and an emphasized focus on infrastructure are not the only trends to be aware of as the world moves into 2012, however. As burgeoning markets begin to pick themselves up from the past recessions, many industries will begin turning their thoughts to stabilization and growth of profits, Overson states. So how are businesses in the financial and accounting industry planning to do just that? Overson says that many of those well-positioned to do so are leaning towards international offerings. And with over 25 years of experience under his belt, Overson has an eye for trends with longevity. “I believe many companies are trending toward an international playing field, i.e. providing services to clients all over the world,” he states. “Foreign companies are always going to want to tap into our markets, and now we’re seeing that, vice versa.” In Boulay’s case, its affiliation with IGAF Polaris - a global association of independent firms - allows the firm to provide its clients with assurance and tax services matching its own throughout the world. Whether through this method or other international offerings, Overson notes that this will definitely be a trend that many larger companies will follow in the upcoming years. Industry Challenges The accounting and financial industries will face some challenges in the upcoming year, Overson acknowledges - and the continued pace of regulation change and complexity is a big one for 2012 and beyond. To keep these fast-paced changes under wraps, Overson again stresses the importance of continuing the search for industry-best tools and education. However this search, he says, can also be a challenge to keep up with. Creating relationships with peer firms and software vendors to share best practices and develop appropriate tools is critical to designing a firm’s future technology system, he continues. Likewise, while regional firms like Boulay provide the kind of invested, interpersonal atmosphere that attracts both clients and employees for the long-term, Overson does admit that bigger companies within the industry will more than likely open up their hiring practices - making it an industrywide challenge for smaller firms to maintain their workforce. 34 Cautious Optimism Creating relationships with peer firms and software vendors to share best practices and develop appropriate tools is critical to designing a firm’s future technology system. Ron Overson, Partner of Boulay, Heutmaker, Zibell Co.
  • 19.
    Accounting Firms Business successionplanning, managing the financial needs of the retiring baby boomer population and international services are all trends that we will very much see in 2012 and beyond. As for bottom line growth, Overson says Boulay plans to do more of the same strategies that helped the company retain its success. In doing this, Overson claims that Boulay - like other firms within the industry striving for process optimization - will continue taking a critical eye to the practices that have the potential to hinder long-term performance. The Light at the End of the Tunnel So what does Boulay predict for 2012? Opportunity, claims Overson. Ron Overson, Partner of Boulay, Heutmaker, Zibell Co. “Retaining people in smaller firms will always be a high priority,” Overson says. “Now that the market is opening up a little we’re seeing a reawakening to the past’s more assertive hiring practices from bigger firms. Our task is to show people why smaller firms with a regional focus - some of which, like Boulay, also have a national presence - are indeed equally critical to a variety of different business needs. We provide our professionals with the opportunities to be positive and personal influences in their clients’ successes, which for many is an unequaled sense of accomplishment.” What’s On the Agenda? Apart from positioning the company to maneuver around the expected challenges of 2012 and on, Overson says that Boulay’s focus for next year will remain on the company’s top line growth. “Grow your top line with efficient business practices, and profitability will come,” he affirms. “To enable this, we have some really good processes in place, and adjust the ones that need attention.” One of this firm’s key practices - an ideal that could benefit any diversified consultancy - is the stress of constant communication and sharing of best practices and solutions to its clients. “We know that we’re going to see double digit growth,” he states. Though this in part is due to the recent completion of a firm merger, Boulay also has a lot to look forward to in terms of clients coming in to look for a more in-depth, personal, consultant relationship. What’s more, Overson notes that opportunities for the financial industry will arise from international development and the increasing age of the population in general. “Business succession planning, managing the financial needs of the retiring baby boomer population and international services are all trends that we will very much see in 2012 and beyond,” explains Overson. “However one of the biggest trends we are now seeing is a sense of cautious optimism. We’re really starting to hear clients voice their optimism, indicating that the economy is starting to come around. Yet they’re still cautious with their investments, and that’s where we come in.” As a professional service industry, it comes as no surprise that the accounting and financial consulting firm's progress stems from an unwavering commitment to people - both clients and staff. Planning, looking at regulation optimization and developing electronic tools in 2012, Boulay provides a great example that mirrors the accounting and financial industry’s overall, continued success - in good times and in bad. ■ “We constantly talk to our professionals about the need for marketing, which to us is more than just ad space or campaigning,” Overson states. “As our clients trusted advisor, we listen for their needs and bring forth appropriate additional services.” This, says Overson, is what helps to keep the firm building its clientele. An example that Overson gives, is communicating with an internal professional to reach out to a client after overhearing him or her speak of an upcoming retirement - even if he or she is there for tax-related or auditing services. “It’s our job to connect to the right service provider within the firm and ask them to reach out in a compelling way,” he finishes. “Keeping our ears open for client needs allows us to bring them the comfort of appropriate resolution. With fewer financial concerns, clients are more able to focus attention on their own business, as well as quality personal time.” 36 Cautious Optimism About Boulay, Heutmaker, Zibell Co. P.L.L.P Boulay, Heutmaker, Zibell Co is an independent accounting and financial consulting firm located in Eden Prairie, Minnesota in the United States. Since 1934, Boulay has helped clients reach both business and personal goals through expert advice and strategic accounting, tax, business planning and wealth management services. To learn more, visit www.Boulay.com Cautious Optimism 37
  • 20.
    Accounting Firms A NewWay to Measure Value Value Pricing Billing – Billing Does Not Equal Value It’s difficult to separate discussions about value billing from billing procedures and practices, as many firms that are trapped by poor billing practices often get them confused with value. To maintain successful billing procedures, firms should: ■ By Gary Boomer, CEO, Boomer Consulting, Inc. For the past two decades, I have watched accountants time and time again use the same pricing strategy for their services – cost of labor plus desired profit – yet without truly delving into the actual value of the service itself. This method is commonly referred to as the effort-based economy trap. But our teams at Boomer Consulting, Inc weren’t content with constantly falling into that trap. After all, how could we advise our clients toward profit optimization, if no one had ever stepped outside the box of the same old pricing strategy? So about 15 years ago, Boomer Consulting, Inc developed a pricing matrix for consulting services in an attempt to capture the perceived value of the services from the eyes of our clients. To complement our pricing matrix, we coupled it with a strong engagement letter that clearly defined both the scope and utilized change orders as engagements expanded. Then we determined the profile of desired clients and named and packaged our unique processes into service offerings for clients. Our method was not without critics. Industry experts said this model was fine for us, but claimed it didn’t have the functionality to perform in the accounting industry. Yet being a partner in a regional accounting firm at the time gave me the first-hand experience to say that fixed price agreements do work with traditional services, and in fact, are great differentiators. With many of these same experts re-emphasizing the importance of the time sheet, I have dedicated many of my professional years to studying pricing, intellectual capital and performance. Though some accounting firms are looking into more modern pricing strategies, for most the effort-based economy trap lives on. But why? In today’s world, businesses are continuously moving work infrastructures to technologically-driven processes and procedures, yet most firms continue to rely on outdated billing methods or are even stuck considering the wrong things when measuring value. 38 A New Way to Measure Value About Gary Boomer Gary Boomer is CEO at Boomer Consulting, Inc. which he started in 1995. Boomer Consulting, Inc. provides consulting services to CPA firms with solutions which target five areas critical to a firm’s success: Leadership Management, Client Development, Talent Development, Technology and Compensation. • Communicate with clients up front about billing and pricing • tilize value pricing and engagement agreements that define the scope U of rendered services with a provision for change orders. Get a signed agreement before commencing work • xpect clients to pay all or a portion in advance with any balance due E upon delivery. The value of a service decreases (from the client’s perspective) after delivery • o not work on clients who are behind in payments per the terms of D the value price agreement • imit pro bono work to those engagements approved by the Chief L Value Officer as Ron Baker names the person in charge of the company values in his book Pricing on Purpose Though these practices should be basic to most partners in accounting firms, they are vital to ensuring successful billing processes. Why Value Billing – You Must Want to Change The profession has used the term “value billing” for years, but frankly, few firms have implemented an actual value billing system. Why not? Some of the most often cited responses are: • Prior training about value is based upon cost plus • esistance to communicate with clients about fees (in advance) R • ash flow (improves under a value billing system if implemented C correctly) • Value billing takes too much time • Clients won’t like it • Fear of change (summarizes all of the above) The fear of change, or the fear of experiencing any number of the responses above, can act like gravity, pulling everything down. The only way to overcome this fear is through strong leadership, communication, clear understanding and adherence to processes, discipline and training. The first step on this journey is wanting to change. A New Way to Measure Value 39
  • 21.
    Accounting Firms And hereis a good reason to want to change. Unlike what most firms believe, clients actually prefer value billing for the following reasons: • They know the price and agree to terms before the work begins • They see the options up front and can choose from a menu of services • ash flow (from the client’s perspective) is spread out over the time C services are rendered • hange orders protect them if additional services are needed or C services need to be reduced Like a true win-win system, a firm should also benefit from a value billing system. When properly implemented, the firm should see the following improvements: • Cash flow improvements due to the nature of how clients pay for services: As an initial, up-front fee, and then as regular payments over a specified period of time. If agreements are drafted properly, work-inprocess and accounts receivable will be reduced to an insignificant level • ess billing turnaround time needed after implementation than L traditional billing systems, as value billing disregards the unimportant (when it comes to value), lagging indicators. • igher recognition and closing of opportunities from more effective H and efficient selling practices • bility to bill for the services of all team members – not just A accountants. The US average for percent chargeable is currently between 50 and 51 percent (all partners and staff) • Increase of overall profitability • Enhancements to its client base • ccountability for partners and managers who continuously exercise A poor billing habits • Expansion of the client’s perception of value Conclusion Value pricing within the accounting industry is no longer a shadow of a thought, but is rather a proven alternative to effort-based pricing and a direct result of the changing, customer-driven marketplace. Given a firm’s overall commitment and senior management’s triumph over the company’s natural aversion to change, the rewards of a value billing system can truly be an amazing asset to your firm. 40 A New Way to Measure Value A New Way to Measure Value 41
  • 22.
    Accounting Firms Recommendations To getthe most out of a value billing pricing model, we recommend the following 5 strategies:   elect Someone to Champion Value in Your Firm S If instituting titles are part of your firm’s company culture, make this person the “Chief Value Officer” (CVO). In addition to pricing services, one of the CVO’s main functions should be to create value from the clients’ perspective. Since value is subjective, accountants often have difficulty looking at this from a client’s perspective, meaning that the CVO should communicate frequently with clients to assess their perceptions. More importantly, he or she should also investigate your clients’ dangers, opportunities and strengths, in order to better provide services that they perceive as valuable. Assign an Intellectual Capital Task Force This team should manage your firm’s intellectual capital from start to finish: Including doing inventory of it, documentation and naming of it, and finally packaging it. This will allow the rest of the firm to focus training on its unique processes and price on value, rather than hours times dollars. Reach Outside the Firm for Help Don’t continue to let old paradigms limit value and profitability. Even though people known as “cautious realists” mean well, the things they don’t know to look for are what end up costing the firm. Lack of knowledge limits growth and value. To combat hitting this wall, read up on trends, educate yourself and solicit coaching from outside consulting firms like Jason Lawhorn’s Lawhorn Associates (who has successfully implemented a value billing system). I also specifically recommend reading Ron Baker’s Pricing on Purpose 1 2 3 4 5 Define the Profile of “Ideal” Clients and Filter Out Those Who Do Not Fit It Again, it’s important not to limit yourself. The plans, people, processes, technology and pricing that got your firm to this level will not carry it through transformation into an emerging industry. Embrace a Culture in which Training and Learning is a Two-Way Street: Everyone Learns and Everyone Teaches Adequate training involves far more than technical CPE – it has to be comprehensive as well. Make sure that your firm is learning the necessary soft skills that are required for maintaining top performance, in addition to the technology side (which can then serve as an accelerator for improved billing strategy). While these recommendations may sound simple, don’t disregard them. Bad habits of past processes and the ‘gravitational’ fear of change can make adherence to the system difficult to accomplish. ■ Know More F or more information on value pricing, we recommend reviewing the Boomer Advantage Premium E-Guide “Guide to Pricing For Value” which can be ordered at www.Boomer.com. Ron Baker: Pricing on Purpose. Ron Baker is the founder of VeraSage Institute. He is a well-known educator on pricing and has written numerous books on pricing and knowledge management. 42 A New Way to Measure Value A New Way to Measure Value 43
  • 23.
    Agencies “2011 without adoubt has brought a number of challenges to the industry, but ensuring that you engage with your clients at a strategic level is going to remain critical”, states Steve Cramer, COO, Leagas Delaney. Read the entire interview in this section and also the latest research from Jonathan Bourke, Managing Partner, Encompass Digital on Agency 3.0: The Destination For Advertising Agencies in a Digitally Focused World.
  • 24.
    Agencies Talking the Talk SteveCramer, Leagas Delaney’s Group Chief Operating Officer, discusses how a frank and open relationship with clients can lead to strong performance, holistic advertising approaches and opportunities in untapped markets ■ By Rachel Lore, Copy Writer, Deltek, Inc. More than one person has watched the internationally-syndicated show Mad Men with a hint of jealousy. The dramatic American television show, following the fast and sometimes morally ambiguous world of advertising agencies in the 1960’s, shows viewers one undeniable truth: advertising is cool. For agencies like Leagas Delaney – a creative advertising agency with offices in key markets all over the world – the world of ‘drinking-at-lunch’ advertising may have rapidly changed since the 1960’s, but the intrigue of their work is definitely still apparent. Working with top-brand clients like Patek Philippe, Timberland, InterContinental Hotels and Resorts, and Skoda, the agency maintains an excitement and commitment to the marketing craft that goes beyond the group’s independent status. About Steve Cramer Steve Cramer has been Group Chief Operating Officer at Leagas Delaney since 2009. He has over 20 years experience working with professional services businesses, ranging from large multinationals including Ernst Young to a number of fast growth entrepreneurial businesses. In addition to his role in Leagas Delaney, Cramer is also co-founder and director of Financial Professional Support Services (FPSS) Group. 46 Talking the Talk Talking the Talk 47
  • 25.
    Steve Cramer, GroupChief Operating Officer of the firm’s London office, says that for Leagas Delaney, encouraging communication is a top priority. And if the organization’s world-spanning offices in Hamburg, Milan, Prague, Shanghai, Tokyo and London note anything about this strategy, they would say it’s been a success. “As an independent agency, our focus is on bringing a level of creative integrity to the clients that we work with,” Cramer says. “Core to our values is having a frank and open relationship with our clients to make sure we are bringing exactly what they need to the table. Besides our creative talent, our focus is on having the kind of conversations with the client that will empower the most strategic and captivating advertising possible.” While Cramer owns responsibility for the financial aspects of the business, his coordinated success of the London office breeds an innate sense of confidence into the client’s mind – something that he uses to make sense of 2011’s tough-but-active advertising market. Murky Waters Time and time again, it’s been noted that 2011 was a tough year. Yet Cramer alludes that it was no more than expected for the advertising industry. “Because the recession was still an influential force in 2010, I would say that this year has really been no worse,” he claims. Though Cramer admits that some in the advertising industry may have seen different results, he explains that it’s really based on individual factors such as the depth of client relationships. “It’s clear that clients are being cautious with their marketing budgets, and are basing their decisions even more on whether they’re getting good value for their investments,” he states. “Really, the biggest issue – particularly in Europe – is uncertainty. It means that everyone is holding their breath to see what happens and many people are holding back from investments,” he states, referring to the economy’s rise and fall over the past few years. For advertising agencies experiencing the uncertainty of winning new business, they know that it’s a bitter chain of events. In downturn markets, people begin buying less to save money, which in turn affects business’ sales, which then impacts clients’ monetary ability to seek external advertising expertise. Fortunately, Leagas Delaney’s client-focused business model has made them one of the few agencies to retain and win new business over the past few years. 48 Talking the Talk Top line growth is already a priority on our agenda. This means not only deepening the connection with existing customers, but also making sure that we identify new client opportunities when they arise. We are therefore putting a lot of effort into developing our relationships across Asia and other growing markets. Steve Cramer, COO, Leagas Delaney
  • 26.
    Agencies The bottom lineis that this economy is tough, but there are opportunities. When the right kind of business comes in with an open mind towards their customers, that’s when we can provoke their thinking and come up with the absolute best advertising solution. Steve Cramer, COO, Leagas Delaney “Again, communication is key,” Cramer explains. “Because consumers are tending to hold back from uncertain investments, it’s now more important than ever for a company selling a product or service to differentiate from its competitors. Our industry is very similar.” “Leagas Delaney has secured a lot of new clients – even in this past troubled year – just by engaging and conversing with clients to make their customer communication stronger. As an advertising agency, knowing what your clients want in the future is a big part of it. To do that, we make sure we ask ourselves ‘What does this client need to say to their customers to keep going forward?’” “Developing a fully joined-up operation that includes the right amount of traditional, digital and social media advertising is something that agencies really need to focus on,” he says. “Often, advertising agencies have too much of one and not the others, and it’s critical that agencies begin to utilize all of these marketing routes in a way that truly benefits the individual client. Interestingly, this is both a challenge and a continuing trend for the advertising world in 2012,” he adds. Even more intriguing in today’s world of advertising are the challenges surrounding technology. Like most other businesses, advertising agencies around the globe have been embracing technology to help determine the most appropriate medium for each audience – yet there are some challenges that are unique to this industry alone. One example Cramer gives is the fact that many consumers have moved beyond television and jumped to the increasing capabilities of today’s mobile phones. Unlike the advertising methodologies that defined the 1960s and 1970s, the time has come to adapt to newer markets that require a strategic balancing act. “Giving clients more options and communicating how the offering should be advertised opens up a world of more effective marketing,” Cramer says. “Encouraging clients to embrace all media challenges appropriate to them is a key part of the business.” Performance Outweighs Price Eastern Opportunity Stressing that it’s just as important for advertising agencies to stand out amongst the competition, Cramer notes that there will be challenges along the way – some of which Leagas Delaney have already experienced. Size of the agency is one of them. Again both a challenge and opportunity for the industry, advertising agencies around the world are beginning to see the opportunities of previously untapped markets. For 2012, Cramer states that this aspect of the business is critical. “As an independent agency, the way that we compete against big advertising networks is through our creative strengths and the ability to produce the right message for the right client,” he says. “For smaller firms however, competing against a level of price and efficiency that multi-national powerhouses can offer is going to continue to be a challenge – though not one that is insurmountable. The way that we distinguish ourselves is by focusing on creative process and talent, and I think this can result in success with high-level clients, no matter the size of the advertising firm.” “The latest challenge that we’ll see in the coming years will follow an agency’s ability to expand its business into the newly developing and growing advertising markets. In our case, Leagas Delaney has been expanding into South America and Asia, as these markets have proven to hold huge opportunities.” No More One-Way Methodology Obviously, in today’s realm of iPad and Facebook campaigning, the days of Mad Men’s sole reliance on print advertising have long gone. Yet Cramer emphasizes that dependence of one advertising vehicle over the other can be just as dangerous as utilizing ‘outdated’ forms of networking. 50 Talking the Talk “In China particularly, we’re seeing a major change,” he adds. “Previously, global advertising agencies had focused on helping western brands advance into Chinese markets. Going in to 2012, we are increasingly seeing newly confident Chinese businesses wanting to expand outside of their home market. It’s a completely different direction, but holds just as many new opportunities for agencies that understand the Chinese market.” This growing belief in Chinese and South American businesses opens up untold potential to both advertising agencies and their international clients. Talking the Talk 51
  • 27.
    Agencies “For Leagas Delaneyand our clients alike, the places that present increasing opportunity are high-growth markets such as China, India, Latin America and the United Arab Emirates.” Another factor that can help those in the advertising industry stay afloat is by continuing to concentrate on top line growth – especially for independent agencies like Leagas Delaney. Guessing Game “Top line growth is already a priority on our agenda,” Cramer acknowledges. “This means not only deepening the connection with existing customers, but also making sure that we identify new client opportunities when they arise. We are therefore putting a lot of effort into developing our relationships across Asia and other growing markets.” When asked what external or economic factors lay in store for the advertising industry, Cramer responds with both wisdom and frankness. “If someone knows, they’re guessing,” he states honestly. “No one foresaw the continuing length and depth of the challenges that are facing the Euro zone countries, and the outcome is still very uncertain. However, this uncertainty means it is now even more important for businesses to communicate effectively with their customer to ensure they maintain or grow market share. Doing this will create opportunities for agencies who can engage their clients at a strategic level.” A Global Experience Despite differences in market health across continental borders, Cramer states that “These really are global issues for both businesses and advertising agencies.” “2011 without a doubt has brought a number of challenges to the industry, but ensuring that you engage with your clients at a strategic level is going to remain critical. Agencies who want to succeed have to form a real partnership with their clients and have the conversation about what will speak to both their messages and customers.” So despite the economic downturns and the end of Mad Men-era campaigning, the industry’s reach into new markets continues to excite today’s forward-thinking agencies. “The bottom line is that this economy is tough, but there are opportunities,” concludes Cramer. “When the right kind of business comes in with an open mind towards their customers, that’s when we can provoke their thinking and come up with the absolute best advertising solution”. ■ About Leagas Delaney Leagas Delaney is a privately-owned, fully-integrated communications agency offering strategic and creative services across all channels. Established in 1980, Leagas Delaney has an international network of offices spanning London, Hamburg, Milan, Prague, Shanghai, Tokyo and Hong Kong (in 2012). Clients include Timberland, InterContinental Hotels Resorts, Patek Phillipe, Glenfiddich, Prudential, Champagne Bollinger, Ministry of Tourism of Ecuador, Skoda and the United Nations World Food Programme. Talking the Talk 53
  • 28.
    Agencies Agency 3.0: The DestinationFor Advertising Agencies in a Digitally Focused World Keeping up with the Evolution of Agencies Themselves through Innovation, Operational Advancements and Digitalization ■ By Jonathan Bourke, Managing Partner, Encompass Digital To paraphrase the movie high school wise guy Ferris Bueller, agency life moves pretty fast. The past 30 years alone have seen not only the desktop publishing explosion, but also the advent of digital marketing – both indisputable game-changers. And as with society in general, technology is either driving the change, or the reason it’s created. The recent “Agency 2.5” movement is based on the belief that the digital space is the new frontier, where online innovation will change the landscape of advertising, the way Burma-Shave did in the 1940s and ‘50s, and David Ogilvy did starting in the ‘60s. Most of all, it delivers what most consumers value – a real relationship with the brands they believe in. Today, digital creativity connects consumers and brands on a visceral, organic level, from real-time customer service via Twitter, to word-of-mouth advocacy on Facebook, Yelp, or TripAdvisor. Consumers also have access to more information on brands and products than ever before. It all excites, engages and empowers them, providing more than Super Bowl spot production pizzazz and print ads to hang in their cubes. No doubt, digital has changed the landscape, and there’s no looking back. About Jonathan Bourke Jonathan Bourke is Managing Partner at Encompass Digital, providing Strategic Advisory and consulting to the advertising and media industries. He has dealt with the issues facing the industry as Chief Information Officer and Strategy Lead for a number of global agencies – supporting client facing, front, middle and back-office agency operations. Prior to advertising and media, he held senior leadership positions in banking, financial services and technology companies. This is what we refer to as “the Work” and is at the core of the Agency 3.0 philosophy. These are the non-creative activities such as time and expense collection, billing, accounting, etc. that every agency must perform, and successful agencies excel at. Until now, the technology discussion for traditional agencies has been confined to strategic and creative development. But we all know that while the creative output gets the spotlight, there’s a lot of “behind-the-curtain” work that supports it – in addition to the “up-front” staffers that could also really benefit from getting their hands on the most current technology available. In fact, implementation of these types of tools is what separates the movers and shakers from those left in the dust – enabling the digital agencies to eat the lunch of the held-back, traditional ones. Ultimately, an agency’s livelihood revolves around the Work. Indeed: the survival and client approval of an agency rests very solidly in the hands of the Work. Though elements of the Work will differ based on the agency itself, without the Work there is no agency. If this behind-the-scenes effort, including the all-important results and ROI, cannot be presented, delivered and executed in a context that makes sense, then your agency has lost the battle before it’s even begun. Agency 3.0 is that next step – taking the lessons learned from Agency 2.5 on the creative side, and applying them to the business of the firm. Agency 3.0 is the effort of increasing efficiency and profitability through finance and production systems that benefit both the agency as a whole and each individual department. Once fully adopted, Agency 3.0 conceptual initiatives provides users with the abilities to improve resource and talent management, link real-time schedules to both internal and external resources and leverage integrated data to better provide both advertising and business-to-business ideas for clients – all with the scale and flexibility for both networked and global offices. Agency 3.0 also provides the clarity to better manage people and workflows, enabling a stronger service to clients no matter where they are located. It delivers real time data – meaning that insight is based only on the most consistent and accurate metrics or business intelligence. And best of all, your firm – like other top firms embracing the digitalization of today – will see technology as an enabler of business, rather than an obstacle. That’s Agency 2.5 But what about the Traffic Manager who’s now a Project Manager, who’s still walking the halls with job jackets – the same ones that often go missing midway through the approval process? Or the Finance department facing off with clients that require more accountability than agencies can provide? 54 The Destination For Advertising Agencies in a Digitally Focused World The Destination For Advertising Agencies in a Digitally Focused World 55
  • 29.
    Agencies • Brands aremore than ever driving compliance and other standards • gency 3.0 provides more visibility into projects, something that clients A are increasingly expecting from top-level agencies • gency 3.0 lets your business do more with less – incredibly important A in today’s turbulent economy, as many companies are forced to lower their advertising budgets As an agency, you want to focus on the Work at hand, not the complex and expensive infrastructure. Agency 3.0 lets you meet that need, while also enabling your firm to: • • • • B etter manage the people, workflows and delivery of the Work E mphasize resource management and related disciplines I mprove operations and manage costs through best practices R ely on simple, trusted systems that meet your needs so they can do the “grunt-work” for you • ove past day-in and day-out tasking so your firm can tap into new M opportunities • Fast track past Agency 2.5 • ot just survive, but THRIVE with the changing advertising world around you N Maintaining integrated, out-of-the-box CRM capabilities, Agency 3.0 also provides agencies with the ability to: • ddress agency compensation challenges through improved A performance • chieve more with less time spent A • fficiently track job and universal job numbers E • asily complete routine, yet critical agency tasks E • ree up staff to focus on their core tasks by eliminating time spent F dealing with a redundant, complex infrastructure • entralize client and vendor information that is fully integrated with C project management, job and financial tasks Why Your Agency Needs to be a 3.0 Agency Darwin said it best when he coined the term “survival of the fittest”. As an agency in today’s technologically driven world, those who don’t get on board with modern concepts get left behind in the process. Even so, there are more reasons than just the above for why every agency has something to gain from embracing the ideas and tactics that make up Agency 3.0. Consider these key factors: • ore than anybody, clients want to see innovation and adoption of M technology, and Agency 3.0 is running your business the way they are asking you to • y going global, brands are changing how and why they work, so B maintaining a system that supports globalization is critical 56 The Destination For Advertising Agencies in a Digitally Focused World In Summary Agency 3.0 isn’t a revolution, it’s an evolution – understanding the value of the tools already at your agency’s disposal, borrowing best practices from other departments and service industries and creating an environment where every staff member affected by the process or workflow has the proper access to it. With the right implementation and customization, Agency 3.0 initiatives will help your entire agency become more efficient, increase visibility and recognize and cultivate both the best talent and the best clients to keep your business at the top of its game – all while capturing and centralizing most of the “paper” functions across the organization, to keep the Work running smoothly. ■ Know More R ead the entire white paper Agency 3.0: The Destination for Advertising Agencies in a Digitally Focused World at www.deltek.com/agency3.0 J oin Tim Williams of Ignition Consulting to hear his insight on the market trends, client demands, and how your agency can respond to the ever-changing environment. Watch the webinar at www.deltek.com/agency3.0webcast The Destination For Advertising Agencies in a Digitally Focused World 57
  • 30.
    Architecture Engineering Firms Accordingto Rasmus Ødum, Executive Vice President of Danish engineering consulting firm COWI, “Globalization has undoubtedly intensified competition within the engineering consultancy sector. But on the other hand, it has brought greater opportunities, especially to those who have established a close working relationship with customers.” Flip to the Architecture Engineering industry section to read Rasmus Ødum’s interview in its entirety, while also diving into a perspective article about decision-making at the best run AE firms.
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    Architecture EngineeringFirms Building a Bridge to Growth in a Financial ‘Earthquake’ ■ By Barry Monk, Consultant, Next Communications Rasmus Ødum, Executive Vice President of Danish engineering consulting firm, COWI, explains how building solid foundations can help counteract seismic shifts in the global economy As an engineering challenge, it doesn’t get much bigger. COWI, a leading international engineering consulting firm headquartered in Denmark, is working with the Japanese contractor IHI to build what will be the world’s fourth-longest suspension bridge, spanning Izmit Bay in Turkey, due for completion in 2015. As if that challenge wasn’t big enough, the USD 1.1 billion Izmit Bay Bridge will be built in one of the most seismically active areas in the world. In contrast to the Great Belt Bridge in Denmark, which COWI was also involved in, the design team elected to use steel pylons that can ‘slide’ on a concrete foundation in the event of a major earthquake, effectively making the bridge earthquake resistant. Seismic activity The fact that, in the bidding phase, COWI prepared a bridge design that IHI would be able to build faster and at lower cost than its competitors, primarily Chinese and Korean contractors, at a time of seismic activity in the global economy is in itself a major achievement. “Globalization has undoubtedly intensified competition within the engineering consultancy sector, but on the other hand, it has brought greater opportunities, especially to those who have established a close working relationship with customers,” says Rasmus Ødum, COWI’S Executive Vice President, Denmark. Global reach With offices all over the world, COWI provides state-of-the-art consultancy services within the fields of engineering, environmental science and economics, and plans projects using its extensive knowledge of local markets 60 Building a Bridge to Growth in a Financial ‘Earthquake’ while drawing on its global experience. The firm’s 6,000 employees include engineers, biologists, geologists, economists, surveyors, anthropologists, sociologists and architects. COWI, like all consulting firms, has undoubtedly felt the shifts in the global economy’s tectonic plates. So in COWI’s view, how did 2011 turn out in the engineering consultancy industry? “We thought 2010 was tough, but 2011 was probably one of the toughest in 15 years,” says Rasmus Ødum. “Building and construction in particular has become highly competitive. Consolidation is the name of game at the moment, with the growth of a lot of bigger players.” Major challenges Given this scenario, what does he see as the top three key challenges facing the engineering consultancy industry in 2012? “Firstly, I think low growth rates in Europe and the US in the first six months of 2012 will undoubtedly impact on the industry, and this is likely to have a tremendous effect on a willingness to invest in major infrastructure projects,” he says. “Secondly, it will be a challenge to maintain competitiveness in the market. If you look back five years, we were able to move people around the world to service the big global infrastructure projects. Local presence is a prerequisite for competitive players in the global market place: A criterion which we have aimed to fulfil in the past years by regionalizing COWI in line with our strategy. Now we have to ensure that people are ‘on the ground’ to service projects, so it’s all about ensuring process optimization in order to maintain a healthy bottom line.” He added: “Thirdly, projects are getting bigger and more wide-ranging, and they therefore require consultants with a wide variety of skills under their belts. The challenge is to ensure that we have the right skills, in the right place at the right time.” About Rasmus Ødum Mr Rasmus Ødum, MSc Agricultural Economics, is Executive Board Member, COWI Group, and Executive Vice President and Managing Director, COWI Denmark. The company with 6000 employees world-wide provides services within the fields of engineering, environmental science and economics. Mr Ødum has been with COWI for 15 years and has headed COWI Denmark since 2008 and is also a member of COWI's executive board. From 2005 to 2008 Mr Ødum had the overall responsibility for the business unit 'Geographical information and IT. Building a Bridge to Growth in a Financial ‘Earthquake’ 61
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    Architecture EngineeringFirms Growth by acquisition In 2009, COWI grew 25% to 6,000 employees, but averaged 3-5% in the last two years. “You really need to make acquisitions to take the big steps and increase the speed at which you can onboard new employees,” says Rasmus Ødum. “The ability to attract and retain the best minds should be high on every engineering consultancy’s agenda.” He adds: “In 2012, we expect organic growth of around 5%, but we constantly look proactively for the right acquisition opportunities in line with our strategy. In our business, there is undoubtedly a strong link between headcount and revenue.” Investment in systems Process optimization at COWI is being achieved via an investment in a new, group-wide Deltek Maconomy project management and financial management system. “The new system is empowering our project managers to more effectively control their projects, including creation, resource allocation, budgeting, invoice preparation, and follow-up. We have around 15,000 ongoing projects, so this front line driven technical and financial responsibility is fundamental for our business success.” He adds: “Moreover, strong business reporting capabilities are creating greater transparency at the executive level so company leaders can get a real-time view into the performance of the business. The system alone will power growth by around 1-1.5% and enable us to acquire and integrate new companies faster.” Opportunities go East So does he see any differences when comparing markets in Europe and the US with the rest of the world? “Certainly we see huge opportunities in China and India, especially on large infrastructure projects,” he explains. “On the other hand, engineering consultancies from China and India are now extending their global reach, so that’s a challenge we haven’t faced in the past because they have largely stayed in their own countries. Having these new players coming up is really changing the game on a global basis.” Urbanization is indeed a key driver. If a recent report* is to be believed, urban infrastructure is one of the most pressing challenges that the world is facing today. More than half the global population lives in cities, and this figure is estimated to rise to more than 70 percent before 2050 as a further 3 billion people move to urban areas in search in of work and prosperity. Rasmus Ødum believes the demand for engineering consultancy will grow accordingly. “It has just been announced that there are 7 billion people on Earth. This growth in population inevitably means more people moving towards big cities, with the demand for urbanization projects, huge transport solutions, intelligent energy distribution, water management, and so on. In China and India in particular, water management will be a huge undertaking that will demand our services. Also, with an ageing population in many countries, an intelligent investment in health services will also create huge demands in our industry. We envisage enormous long-term growth potential in these areas.” Looking at China in particular, after a busy Year of the Tiger (2010) which saw COWI secure participation on the Hong Kong-Zhuhai-Macau link – the most important infrastructure project in China – the government unveiled a new Five-Year Plan in the Year of the Rabbit (2011). “You could call it a plan for ‘China Incorporated’,” says Rasmus Ødum. “China's Five-Year Plans in the past three decades have had one key success parameter: Economic growth. And to a large extent, the growth strategy has worked: The world's most populous country has been transformed into the world's second largest economy. But the new Five-Year Plan will shift the focus from flat-out growth to more sustained, balanced growth rates of around eight per cent that target societal imbalances.” He adds: “The urbanization rate in China is unprecedented and this is where we already have strong competences within building, energy, water and infrastructure. When this is coupled with sustainability, I believe we can differentiate ourselves in this emerging market.” Key goals The world’s fourth-longest suspension bridge, spanning Izmit Bay in Turkey, due for completion in 2015. Copyright: Dissing + Weitling 62 Building a Bridge to Growth in a Financial ‘Earthquake’ For Rasmus Ødum, the key objectives for 2012 and beyond are to “increase efficiency and effectiveness”. He explains: “We’re looking to achieve steady but solid growth rates, so it’s all about really tuning our machinery for next year. That means achieving process optimization, increasing our effectiveness, and ensuring a distributed engineering model whereby we can deploy the skills we need, wherever the projects are.” Building a Bridge to Growth in a Financial ‘Earthquake’ 63
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    Architecture EngineeringFirms Of course, no company in this industry operates in a bubble, so what does Rasmus Ødum see as the key external factors – political and/or economic – that will impact the engineering consulting industry in 2012? “A great deal depends on the outcome of the economic crisis in Europe,” he says. “One thing is for sure: Uncertainty can and will paralyze business activities. In 2011 we all had the feeling that we were on track in Q1 and Q2, then everything grounded to a halt. The sooner we have clarification as to what is going to happen, the better. The one thing we all need is stability.” We have to ensure that people are ‘on the ground’ to service projects, so it’s all about ensuring process optimization in order to maintain a healthy bottom line. Rasmus Ødum, Executive Vice President and Managing Director, COWI Denmark. He believes that, whatever the outcome, different measures will be taken across every country, and this will affect the work available to engineering consulting firms. “There is currently a backlog of infrastructure initiatives in different countries, so this will need to be cleared, but I suspect it will not be at the same speed as previously,” he says. “The possibility that these projects could be rolled back even further if the crisis continues is a major concern.” Even though there seems to be a surplus of consultants, and prices are falling on the world market, COWI is looking optimistically to the future. “We have especially focused on four important high-growth areas, where we have secured significant breakthroughs – transport, water, energy and healthcare – all of which have enormous long-term growth potential,” says Rasmus Ødum. He believes that financial strength will continue to be decisive in these years, where projects grow in size and complexity. “For this reason, investments must ensure that we can continue to bid on mega-projects so we can continue to be among the world leaders in, for example, designing bridges,” he says. “This will give us a significant competitive advantage in the coming years.” He concludes: “The risk of an earthquake places unique demands on our services, whether it’s a real one that affects our bridge designs, or a financial one that can impact our industry. We’re very well placed to withstand either.” ■ About COWI With offices all over the world, COWI offers consultancy services and plans projects using its extensive knowledge of local markets while drawing on the international experience of its entire organization. COWI’s 6,000 employees in 26 countries include engineers, biologists, geologists, economists, surveyors, anthropologists, sociologists and architects. For more information, visit www.cowi.com Building a Bridge to Growth in a Financial ‘Earthquake’ 65
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    Architecture Engineering Benchmark Reports Deltek havebeen studying and reporting on the AE industry for over two decades. As you move forward into 2012 and beyond, it is our hope that our AE reports will help you chart your course for success. Read them. Discuss them. Benchmark your performance. Above all, use the insight contained within to make improvements in your own operations. Clarity: AE Industry Study 2011 Comprehensive Report Trends and needs in the engineering sector The report provides information on the overall health of the Architecture Engineering (AE) industries as well as important benchmarks for each AE firm to evaluate their performance. How do engineering consultancies themselves see the future of the sector? In this year’s Clarity 2011 AE Report we are focusing on: • ow firms like yours manage these dynamic times h • how performance is trending • what strategies have worked • what to expect from the future Download the report free of charge at www.deltek.com/clarity 66 The Dutch engineering association NLingenieurs and Deltek conducted a study in 2011 on the trends and needs in the engineering market in the Netherlands and Belgium. Consulting firm Synovate interviewed employees of 112 engineering consultancies. The study offers in-depth insight into the consultancies’ vision of their market and of their own future. Download the report free of charge at www.deltek.com/AEreport2011 67
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    Architecture EngineeringFirms Decision Making at the Best Run AE Firms ■ By Jon Bornstein, Manager, Deltek, Inc. Creating a Culture of Fact versus Gut Historically, Architecture and Engineering (AE) firms have been able to rely on the merits of their work for success, growth and profitability. Accordingly, decision making used to be relatively informal, and was largely guided by gut instinct and considering past performance as a barometer for future performance. While that is still true in many organizations, the opportunity for AE businesses is changing based on the emergence of Business Intelligence (BI) as one of today’s most popular business disciplines. BI, also known as fact-based decision making, performance management or analytics, is significant because of its ability to significantly impact growth and profitability. Equally important, Business Intelligence gives firms the ability to foresee and proactively avoid problems that could negatively impact performance. BI flips the historical decision making process on its head: in the past, decisions were based on intuition, without the benefit of a concrete, data-driven foundation. Today, firms are instead achieving a competitive advantage by creating cultures where BI sits at the core. In this new AE business dynamic, the premium is on decisions informed by data and data analysis. Because of its many merits, BI has been widely discussed and adopted in other industries – especially in financial services and retail. Little attention has been paid, however, to how AE firms can harness the power of BI in their own organizations. 68 Decision Making at the Best Run AE Firms Decision Making at the Best Run AE Firms 69
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    Smarter Decisions, BetterResults Firms that have formal BI strategies in place are taking a deliberate and methodical approach to decision making, resulting in an accurate perspective of their business. Consider having a historical, current and future view of firm performance with which you can: • pend more time analyzing data and making decisions than running S reports • Share performance data across the firm in role-appropriate ways • Use goals to drive the decision making process A nd perhaps most importantly: Predict the impact of decisions on firm performance 1 AE firms have their own distinct processes and cultures. In considering how to apply BI within their organizations, it’s important to start with three factors: 1. A firm’s maturity level, 2. Defining and measuring as specifically as possible and 3. Creating a clear bias towards action. Know More In the webcast Back to Black: Decision Making at the Best Run AE Firms Christine Brack, Principal, Strategic Business Planning, ZweigWhite, Vicky Morton, Information Systems Manager, Bonestroo and Bret Tushaus, Product Director, Deltek discuss how to design and leverage BI strategies to optimize the aspects of firm performance. Watch the webcast at www.deltek.com/webcastBestAE 70 Decision Making at the Best Run AE Firms Christine Brack, principal, business planning for ZweigWhite, stresses the importance of assessing a firm’s ’maturity level’ first and foremost. “How committed are you to changing? This factor is key”, Brack says, noting “A firm using business information to make decisions about growth and using metrics to improve, has to have a culture that is prepared for these initiatives and expect change.” 2 These are the distinct, and sometimes critical, advantages that BI provides. When looking at what BI offers, it’s clear that firms that systemize their BI or fact-based decision making processes have a strong competitive advantage over those that don’t. The challenge then becomes where to begin and/or how to best manage the existing BI programs in place. Moving a Culture of BI forward: Three Considerations Consider Your Firm’s Maturity Level 3 Be As Specific As Possible Once you’ve decided that BI has a role within your firm, it is time to create specific initiatives. After identifying what you’ll measure and improve, it’s imperative to be laser focused on ensuring the data is easy to access, easy to read and relevant to the appropriate decision makers. Additionally, it is essential that firms identify goals for all of the data that is being measured so that it’s clear what success looks like. Without goals, measurement becomes irrelevant. Brack emphasizes this, stating, “Leaders and managers need to concentrate on data that is actionable, rather than informational. In other words, get the right data and do something with it.” Take Action Finally, once a firm has quantifiable data, it needs to be able to apply it accurately. This means that someone has to look at the numbers and be able to decide if they can be changed in a favorable manner. Christine Brack comments: “If it has been determined that proactive action can be taken, the firm also has to decide how much change it wants and be willing to make the necessary changes to produce results.” As the last step, a feedback loop must be in place so that the effect of a change can later be evaluated (measurement is, after all, BI’s fundamental principle). Conclusion Given the availability of reliable data provided by today’s powerful software tools, AE firms have no reason to continue to strictly use intuition to make decision that could put their firm at risk. As the adage goes, “Data does not lie”. And while it can be misinterpreted, if you do your due diligence and balance your decision making with a three parts data and one part intuition, you should rarely be questioning your course. ■
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    Law Firms In hisinterview regarding today’s trends within the legal industry, Knut-Magnar Aanestad, Chief Knowledge Officer at Schjødt law firm, discusses market expansions, international offerings and modernization of the industry as a whole. Also in this section, read our interview with PA Consulting Group’s Claus Fadum Nissen and Henrik Zeberg where they disclose how today’s legal sector is adapting to become more of a ‘business’ and less of a ‘profession’.
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    Modernizing the Legal Industry Interviewwith Knut-Magnar Aanestad, Chief Knowledge Officer, Schjødt law firm ■ By Lauran Cacciatori, Senior Manager, Deltek, Inc. If you have access to any form of media, you’ve probably heard of Amanda Knox. With her incredibly high-profile murder case overturned in October of 2011, the face of the ‘student-abroad-in-Italy murder suspect’ has been broadcast over all corners of the earth. And like many of 2011’s other highprofile courtroom dramas -including the murder trials of Casey Anthony, and Michael Jackson’s doctor, Conrad Murray - each defendant retained an equally attention-grabbing lawyer. But despite the similarities of infamy, the difference between Amanda Knox and other news-breaking cases was the sense of internationality that the case had in and of itself. While both Casey Anthony and Conrad Murray’s murder cases were executed, defended and sentenced in the United States, the Amanda Knox trial showcased the extraordinary differences between legal systems across the world. With U.S. and Italian law proceedings so drastically varied, challenges arose for the legal teams to ensure that the American girl abroad received the proper extent of the law for both countries. About Knut-Magnar Aanestad Graduating with a Law degree in 1997 from University of Oslo, with a specialty in IT-law. Knut-Magnar started his career at Datatilsynet (The Norwegian Data Protection Authority). With over 14 years experience, he is now the Chief Knowledge Officer. Knut-Magnar Aanestad leads the Knowledge and IT-department. Currently, in addition to developing KM-activities, Knut-Magnar Aanestad is working with Schjødt to redesign its IT-infrastructure and implement new basic applications, such as ERP (PMS) and Document Management (DMS). Other main tasks include developing EUREKA, Schjødt’s database of documents for reuse and development. 74 Modernizing the Legal Industry
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    Law Firms … thereis a spark to make firms more professional and knowledge-driven than before. While the legal industry may have previously been content to perform ‘oldfashioned’ traditions and processes, there is now a stronger pull towards workers and leaders utilizing more modern technologies. Knut-Magnar Aanestad, Chief Knowledge Officer, Schjødt For law firms like Schjødt, overcoming international challenges is just another day at the office. While the firm may not practice criminal law, the idea of being an international firm and crossing country lines is still paramount to its business. As a Norwegian-based firm, Schjødt – a leading provider of business law services –gives clients access to lawyers in Oslo, Bergen, Stavanger, Alesund and Brussels, while simultaneously working with international clients and assignments that reach Scandinavia, Europe and beyond. Focusing its practice on areas including competition law, corporate MA, intellectual property, litigation, real estate, stock exchange securities, and tax amongst other areas, Schjødt tailors legal advice to its clients’ professional and geographical business objectives. The firm helps businesses navigate the supreme parliament of Norway (called The Storting) and international legislatures alike. To accomplish this, its expertly-staffed legal consultancy has to be aware of laws and procedures all over the world. Schjødt’s Take on 2011 As the legal industry continues to look in new directions for business and international offerings, it faces a bumpy road moving into 2012. However, amidst a year full of economic ups and downs, representatives from Schjødt believe that 2011’s tumultuous state has actually forced the legal industry to embrace some positive changes. “For the legal industry, 2011 turned out pretty well,” says Knut-Magnar Aanestad, Schjødt’s Chief Knowledge Officer. Staying optimistic as the year comes to a close, Aanestad does not feel that the business arena of the legal industry held unwanted surprises. “Speaking for both our company 76 Modernizing the Legal Industry and the industry as a whole, we were not as negatively affected by the crisis as many other industries.” “However, there is a spark to make firms more professional and knowledgedriven than before,” he continues. “While the legal industry may have previously been content to perform ‘old-fashioned’ traditions and processes, there is now a stronger pull towards workers and leaders utilizing more modern technologies.” These technologies, like in many of today’s fast-developing industries, can be viewed as the new lifeblood of a legal firm intent on growing its clientbase. And according to Aanestad, there are still plenty of projects for the legal industry to take on - meaning more chances to optimize processes and make more streamlined and efficient business decisions. “There are a lot of pros in terms of modernizing, especially when it comes to how management setup is done,” he states. “Our company, for example, is amongst other measures, starting to use Business Intelligence in an increasingly advanced way where we can now develop different types of reports to incentivize our leaders and managers.” Global Predicaments Though Aanestad emphasizes the positives of 2011’s economic instability, he does note that a major challenge of the upcoming year will be the unpredictability of the market itself. Depending on the market, he admits, costs and incomes for legal firms could fluctuate. What’s more, the challenge of unpredictability is something that all markets have to stay on top of, meaning that this global concern will affect firms at international, national and regional levels alike. The second challenge Aanestad discusses is also a global issue, but one that most firms are excited to tackle: expansion into new markets. “There are a lot of ways to do this,” Aanestad explains. “A firm has the more obvious option of setting up a local office in the market it’s trying to tap, but penetrating a new market is never easy, even with local resources at your disposal. Another way that has become increasingly common is to specialize and cooperate with legal firms that have already established a solid footprint in the desired market.” With the second option summarized as “setting up a desk at another office”, Aanestad notes that there is a final, more internally-driven strategy to market expansion within the legal industry. Like the technology Aanestad Modernizing the Legal Industry 77
  • 40.
    Law Firms There area lot of pros in terms of modernizing, especially when it comes to how management setup is done. Our company, for example, is amongst other measures, starting to use Business Intelligence in an increasingly advanced way where we can now develop different types of reports to incentivize our leaders and managers. Knut-Magnar Aanestad, Chief Knowledge Officer, Schjødt mentions earlier, this strategy focuses on project managers, under the idea that management from another country can help focus the business strategies in a way that will attract that manager’s home markets. “For example,” Aanestad says, “As our firm looks to expand its business towards China, we might hire a Chinese project manager who knows the Chinese business landscape and can help focus the business strategies Beyond 2011: Growth Rates Slow, But Don’t Surrender “The last few years, we’ve seen a lot of growth on both our top and bottom line,” states Aanestad, reflecting on 2011’s limited economic impact on both Schjødt and the legal industry. “However, we may be expecting a year that won’t deliver the same growth that we’ve recently had.” The position of the firm is still a good one, though. While not planning on as much growth as seen in the previous two years, Schjødt is still expanding - taking the firm’s reach all the way to China and other international partnerships. The challenge, Aanestad notes, again revolves around the unpredictability of what 2012’s economy has in store. “It’s really hard to say what will happen in 2012, as the landscape is still so murky,” he acknowledges. “Organic growth certainly is not expected to be so strong, but some companies may still hold on to the trends of last decade and consider mergers. Honestly though, mergers are not a huge trend that the legal industry sees as much, since firms now have more options to tap into markets outside their own.” The impact these trends will have on legal firms is clear: to keep pace and continuing growing top and bottom lines, firms must think outside the box and modernize in 2012 and beyond. ■ accordingly. What’s more, this method of internal employment can help motivate those under the project manager to follow suit and align their strategies in a more accurate target towards that same market.” But in discussing the trials of market expansion, Aanestad taps into a much deeper challenge of the legal industry, one that has not yet reached Norway but is being seen more and more as a growing trend - and that challenge is liberalization. Liberalization: A Growing Trend Becoming more and more commonplace outside of Norway, countries are liberalizing the market for legal services, developing a market where businesses other than law firms can give legal advice. “A great example of the liberalization we are seeing is when a larger consultancy firm would offer legal advice connected to its core business area. The United Kingdom has been affected by liberalization, forcing law firms to professionalize to compete. While liberalization has not yet reached Norway or affected our market, we will still keep a keen eye on this trend,” said Aanestad. 78 Modernizing the Legal Industry About Schjødt Founded on a high professional standard, sectoral expertise and staunch tradition, Schjødt supplies services in commercial law that provide a secure foundation for our clients’ decisions and safeguard their objectives. Schjødt aims to be Norway’s most competent commercial law firm within its priority areas. We will participate in social change and progress. The firm gives its clients access to lawyers in Oslo, Bergen, Stavanger, Ålesund and Brussels, and has the ability and resources to lead the development in Norwegian business law. On a daily basis, Schjødt’s lawyers work with international clients and assignments. Schjødt has alliance partners in Scandinavia, Europe and beyond; is a member of the World Law Group; and has experience collaborating with other law firms in respect of numerous projects and transactions. In order to ensure complete flexibility and the requisite highlevel expertise in the carrying out its remits, Schjødt's philosophy is always to remain independent in its choice of cooperation partners, thereby ensuring they meet all their clients’ requirements to the fullest possible extent. www.schjodt.no Modernizing the Legal Industry 79
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    Law Firms Change isthe Name of the Game For the legal sector, a new wave of client expectations puts focus on developing the business ■ Claus Fadum Nissen and Henrik Zeberg, management consultants, PA Consulting Group, interviewed by Rachel Lore, Copy Writer, Deltek, Inc. We’ve all heard a joke or two about how bad lawyers are when it comes to interpersonal relationships with clients but market driven evolution within the realm of legal sector business may change that. A new study by international consulting firm PA Consulting Group shows that a budding landscape of strong lawyer-client relationships is currently arising out of the legal industry’s development into commercialized business. “Change for the legal sector is indeed coming,” summarizes Claus Fadum Nissen, a management consultant based in PA's Copenhagen offices together with his colleague, Henrik Zeberg. As two of the company’s 2,000plus employees, they are not being ominous. Actually, Nissen states this very matter-of-factly, as if the change hitting the legal sector of business is in no way a negative or even unexpected thing, but rather is all in due course. “Law firms are simply being hit by the same client expectations that hit the consulting industry many years ago,” Nissen says. To simplify, Nissen explains that the recent call-to-action for the legal industry’s business evolution can be boiled down to four things: 1. A call for clear value-for-money 2. Raised expectations for understanding client needs 3. Increased use of tenders for large-scale assignments, and 4. Client preference to seek top lawyers within the needed specialty – even if it means changing legal service suppliers to get there All together, these changes have been underway for years. Nonetheless, it’s clear from the company’s legal sector research how imperative it is for law firms to be prepared for these changes – especially now that this pace of change is steadily increasing. In monitoring global legal sector trends, PA has determined that adaptability to these new client expectations can mean the difference between success and struggle, and can even be detrimental 80 Change is the Name of the Game enough to contribute to a firm’s demise. Adaptability in this case means the willingness to look into the business’ infrastructure, including looking for operational efficiencies and even re-examining the basic business model of the firm. But why study the legal sector? PA provides services within management, IT and technology consulting to a wide range of sectors, yet Zeberg claims that in PA’s study the legal sector stood out, as its challenges actually mirrored those of PA's own over the years. Inspired by PA's work with some of the most successful law firms in Denmark and the UK over the last few years, it dawned on Nissen and Zeberg that if these firms were experiencing the need for internal efficiencies and business improvements, law firms in other geographies were probably seeing many of the same challenges. Additionally, the recent collapse of many highly regarded firms, and an increasing level of competition within the sector, confirmed to many in the legal sector that it was time to change strategies. At the same time, new websites such as legalzoom.com are providing potential clients with the ability to retrieve fast and uncomplicated online advice from a range of legal questions. Through what basically amounts to three easy steps, websites like legalzoom.com eliminate many users’ needs to seek professional advice from traditional ‘brick-and-mortar’ law establishments. This new electronic option may over time force firms in the legal industry to provide more than just solid legal advice when called upon, and instead look to a way of systematically developing and maintaining longterm relationships with their clients. The Study With the study PA began its research into the future of the legal sector. Through one-on-ones, surveys, seminars and open forums, PA was able to utilize its project-based experience and insight as a foundation for analysis. From there, PA uncovered a wealth of information that helped solidify the presence of evolving market trends. The highlights of their findings included three important aspects: 1. client demand for increased service value as an addition to genA eral legal expertise – supporting the development of alternative pricing models, risk sharing models and a deeper understanding of client challenges and overall ambitions 2. An increase in competition – amplifying the need for performancedriving, internal efficiencies within both the administrative processes and the efficient use of free-earner resources Change is the Name of the Game 81
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    Law Firms 3. A warfor talent – attracting the best legal talent through a combination of market-leading compensation packages, offering challenging client work and personal and professional development With the research results stemming from a number of international legal markets, Nissen admits that the similarities across geographies – in addition to the focus points – were actually somewhat surprising to the PA team. “We were a bit skeptic that the challenges identified were as large, as many of the firms mentioned in our survey seemed so successful,” Nissen states. “Though we had some hunches, we did not imagine that there was that much similarity in company performance and the challenges faced. Zeberg adds “What our survey showed however, was that almost all firms in the legal sector, in some shape or form, are going through the same process. And that process is business commercialization.” Law’s Commercial Journey Nissen and Zeberg are refering to what PA calls “The Commercial Journey of the Law Firm”, wherein law firms facing the pressure of increased competition and selectiveness of clients, are remodeling business models to become increasingly client-focused. The journey starts in the “good old days” where the backbone of success was expertise alone and where companies could pick their clients as they suited, all the way to today’s market where IT and framework consolidation are often necessary for firms to conjoin and optimize efficiency. In this new journey, the key for law firms is to become even savvier about running the business itself, not just legal capacity and quality alone. Nissen suggests that those who can reach the “nirvana” of the business model – that is, those that can consistently transform client satisfaction into a strong bottom-line – are firms that have full client focus in addition to maintaining clear commercial and operational targets and goals for all employees. What’s more, these firms will be the ones that are the best at using alternative pricing models, organizing case portfolios and managing resource utilization. While Zeberg contends that larger, more competitive legal markets such as the US and UK are probably farther along this journey when it comes to key aspects, he notes that it’s more important for an individual firm to successfully develop client-focused practices along the way, than to rush through the process and ignore company inefficiencies. 82 Change is the Name of the Game ... the legal sector is becoming more of a business and less of a profession. Henrik Zeberg, management consultant, PA Consulting Group Going Forward To give your law firm a better chance of long-term success, Nissen recommends embracing these changes whole-heartedly. Emphasizing the importance of developing relationships, opening up to the option of partnering with like-minded firms and focusing on what it takes to establish and develop clients, the research translates into understanding the value chain of case work. Noting that this is also true for other struggling professional services organizations, Zeberg proposes five questions that law firms should ask themselves to better focus their business commercially: 1. Do we have the right pipeline of work? 2. we managing risk profitably when it comes to pricing, scoping, Are etc.? 3. we consistently allocate our resources efficiently, given the case Do work in question? 4. we efficient in our order-to-cash process (i.e. billing efficiently, Are ensuring timely payment, etc.)? 5. Are we creating value for our owners on all cases we take on? “This forward-looking focus on business highlights the monumental change taking place in the legal sector,” concludes Nissen. “The most interesting part is that we’re now seeing the importance of developing a business that focuses both on developing and maintaining best-in-class legal skills and on building deep client relationships. And these relationships will increasingly be based on a thorough understanding of the clients sector, competitive situation and unique challenges and needs, not just on the individual cases previously solved on behalf of the client, Zeberg adds “These changes imply a new era of better, more resilient business for the legal sector. In short, the legal sector is becoming more of a business and less of a profession.” ■ About PA Consulting Group PA Consulting Group is a management and IT consulting and technology firm. Independent and employee-owned, they operate globally in more than 30 countries and transform the performance of major organizations in both the private and public sectors. www.paconsulting.com Change is the Name of the Game 83
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    Management IT Consulting Companies VictorAllis, CEO of Dutch software company Quintiq, explains how and why ‘making the 6 meter jump’ can help businesses leap over the competition. Read his interview in full in the Management and IT Consulting section, and check out an industry perspective piece on how these firms can capitalize on the temporal opportunities brought to us by the social, economic and market factors around us.
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    Management ITConsulting Companies Businesses Must 'Clear The Bar' to Stay On Top ■ By Barry Monk, Consultant, Next Communications Victor Allis, CEO of Dutch software company Quintiq, explains why ‘making the 6 meter jump’ can help businesses leap over the competition Meeting challenges, aiming to win, working together, overcoming adversity, going the ‘extra mile’, breaking records. There are indeed a lot of similarities between sporting and business success. With this in mind, Dr Victor Allis, CEO of Quintiq – himself a six-fold gold medal winner at four computer Olympiads – draws comparisons between his company’s business objectives and one sporting event in particular – pole vaulting. Achieving and maintaining market leadership in its target markets, he says, means encouraging his people to ‘make the 6 meter jump’, i.e. make that extra leap to secure business, stay on top of the competition – and win. Winning strategy For Quintiq, it’s a strategy that appears to work. Founded in 1997, Quintiq achieved its first installation in 2000 and now has solutions in use at over 500 sites in 77 countries. The firm has dual headquarters in The Netherlands and Philadelphia, USA, and international offices in  Australia, China, Finland, Germany, Italy, Malaysia, and the United Kingdom. It has been recognized by industry analyst Gartner as a ‘Visionary’ in its 2010 Magic Quadrant for Supply Chain Planning, and was the winner of Deloitte’s 2010 Best Managed Companies. The company – which provides advanced planning, scheduling and supply chain optimization software solutions and consultancy – has grown on average 40% per annum in recent years, with revenues in 2011 of around US$ 65 million and 376 employees worldwide. The company is charting the same course for growth in 2012, and hopefully beyond. 86 Businesses must ‘clear the bar’ to stay on top Whoever heard of the word ‘recession’? Not Quintiq, it seems. Of course, this growth needs to be put into the context of a difficult period for IT consulting in recent years. Consulting, as we all know, is a somewhat cyclical industry. Consultancies generally posted significant growth from 2005 through 2007. However, 2008-09 marked a challenging period throughout the world, in light of the global economic slowdown and shrinking corporate budgets. Many IT consulting engagements focused on delivering cost-cutting operational enhancements and performance improvement benefits. However, as the business climate started to improve by mid-2010, the focus on IT cost cutting diminished. Today, many client organizations have shifted their focus and are engaging software and consulting practices such as Quintiq to develop a sustainable IT platform and an approach that focuses on innovation and growth. When it comes to providing innovation in its software solutions and consultancy to organizations in order to solve their complex scheduling, planning, and supply chain challenges, Quintiq not only ‘talks the talk’ but also ‘walks the walk’. Examples include: • LM Catering Services optimizes the daily distribution of 40,000 K meals to aircraft at Amsterdam’s Schiphol Airport • DHL Express plans and manages the daily delivery and pick-up of thousands of parcels in more than 50 countries • Novelis, the world leader in aluminum rolling and recycling, performs production planning across its manufacturing centers, and • he US Federal Aviation Administration (FAA) uses Quintiq’s T advanced planning and scheduling software to perform employee scheduling of all air traffic controllers. About Victor Allis Victor Allis and Arjen Heeres jointly run Quintiq and have divided portfolios between them. Victor Allis’ focus is on all non-European Business Units, the Global Development Center, RD, Project Delivery, Product Development and Finance. His awards include: • Ernst Young Entrepreneur of the Year, 2008 • Silver medal winner at the International Mathematical Olympiad in Paris 1983 as representative of the Netherlands. Businesses must ‘clear the bar’ to stay on top 87
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    Management ITConsulting Companies Dr Allis explained: “Clients today are looking to maximize asset utilization, drive down operational costs, improve on-time delivery, reduce production lead time, and much more. These are day-to-day business pressures, whether or not there’s downturn. For us, it’s about building long-term partnerships with our customers, and this is absolutely crucial in a good or bad economic climate.” Delivering quality and efficiency Dr Allis explained that in recent years, the company has landed some significant, multi-million dollar contracts, accounting for approximately 50% of its revenues, with the rest coming from a large number of smaller contracts averaging several hundreds of thousands of dollars each. But maintaining growth and leadership in its target markets is not easy. So how have they achieved it? And what’s the lesson for other firms? Dr Allis explained: “Through the years and numerous successful implementation projects, we have identified the principles that determine the success of a project and developed a methodology called the Quintiq Project Life Cycle, or QPLC. Underlying this is a number of important principles that can be summed up in two key words: quality and efficiency. It is through this focus on quality and efficiency that we are able to achieve a 100% fit for our customers.” Customer service goals The company’s approach is evident in the business it secured in 2011 with one of its customers, PO Ferrymasters, one of Europe’s leading providers of transportation and logistics services, which selected Quintiq’s Advanced Planning and Scheduling (APS) software solution. In the competitive logistics industry, PO Ferrymasters differentiates itself by offering ‘grade A’ customer service, including tailoring logistics solutions to its customers’ specific operational processes. “Our planning solution helped the company surpass its customer service goals by decreasing transport costs, improving communication between the firm and its customers and reducing its carbon footprint with efficient transportation utilization,” said Dr Allis. But isn’t landing deals like this a really tough challenge for any firm in the rollercoaster of a global economic turmoil? “The recent economic downturn hasn’t really affected us too much,” said Dr Allis. “We’re pretty much recession-proof. In difficult times, businesses focus even more on their quest for quality and efficiency, they need solutions to achieve that, and they come to us – so we can benefit from downturns.” Businesses must ‘clear the bar’ to stay on top 89
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    Management ITConsulting Companies We need to look at what we can do in order to create value for our customers. If each business concentrates on creating its own growth, however small, then this will have a positive impact on growth in the global economy. Victor Allis, CEO, Quintiq Key challenges But running a successful and rapidly growing business like Quintiq isn’t without its challenges, as Dr Allis explained: “Our biggest challenge is to achieve growth with the right people. Finding the right talent at just the right time is absolutely at the top of the list in our business. People are undoubtedly our firm’s strongest asset.” He added two further challenges for software and consulting firms: Breaking new territories and finding new vertical markets. He explained: “Our next biggest challenge is extending the business geographically to break new territories such as China, Japan, Brazil and India. In some countries they don’t have the data infrastructure required to implement our solutions, so we need to work harder to make them work. Our next big challenge is to break into new vertical markets, such as oil and gas and, in some countries, the steel industry. It’s absolutely vital for our industry to find and maximize these new opportunities.” Reaching new heights When Ukranian pole vaulter Sergey Bubka set the indoor world record of 6.15 meters in 1993, he couldn’t anticipate that Dr Allis would look to this achievement in terms of setting the bar high for his company. He explained: “In telling all our sales people to go for the 6 meter jump, I want them to reach new heights for the customer. In Quintiq, we’re selling value, not just solutions, to our customers, so we need to keep aiming high.” He gives an example of this in practice. “When we started out as a small company, with only 8 employees at the time, we were pitching for some business against a major league competitor. In some areas of the evaluation we scored higher than the competitor, but the customer took the safe option and went with the larger company.” 90 Businesses must ‘clear the bar’ to stay on top He continued: “We said that this was unacceptable, we have the best solution, so we came up with a proposal they couldn’t refuse. We offered to install our software for one month at no cost, and supported it 24/7. After a month, they liked it so much they opted to buy it. We went for the 6 meter jump, and we won the deal.” Making a difference It is probably fair to say that, when it comes to external factors – both political and economic – Dr Allis takes a fairly pragmatic view. “Many politicians and economists have appeared to be ‘clueless’ about what’s going on in the economy. While some countries, such as the UK and France, have been introducing austerity measures, there doesn’t seem to have been a universally agreed direction. They have all been too busy fighting over the details rather than looking at the bigger picture. There’s been a lot of ‘crying wolf’ going on.” He believes it is the responsibility of every business to take care of its own future, rather than relying heavily on any doom-laden forecasts coming from politicians and economists. “It is fundamentally about answering the question: “What can we do to make a difference?”, he says. “We need to look at what we can do in order to create value for our customers. If each business concentrates on creating its own growth, however small, then this will have a positive impact on growth in the global economy.” The key question for consulting firms is: Where will future growth come from? “Consulting firms need to realize the extent to which globalization and specialist knowledge will be the driving force of competition over the next five years,” said Dr Allis. “Many firms will be forced to re-think what it means to be international and the skills and experience that will differentiate them in an increasingly sophisticated competitive industry.” Meanwhile, to help maintain global market leadership, Quintiq has secured private equity investment. “We have a five-year plan to grow to a US$ 0.25 billion company,” concluded Dr Allis. “We’re setting our own bar high.” ■ About Quintiq Quintiq focuses on providing the most advanced planning, scheduling and supply chain optimization software solutions for targeted markets. Founded in 1997, Quintiq achieved its first installation in 2000 and now has solutions in use at over 500 sites in 77 countries. With dual headquarters in The Netherlands and Philadelphia, Pa, and international offices in Australia, China, Finland, Germany, Italy, Malaysia, and the United Kingdom. Quintiq has been recognized by industry analyst Gartner as a Visionary in its 2010 ‘Magic Quadrant’ for Supply Chain Planning. The company has also been cited as a winner of Deloitte’s 2010 Best Managed Companies. Businesses must ‘clear the bar’ to stay on top 91
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    Management ITConsulting Companies Adapting to the Times How your firm can take advantage of the events that make headlines ■ By Henk Jan Onstwedder, Managing Director, Deltek Benelux We all know that adapting to the changes around us is part of being a successful business. Otherwise, we’d still be using typewriters and relying solely on radio broadcast for our marketing strategies. Today however, these trends indicate much more for consulting firms. IDC demonstrates that there are indeed better opportunities out there for consulting firms who master two key elements: the first, that they align themselves around the core capabilities that match their own niche market. And second, that they adapt to the changes of the business environment and then incorporate those changes into their offerings. Through the practice of what IDC calls “grasping temporal opportunities”, consultancies can keep their operations at a stronger operational level. In the report, entitled Evolution and Future of Business Consulting: Grasping Temporal Opportunities, the temporal opportunities are defined as “any business opportunity triggered by an event, unexpected market or demand requirements or by a change in regulatory regime.” The most recent–and maybe one of the most frightening – temporal occurrence firms face today is the Euro crisis of 2011. With the Euro at an all-time low and economies collapsing under the pressure of widespread debt, it has become absolutely critical that consultancies adopt the market changes into the way they offer services. About Henk Jan Onstwedder Henk Jan Onstwedder has worked in the IT consulting industry for more than 15 years with business development, sales and marketing. Since 2010, he is the Managing Director of Deltek’s offices in the Benelux region. Increasingly, firms are leveraging areas of deep industry, domain, technical or analytical expertise, often providing specialty services build on rich, data-driven analysis. Evolution and Future of Business Consulting: Grasping Temporal Opportunities; by Cushing Anderson, IDC Deepening the Client Relationship As the industry has evolved, IDC reports that the manner of consulting in and of itself has changed. Moving from previous “theoretical advisories” to practical implementation, IDC confirms that consultancies are now more than ever leveraging deeper technical and analytical expertise to boost their offerings to clientele. 92 Adapting to the Times 93
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    Management ITConsulting Companies “Increasingly, firms are leveraging areas of deep industry, domain, technical or analytical expertise, often providing specialty services build on rich, data-driven analysis,” the report notes. “Collaborating on the successful execution and integration of solutions brings a greater level of intimacy and deepens the firm/client relationship. Deeper knowledge of individual client organizations allows firms to recognize temporal opportunities and capitalize on them with timely proposals.” From IDC’s research, we see a prominent cause-and-effect relationship. In moving to practical implementation – wherein consultancies no longer just develop a plan, but also do the implementation and support the client’s staff during it – firms deepen their relationships with clients, which then in turn opens them up to temporal opportunities. All of this together builds up to the ultimate payoff for consultancies – growth. But where are the connections to today’s market? For that we look to the fact that clients want tangible returns now more than ever. With today’s markets in an uproar, consultancies depend on aligning their core capabilities to the needs of clients within their niche markets – requiring necessary shifts in their offerings. Future Success Though times are tough, there are still big opportunities out there that are ready to be grasped – and it’s the consulting firms who know how to adapt to these times that will be in the best position to grasp them. Being able to capitalize on today’s market developments and incorporate them in your customer-targeted portfolio of services will empower your company your company towards success. Taking what we’ve learned through our years of extensive client interaction and our agreement with IDC’s report conclusion, we’ve solidified the criteria that will help consulting firms thrive in today’s rocky business landscape. 1. Employ a niche strategy in your service offerings – getting the right customers within your nice or core competency means that your business needs to have an understanding of the profitability of your customer segments 2. Create a network of relationships with the key players within your customer’s organization – focusing on CRM is critical to serving your clients needs and delivering the desired results. 3. Deliver measurable results 4. Capitalize on the market developments – Adapting and establishing best practices specifically for these temporal opportunities can ensure that your business is taking advantage of potential profitability. 94 Adapting to the Times 95
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    Management ITConsulting Companies With all this in mind, how can consultancies take this information and place it into practical application throughout their enterprise? The best way is to stay agile. By extending your niche offerings or creating new ones to accommodate the changing business environment, you ensure that your firm is staying ahead of the game. Final Recommendations With all this in mind, how can consultancies take this information and place it into practical application throughout their enterprise? The best way is to stay agile. By extending your niche offerings or creating new ones to accommodate the changing business environment, you ensure that your firm is staying ahead of the game. Again, the question is how. How can our business mold our offerings to niche markets? How can we create solid relationships with key customer contacts, or deliver measurable results that will increase our competitiveness in the market? The answer is by having the right tools to deliver the data capabilities you need, capabilities such as workflow enhancers and automatic, daily alerts that let you know critical information when you need it most. With the right information your company could have information on the profitability of customer segments streamlined to the right personnel, and at the same time, track and maintain all the relevant information on your customers and prospects. If you incorporate such integrated processes throughout your business, you will remain efficient. This means that if your company has optimized its performance through cooperation and information and knowledge sharing, you will be able to better deliver measurable results. This will then allow your firm to grasp hold of those temporal opportunities and thereby be on the right path to success and growth – even in today’s challenging times. ■ Know More Evolution and Future of Business Consulting: Grasping Temporal Opportunities; by Cushing Anderson, IDC. Copyright 2010 IDC. All rights reserved. 96 Adapting to the Times 97
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    Scientific Research and NGOs Inan interview about today’s trends within the field of Scientific Research, Oddgeir Hov, Financial Advisor for the Institute of Marine Research, explains the similarities between the institute’s data-exploration practices and the meticulous reporting practices and careful administration of funding sources. Additionally, look to the Scientific Research section to read the latest piece describing the United Nations Environment Program’s initiatives to put authoritative knowledge at the center of decision-making.
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    Scientific Research andNGOs Data Explorers in the Norwegian Sea ■ By Patricia Baagø Ishøj, Client Insight Manager, Deltek Oddgeir Hov, Financial Advisor, Institute of Marine Research, aptly explains that the institute not only researches aquaculture and ecosystems, but also uses its powers of exploration to better maintain data that adheres to the meticulous reporting practices and careful administration of funding sources. The aim of the Institute of Marine Research’s research and advice is to help ensure that Norway’s marine resources are harvested in a sustainable way. Capacity on the agenda With more than 700 employees, the Institute of Marine Research (IMR) is the largest marine science community in Norway. IMR’s main task is to provide advice to the Norwegian authorities on aquaculture and on the ecosystems of the Barents Sea, Norwegian Sea, North Sea and the Norwegian coastal zone. While IMR’s headquarters are located in Bergen, highly critical projects are also carried out at a plethora of other locations: IMR’s department in Tromsø, the organization’s research stations in Matre, Austevoll and Flødevigen, and even on board its research vessels, which are at sea for a combined total between the vessels of 1,600 days a year. Around half of IMR’s activities are funded by the Norwegian government. While the remainder of its funding stems largely from governmental entities, including the Research Council of Norway, EU, and NORAD, the company also receives financing from private sources. Despite the recent economic downturn in the global economy, IMR has not experienced the same funding challenges or restrictions that many other industries have faced in the past year. Even better, as IMR looks into 2012, there is no indication that its number of projects will decrease, meaning that the real challenge is ensuring the capacity to execute more projects. 100 Data Explorers in the Norwegian Sea The company’s true challenge is explained by Oddgeir Hov, who is an experienced Financial Advisor and has been with IMR for over a decade. “The financial crisis has had a small impact on our funding from private sources, yet it is still not really a problem to obtain funding for our future projects. Instead, our main challenge is our ability to execute all our projects on time and within scope, while successfully reporting on funding allocations, progress and expenses.” Meticulous reporting requirements In scientific research organizations, meticulous reporting practices and careful administration of funding sources, programs, projects, activities, people, output and outcome and underlying financials are essential for demonstrating efficient use of funds and resources. “The largest change that we have experienced, compared to previous years, is the external requirements on project reporting. Today, all our funding sources – including government as well as private sources – require that we meticulously report back on how we are utilizing their funds,” says Hov. In order to both meet these requirements and be able to report on the status and progress of the individual projects, IMR needed efficient routines for time capture, project management and project reporting. Yet these challenges more appropriately reflect day-to-day business pressures for any organization within the scientific research industry – whether or not there’s downturn. Though still maintaining success amidst a troubled economy, increased requirements on reporting have also had a noticeable influence on the way in which IMR organizes project work and daily routines. “We have been a project-centric organization since the late nineties, but the level of detail in project data which we report on today is much more comprehensive than what we have ever had before,” Hov elaborates. About Oddgeir Hov Oddgeir Hov is a financial advisor at the Institute of Marine Research (IMR). As an economist he is involved in most parts of IMRs financial management. For the last couple of years, Hov has been especially engaged in developing and customizing IMRs project management systems and creating an efficient project based reporting structure throughout the organization. Data Explorers in the Norwegian Sea 101
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    Scientific Research andNGOs The largest change that we have experienced, compared to previous years, is the external requirements on project reporting. Today, all our funding sources – including government as well as private sources – require that we meticulously report back on how we are utilizing their funds. Oddgeir Hov, Financial Advisor, Institute of Marine Research Fish know no boundaries Excitingly, the IMR is also breaking into new territories and new verticals. The Centre for Development Cooperation in Fisheries (CDCF) under IMR runs international development cooperation projects in the fields of research and resource management on behalf of the Institute of Marine Research and the Directorate of Fisheries. Prudent use of resources As is the case in other scientific research organizations, IMR also have challenges when it comes to finding the right balance between the Project Manager (who draws up the project plan in hours) and the Resource Manager (who has to come up with staff to deliver on those hours). “We have looked very carefully on how we use our human resources,” affirms Hov. “After all, it is essential that we utilize the resources that we have in a way where we get the most research for our funds.” Over the past 30 years, the centre has run projects in more than 40 countries in various parts of the world. Through long-term initiatives such as the Nansen program – a project that supports developing countries attain self-sufficiency through sustainable use of marine resources – a number of countries in West Africa have received assistance with mapping their fish resources, building up national research capabilities and developing fish­ eries management systems. In recent years, aquaculture has also become an important part of IMR’s international development cooperation with countries such as Cuba and Thailand. ■ Hov also notes that this challenge is no five-minute fix. “We are looking to strike an optimized balance between projects and people, which, in my opinion, is a challenge for any project centric organization. Though we have been working on this for a while, there is still room for improvement – something that will very much be on our agenda in 2012,” Hov concludes. About IMR On top of the agenda according to Oddgeir Hov • Optimizing work processes • Improving utilization of resources • Being able to meet reporting requirements 102 Data Explorers in the Norwegian Sea With more than 700 employees, the Institute of Marine Research (IMR) is the largest marine science community in Norway. IMR’s main task is providing advice to the Norwegian authorities on aquaculture and on the ecosystems of the Barents Sea, Norwegian Sea, North Sea and the Norwegian coastal zone. The institute is also heavily engaged in international development work through the Centre for Development Cooperation in Fisheries (CDCF). For more information visit www.imr.no Data Explorers in the Norwegian Sea 103
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    Scientific Research andNGOs Decision Making Based on Facts How the United Nations Environment Program is putting authoritative knowledge at the center of decision-making. “We chose Deltek’s solution because it offers a fully integrated solution that really has everything: strong project management functionality, crossfunctional financial management capabilities, custom dashboards and reports that provide instant access to project status,” added Gee. “Easily the best product, Deltek’s solution also fit our budget and met our goals of gaining real-time access to client, project, employee and company performance data.” Partner implementation To help with the implementation, UNEP-WCMC selected Cambridge-based KPI-Insight consulting, a provider of business management and consulting services, and a leading Deltek UK partner. ■ By Barry Monk, Consultant, Next Communications and Patricia Baagø Ishøj, Client Insight Manager, Deltek, Inc. Smarter Decisions, Better Results The United Nations Environment Program and World Conservation Monitoring Center (UNEP-WCMC) is an internationally recognized center of excellence for the synthesis, analysis and dissemination of global biodiversity knowledge. Providing authoritative, strategic and timely information for conventions, companies and even entire countries, UNEP-WCMC enables the development and implementation of proven policies and decisions. To accomplish its mission, the center employs over 70 people and undertakes around 100 projects a year, each ranging in value from anywhere between $10,000 to over $3.5 million. Since many of UNEP-WMCM’s projects are multi-partner, multi-currency and complex to manage, the organization found its previously disparate systems unable to piece together project-related financial and management information. “Analyzing our staff timesheets to complete our month-end reporting was a long-winded process,” affirmed Alex Gee, Head of the Project Coordination Unit at UNEP-WCMC. “Staff often had to be chased to enter timesheets into an archaic system.” “Likewise, our long-winded process of ensuring the right amount of hours were booked against the right projects, then extracting and manually entering data into a different system – not to mention the back and forth of extracting and analyzing the metrics after that – pushed us about 10 working days into the following month.” Time for change To overcome this internal obstacle, the company embarked on a sixmonth scoping exercise which resulted in a tender for a new ERP system. 104 Decision Making Based on Facts UNEP-WCMC’s implementation plan was to go for a ‘soft launch’, which allowed the company’s ‘super users’ to test the system and see what did and didn’t meet their daily needs. “With their feedback, we were able to work with KPI-Insight and make changes to the configuration before we actually went ‘live’ six months later,” stated Gee. Cash flow focus Another major challenge for UNEP-WCMC was moving from monthly to weekly time and expense reporting. Though better for project planning and reporting, the organization faced obstacles in retrieving data that would enable more accurate cash- flow forecasting. “Project plans are essentially linked to cash flow forecasts, so if project managers don’t plan, there is no cash flow forecast,” explained Gee. “The net effect of our improved capabilities under the Deltek solutions is that we can see which departments are under- or over-committed, identify billable and non-billable activities and draw up accurate cash flow forecasts based on real-time information.” According to Gee, the newly-acquired accuracy of project reporting is a key advantage. “We can report on anything in the system, from global reports to drill downs so that we can see things like the amounts invoiced against expenses, work in progress and so on. With KPI-Insight’s help we’ve also been able to train our employees to create their own reports.” About UNEP-WCMC UNEP-WCMC is a collaboration between the United Nations Environment Program and the World Conservation Monitoring Center (a UK registered Charity). UNEP-WCMC provides expert synthesis, analysis and dissemination of knowledge about global biodiversity and ecosystem services. For more information visit www.unep.org Decision Making Based on Facts 105
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    Scientific Research andNGOs Absolutely critical to the organization’s monthly results, timesheet analysis is another benefit seen from UNEP-WCMC’s new system. Knowing how much time has been charged to projects and what it equates to in billable time used to be a tall order for the company. “It used to take forever to forecast how each unit was performing, and now it takes just a minute,” Gee confirmed. “That’s brilliant. It gives the senior management team much more visibility of resourcing and performance across the organization.” It used to take forever to forecast how each unit was performing, and now it takes just a minute. It gives the senior management team much more visibility of resourcing and performance across the organization. Alex Gee, Head of the Project Coordination Unit, UNEP-WCMC Increases in efficiency Gee estimates that the finance and administration unit has saved a whole working week per month in putting together the month-end reporting. “That’s a massive difference to us,” he noted. “It gives us more time to spend on work that we used to never be able to get around to. Enabling increased revenue and more proactive decision making, this system has also allowed us to take a more meaningful look at how we can better plan and utilize our resources.” This statement has been proven to be more than just an opinion. In March 2011, UNEP-WCMC had the fastest month ever to get their first cut results. In submitting the staff’s timesheets weekly, the company wasn’t left to scramble for numbers by the close of the month. Under Deltek systems, Gee testifies that it was as simple as reminding staff to submit their approved timesheets a couple of days before the end of the month. “On April 1st we posted all the completed timesheets. By 10am on April 3rd everything was completed: timesheets were posted, revenue generation was reported, income and expenditures were reconciled, work in progress was validated, and our time analysis was finalized,” he said. “By 11am that same day we had disseminated the initial results to the management teams.” Though it’s too early to evaluate a concrete return on investment, Gee believes it won’t be long. “ROI will be easy to measure in another 12 months, as we get to grips with using the solution and maximize its full potential,” he concluded. ■ About KPI-Insight The Deltek UK partner, KPI-Insight consulting provides consulting services and business management software for organizations throughout all levels of the Professional Services industry. Under the company’s client-focused mission, KPI-Insight strives to make businesses more efficient and profitable through world-class software and services. To learn more, please visit www.kpi-insight.com. Decision Making Based on Facts 107
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    About Deltek, Inc. Deltek(Nasdaq: PROJ) is the leading global provider of enterprise software and information solutions for professional services firms and government contractors. For decades, we have delivered actionable insight that empowers our customers to unlock their business potential. Over 14,500 organizations and 1.8 million users in approximately 80 countries around the world rely on Deltek to research and identify opportunities, win new business, optimize resources, streamline operations, and deliver more profitable projects. deltek.com