_{By Dave Hofferberth}

KPI 1. Project duration

The average project duration in months depicts the effectiveness, or lack thereof, of selling longer-term projects. The average project duration is important in that it shows the average length and scale of today’s projects. Although easier to staff, longer projects are not necessarily more profitable because longer and larger projects may involve significantly more risk and complexity. However, extended projects with large staff size can yield significant revenue and stability to the organization as employees are not moving from project to project.

Table 1 shows the majority of projects take between one and nine months. Clearly, revenue per project increases as the duration increases; billable utilization also rises as the duration increases. But what is perhaps most important about this table is that organizations with the largest projects tend to grow at a much higher rate than those organizations focused on very small projects.

KPI 2. Standardized delivery methodology

Consistency of service delivery is imperative in order to improve quality and instantiate best practices. While not all work can follow a standardized or structured service delivery methodology, the higher the percentage, the better the firm typically operates.

Mature firms invest significant time and attention to methodology development as a means to standardize project processes, define expectations and institutionalize quality. Using a standardized delivery methodology is a critical component of a services productization strategy. It helps improve project forecasting and resource management by lowering costs and enhancing predictability. PSOs that can accurately plan and execute services in a structured way are more productive and more likely to deliver quality results.

There is significant effort involved in developing, implementing and adhering to standardized delivery methodologies, but the net impact for PSOs is beneficial.

Table 2 compares the percentage of time used in standardized delivery methodology to other key performance indicators for the PSOs. It shows that PSOs using a standardized delivery methodology have improved on-time project completion, higher revenue per employee and are more likely to achieve their annual revenue targets.

KPI 3. Billable utilization

Employee billable utilization is one of the most heavily tracked and scrutinized KPIs. While there are many definitions of billable utilization, the benchmark’s definition is based on a 2,000 hour per year basis. Employee utilization is calculated by dividing the total billable hours by 2,000. This key performance indicator is central to organizational profitability.

To be meaningful, utilization must be examined in conjunction with overall revenue and profit per person along with other leading indicators like backlog and size of the sales pipeline. It’s a major indicator of opportunity and workload balance as well as a signal to expand or contract the workforce.

To improve margins, PS executives must continually focus on increasing employee billable utilization, as well as increasing the percentage of billable employees. The primary gain from increased utilization is a significant increase in revenue per employee. Interestingly, PSOs with higher employee utilization also reported more revenue growth, more revenue per consultant, more revenue per employee and larger projects. The dynamic combination of high utilization and a high percentage of billable employees leads to better financial performance.

Table 3 shows the actual benefits this year’s firms experienced from increasing employee utilization. As you might expect, billable utilization is critical in terms of meeting deadlines and profit margin targets. High billable utilization is directly tied to the percentage of employees who are billable. This chart shows that firms with very high utilization are much more likely to meet their margin targets.

KPI 4. On-time delivery

The percentage of projects delivered on time is a measurement determined by dividing the number of projects completed on time by the total number of projects. This KPI is critical for billable services organizations because when it decreases, both profitability and client satisfaction also decreased. The bad news is that the average on-time project delivery rate tends to be less than 80 percent for PSOs.

On-time delivery is an important key performance indicator as it affects client satisfaction and the ability to take on new projects. When projects are delivered late, client satisfaction suffers. It also causes new projects to be delayed. This is the result of planned resources that are still working on the late project, which makes them unable to start another. PS executives strive to keep employees utilized. However, when they cannot start work because prior projects are late, it affects everyone. The effectiveness of quality and knowledge management processes correlate highly with on-time delivery and, ultimately, help drive revenue per employee upward.

KPI 5. Project overruns

Project overrun is the percentage actual costs that exceed budgeted costs of the percentage actual effort (time) exceeds the budgeted time. Project overruns may be expressed in actual time versus plan, actual cost versus plan or both. PSOs want to track this KPI because whenever a project goes over budget in either time or cost, it cuts directly into their profitability.

Project overruns, like projects not delivered on time, limit future work and client satisfaction. In many instances, project overruns indicate a lack of project governance, which hurts project quality. Table 5 highlights how average project overruns significantly influence on-time completion, annual revenue and margin target attainment. Obviously, project overruns are negatively correlated with on-time completion, as one increases while the other decreases.

What’s most important — as shown in the table — is that PSOs with high levels of project overruns yield poorer revenue and margin performance. Focusing on why projects run over is a critical step in performance and profitability improvement.

Using information wisely

These key performance indicators for services delivery, and many more like them, can be tracked through an organization’s Professional Services Automation (PSA). PSA is specifically for services delivery and improving all five of these key performance indicators. PSA helps PS executives plan, sell, deliver and collect for work that meets targeted delivery dates and margins.

PSA solutions manage all of the resources and projects, which helps improve billable utilization and bottom-line results. Twenty years of research has shown that those using PSA see a 5 to 7 percent improvement in billable utilization. That translates into an additional 100 to 140 hours billed annually per consultant. As you can imagine, the dollar value and profit associated with these hours are significant.

How these KPIs can help PS firms grow

To compete successfully today, professional services executives need to optimize every aspect of their organization – from the creation of a solid strategy and accompanying business plan to the sale of services that offer the greatest potential for growth and profit. It also requires a staff of high-quality talent.

Regardless of all of the other areas of the PSO, delivering services is where money is made in professional services. Achieving organizational growth and profit begins with project profit margin. Therefore, for PSOs to grow and prosper, they must be astute in terms of how they deliver services. The five key performance indicators discussed here are a good place to start.

Original Article  http://www.internetviz.com/5 KPI’s that matter most

reposted from http://fieldservice.com/Lee Company

It’s a looming question for many field service organizations: How do you keep your brain trust of experienced technicians from retiring early? Often they leave after a couple of decades due to the physical demands of the job, such as climbing ladders or spending hours working on rooftops and in basements.

For Nashville’s Lee Company, the answer has come in the form of wearable tech, thanks to the recent rollout of 500 pairs of smart glasses. The idea: Retain experienced technicians as virtual supervisors who, from the comfort of the office, can help smart glasses-wearing techs in the field triage and fix problems.

Founded in 1944, Lee Company provides facilities services for home and commercial customers in Tennessee, Alabama and Kentucky. The company closely watches technology innovations that can help it stay competitive, says Steve Scott, Lee’s vice president of facilities solutions. “If we’re going to be a sustainable company for another 70 years, we’ve got to figure out how to stay relevant,” Scott says.

Experienced Eyes in the Field

Recently, Lee Company equipped technicians from its commercial service division with smart glasses from Vuzix to wear as they traveled to customer sites to maintain complex HVAC, electrical and plumbing systems. The glasses are equipped with software from XOEye that allows telepresence videoconferencing between on-site technicians and off-site supervisors, and also lets technicians in the company’s “triage center” access and view project documents like wiring diagrams and maintenance manuals.

“We use the glasses so we can see what the technician sees,” Scott says. “If technicians get into the work and find they need guidance, they can call in and talk to a supervisor [who] can offer support to the person on-site in real time, and suggest repairs and equipment change outs.”

Before the smart glasses, if on-site technicians hit a roadblock at a customer location, they’d have to phone the triage center and verbally explain the problem. A senior technician would then jump in a truck, drive to the site and spend time troubleshooting (and climbing ladders, working in hazardous conditions, and so on).

“That was the hard way,” Scott says. “There would have been delays, and the longer that equipment is down, the more it’s costing customers.”

Now experienced staff can see video from the on-site technicians’ perspective — and they don’t need to leave the triage center to solve tough challenges. Onsite technicians can get systems up and running much faster, allowing them to move on to new customers and get more calls done in a day.

Customers See Clear Benefits

The smart glasses don’t just help connect senior technicians with their junior colleagues — they also help connect customers to the intricacies of the repair work being done to complex commercial systems. Software lets technicians attach video clips from the repair site, captured by the smart glasses, to service tickets so customers can see what was done to solve the problem. “Customers want more transparency. They want to know what we were doing in the places they can’t see, like on the roof of a building,” Scott says. “It creates more accountability.”

If we’re going to be a sustainable company for another 70 years, we’ve got to figure out how to stay relevant. — Steve Scott, Lee Company

And while they might not make the connection themselves, customers like the fact that smart glasses connect them to the most knowledgeable talent at Lee Company, even if the technicians aren’t there in person. “Customers always want the most experienced technicians to deal with their systems,” Scott says. The smart glasses help Lee Company meet this request, without demanding that the technicians be required to perform feats of strength and agility that might not be attainable.

The combination of smart glasses and smarter technicians is also helping Lee Company get more business. “It’s easier to get customers to make decisions on projects when we’re giving them a compelling narrative,” Scott says. “We’re showing them how it looks on the roof, or we walk through a mechanical room that has damage, and we can talk through the repair process. That kind of data helps decisions get made faster.”

So far, technicians see the smart glasses as a boon to their work, not a barrier. “Morale is good,” Scott says. “We didn’t just say, here’s the tool and start using it. We tried to get everyone to understand our vision for why we’re doing this.”

In the end, the company hopes that keeping creative and smart technicians on the job longer will raise its service levels across the board. “We’re retaining intellectual property and creating more career mobility,” says Scott.

More companies today see service departments as profit centers instead of cost centers.

In fact, 55 percent of U.S. organizations have that outlook, according to Service Council President Bill Pollock in an article on Service Management Online’s website.

For field services firms, delivering profitable services means understanding that you measure profit and adjust costs to align to it. To do this, your service management software needs to price, cost and measure profit on each work order.

Services that drive profitable revenue must be studied, nurtured and marketed with campaigns to existing customers and in new markets. Having software that introduces forecasts, sales cycle management and marketing tools is integral to profit center management.

Services agencies also must position themselves as business partners instead of just providers, Pollock explains in the Service Management Online article. Building deeper industry relationships will lead to natural increases in customer satisfaction and retention.

“You’ve got to enter into a partnership with them, and it cannot just be lip service, it’s got to be a real partnership,” Pollock says. “You’ve got to understand what their needs are. You have to understand what happens to them when their systems fail or when just a device fails. You have to understand the pain they are going through when things don’t work the way they were promised they were going to work.”

Source: Service Management Online, October 2012

reprinted from http://www.fieldpoint.net

Whilst it is often the selling point of specialist field service technology, improving productivity can also be achieved through good management. So as part of a new series from Steve Brand, Senior Consultant with field service training specialists SGSA, we look at eight key management concepts that can help you improve the productivity of your mobile workforce.  

The topics included in this series are based around the content of SGSA’s 4 and half day, university standard training course for field service managers and Field Service News readers are eligible for a discounted attendance. Further details, a discount code and links to registration are all included at the bottom of the page…

Back in the 1970’s, management best practices were revolutionised by Peter Drucker’s work; it has endured, withstanding the test of time. New books on management best practices are published almost weekly but despite new terminology, they are based on the same fundamental principles. Drucker’s golden rules remain unchanged:

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So what else, can Field Service Managers do to ensure their team members are highly motivated and committed to delivering high performance?

In this series we will present eight concepts that have the potential to improve the way Field Service Managers lead and organise their teams. Correctly applied, these concepts will result in improved productivity and employee motivation/satisfaction.

We begin with two less common but very powerful management tips to help Field Service Managers improve their relationships with their engineer and increase productivity.

Concept #1: Close the ‘Knowing-Doing’ Gap

Many organisations suffer from the ‘Knowing-Doing’ gap. Some managers seem to be forever attending meetings and conference calls; the output from which is often talk rather than action.

As managers talk more and more, less and less actually gets done! We see some leaders discussing the metrics incessantly, telling others what is wrong with the business, spouting the latest business-speak or techno-gabble, drawing up plans for projects that never get off the ground and even criticising their peers. These are all forms of Smart Talk.

Smart talk abounds in the work place and leads nowhere.  It occurs at all levels of the organisation and can be seen wherever employees attempt to sound knowledgeable or confident by being critical or negative, or by using overly complex language for simple concepts.  The “that won’t work because…” statements, ridicule of others’ suggestions or using phrases such as the ‘Transformation to a Virtual Organisation Project’ when all we want to do is give mobile devices to staff, are all examples of smart talk.  The impact of smart talk is that it adds confusion, hinders problem solving and prevents knowledge sharing.

There are a number of ways to eliminate Smart Talk. Firstly, take time to explain the thinking behind initiatives and changes. Secondly, ensure all company messages, directives and objectives are short and simple; never use a written paragraph when a spoken sentence will do.  And finally, create an environment of trust and respect amongst the staff.

Field service engineers must feel that they can promote their ideas without fear of criticism or ridicule. Focusing on what went wrong, who is to blame or why something won’t work is self-defeating.  The key to success is to put aside what went wrong and focus on what we want or what needs to happen next.

Concept #2. Putting the Team’s Whole Brain to Work

Efficient problem solving requires a group of individuals who see the world differently from each other, to work together in a constructive manner.  The key is to identify these differences and to help individuals with opposing perspectives and styles, to work together.

For example, so called ‘left-brained’ thinkers tend to approach a problem in a logical, analytical way.  ‘Right-brained’ thinkers rely on more non-linear, intuitive approaches.  Some people prefer to work together to solve a problem; while others like to gather and process information by themselves.  Abstract thinkers need to learn about something before they experience it; for experiential people the opposite is true.  It is important to remember that these different approaches are preferences rather than skills.

Two field service engineers with different cognitive preferences, when faced with the same problem, may reach an identical solution at the same time, but use very different thought processes.  Neither approach should be considered superior. The challenge for Field Service Managers is to understand these subtle cognitive differences and that engineers with differing approaches may clash or struggle to work together effectively, without intervention.

There are many diagnostic tools available to identify these preferences and report back with various levels of detail.

Field Service Managers who do not understand this concept or know their engineers’ default style, may fail to create an environment where innovative solutions are produced quickly.  In order to take full advantage of these differences, the manager must carefully select which engineers work together on problems.  In most situations, a mixed group will considers more options and the final solution will be better of better quality, than any, one engineer would have produced on their own.

The downside of this approach however, is its potential to create friction.  To ensure success in whole-brain problem solving, the manager must take time to define the goal and the rules of engagement; the conflict should not be personal. It is a common mistake to think that a group of people will work together as an effective team when left to their own devices.

In fact, teamwork only happens when leaders create the opportunities for teamwork and effectively manage the process.

The Field Service Manager program is dynamic and interactive, with students frequently working in small groups, presenting findings and working on the course case study.

The program is four and a half days of course content and university-level instruction and learning that is focused on managing a field service operation.

If you want to see more information or register for the course you can do so by clicking here

The world of manufacturing is going through a seismic change with parallels being drawn to the industrial revolution. And as the trend of servitization takes seed the role of the field service engineer takes centre stage and is more important than ever before. Nick Frank, Principal Consultant of Frank Partners explains…

‘I am still making order out of the chaos of reinvention’ said novelist John Le Carre as he penned another cold war spy thriller.

Many would say the same is true of manufacturing today. Gone are the days when a manufacturer simply made the product, delivered it to the customer, sometimes supplied some parts & services, and then moved onto the next sale. In today’s unpredictable world, this model is fast becoming unsustainable.

Accelerated by the chaos of the financial crisis and propelled by the industrial internet, many businesses are moving beyond this traditional notion of manufacturing. No longer do they just ‘make stuff’, they provide services such as financing, maintenance programmes, lifecycle consulting or even outcome orientated service contracts. Complex equipment manufacturers are leading the way in evolving ever more strategic relationships with their clients, as they deliver their technology as a service outcome rather than stand-alone product.

Why is this important? It’s not just that product transaction orientated business models are being replaced by those centered on relationships, outcomes and service. But that to achieve this re-invention, manufacturing must overcome a severe skills shortage! Without people and skills, all the advances in technology and thinking will stagnate. Companies need to attract a completely new talent pool into their industry. One that is technically and socially more diverse and which has many of the marketing, customer experience and media skills found in the FMCG and financial sectors.

If manufacturing is re-inventing itself, so must the services back-office. Much has been written around how IoT and analytics will change the nature of field service in terms of efficiency, transparency and customer relationship management. All this is true, but more profoundly as the product/service boundary blurs towards solutions, so the idea of field service as an entity must fundamentally change. Rather than being perceived as a ‘bolt on’ entity fixing customer problems, field service must be integrated into the business. As this happens it too must broaden its skills set, outlook and relationships, especially in the areas engineering, sales and other service back-office operations.

As connectivity and data become more available in real time, so increasingly problems can be solved centrally. As service thinking becomes more embedded in manufacturing businesses, so even self-healing technologies may be introduced into product design. One can see that this will require a completely different approach as to how service organisations are perceived and managed. It is logical that in order to provide seamless outcomes and experiences to the customer, organisations will become much more integrated, between, centralised technical support, the machine itself, local support, 3^rd parties and parts and sales/relationship management. Exactly how this happens will depend on the business models being supported.

For example in the Asia-Pacific market a leading supplier of industrial robots see their mix of Field /Central services swinging from 60/40% to 40/60% as they increasingly integrate remote services into their solutions. There are companies in the defence industry who have their service team located in situ on warships where they are contracted to provide availability. These are perhaps the more extreme examples of the moment, but one can clearly see that there is a link between the technologies, the contractual relationship with the customer, and the organisation of the service organisation.

We we will also see field service and centralised support organisation being closer to the sales teams. Just look at the emphasis we have seen in recent years on the Trusted Advisor roles and the discussions of how field service as one of the major customer touch-points, has a significant impact on customer experience. Trying to balance relationship skills with technical problem solving is a real challenge for the industry.

The bottom line is that as manufacturing re-invents itself, so field service as an integral part of most service offerings will become a significant part of the companies growth strategy. How this will happen is difficult to tell, because we are still in the early stages of a manufacturing revolution. However, this re-invention of manufacturing is exciting from two perspectives. It means that a more diverse and broader skills set must be attracted into industry. And secondly that field service itself will need to adapt to evolving product technologies and business models bringing new challenges and opportunities for its people.

To be part of this re-invention process, Service Leaders can follow a simple 3 point plan: