Warning: Push your nerd glasses up. This blog post is for people that “geek out” about professional services organization theory.
For the past seven years, a consulting agency named Service Performance Insights has been producing a survey and corresponding report that allows professional services organizations (e.g., Internet marketing agencies such as DigitalRelevance) to compare themselves against the services industry at large for metrics such as dollar-per-hour utilization rate; Earnings Before Interest, Taxes, Depreciation and Amortization (EBITDA); and more. It’s fascinating stuff and this last year I participated in the survey for the first time. As a participant in the survey, I received a free copy of their 200-page report and am slowly working my way through it. So far, it’s great. Here’s why:
Moving beyond heroics
SPI Research has used their years of survey data to categorize service organizations in what they call their Professional Services Maturity Model™ . In practice, and for example, the model suggests that organizations with relatively low maturity levels typically exhibit lower EBITDA percentages and rely on what are called “heroic individuals” to keep operations running. However, organizations at higher maturity levels experience higher EBITDA percentages and have evolved processes that limit the dependency on heroic acts.
Boiled down, it’s a tool that can be used in strategic planning to frame goals and performance. It’s a massive amount of data that has been boiled down to simple, understandable measures. As someone presiding over three distinct service offerings at different maturity levels — consulting, creative and outreach — it’s been a comforting and reliable tool. If you’re in a similar position, take a look at page 11 of their introductory whitepaper and see if the bar chart resonates with you. I was blown away with a feeling of strange camaraderie from the first moment I saw it. Maybe I’m weird, but I now look forward to the annual PS Maturity Benchmark more than any film, album or J.K. Rowling novel.
It offers such director-level solace because it has a real business impact. In terms of raw financials, I used last year’s results (the 2012 survey) to frame our revenue and EBITDA expectations for 2014. From where I’m sitting, it looks like we’ll move up the maturity model as it relates to dollars-per-hour and utilization. The cautiously optimistic view also sees us hitting an EBITDA goal that will trigger material profit-sharing payouts for even entry-level employees. We’re on our way.
Scaling up
As far as the “fuzzier” impacts, the PS Maturity Model has taught our organization to “act its age.” That is, we collectively see the value in greater maturity and have agreed to routinely assess ourselves and put together the necessary planning for continued evolution. However, we also recognize how mature we already are and are careful to stretch our operations further than the next immediate level.
For example, in some areas of our business we still rely on heroics; however, we’ve identified this and are devoting time to understanding what makes our heroes great and then building corresponding training programs to teach this greatness to the rest of the team. The hope is that when we scale our heroes such that their way of operating becomes the standard, we’ll be able to create premium services that differentiate our business from competitors.
Is reading the report going to instantly change your professional services world? Probably not, but it will hopefully give you something worthwhile to consider including in your next round of strategic planning.
While it may seem a bit pricey for small organizations, for those interested in SPI’s 2014 report, it can be found here.
Service Performance Insight Image Via: SPI Research
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