CPM in Professional Services – Beyond Utilization

Professional service organizations are unique in that their finances are focused on people, not products.
Employees generate revenue, but they also account for the majority of expense.

 

Traditionally, the metric for measuring the profitability associated with these employees is utilization rate, which simply calculates hours worked on revenue-producing activities over hours available.

 

That’s all well and good, but it’s a measure that falls far short when it comes to producing more granular data and insights that have the potential to increase profitability and productivity through more informed budgeting, planning, and forecasting.

 

The good news is that today powerful CPM tools and technology are available to dig far beyond utilization rate in ways that position Finance as an essential business partner to improve profitability and drive growth. This is true whether you’re a law firm, consulting company, security service, or any other type of professional service firm that relies on high-performing people for success.

 

All of your data on one powerful platform

Today’s technologies gives you the ability to consume and process immense amounts of data, which allows professional service organizations to analyze operational and financial data down to the lowest level possible.

 

You can blend all of the information from the various systems in a central platform where it is then available to conduct in-depth analysis, such as calculating your profitability by employee, by position, by project, or even by project task.

 

With a configurable CPM product as powerful as CCH Tagetik, you can quickly gather and process data from the field, and then incorporate that data into your financial plan. For instance, you can plan revenue, personnel and expenses by practice group, project, or even at the contract level.

 

Yet with CCH Tagetik it doesn’t stop there. Once you’ve gathered all of the numbers at the most detailed level available, you have powerful options to produce unprecedented insights and analysis.

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Moving beyond traditional finance to generate next-level insights

For instance, maybe you want to allocate some of your organization’s shared services—not at the traditional aggregated level, but by allocating costs down to that project/contract level.

 

You can even go beyond the traditional allocation method because you know that some activities require more effort than others.

 

For example, imagine you’re at a consulting company where you know Service A contracts take four weeks to review while Service B contracts only require one week to review. With a Finance Transformation Platform such as CCH Tagetik, you can configure (and not customize/script) activity-based costing to allocate those shared service expenses down to the lowest level possible.

 

This analysis helps assure greater profitability through insights that allow for better budgeting and planning.

 

A true measure of profitability at your fingertips.

 

So what’s the big payoff? You’re now able to get a true profitability measure down to the most detailed level. This information can then be reported at any aggregated or detailed level, giving you greater visibility to slice and dice profitability by region, service, project, employee, position, or any other relevant dimension.

 

With CCH Tagetik doing the heavy lifting, you’re now free you to devote your time for meaningful analysis to identify the differences between the most and least profitable areas of your business. And you can dig even deeper to assess the best and the worst projects or project tasks, as well as the most and least profitable employees or positions.

 

This analysis can unearth unexpected insights that can inform better decision making. For instance, perhaps you have a profitable group, but within that group there’s a hidden project that is running at a loss. By identifying that drag on revenues, you can make timely recommendations for change or improvements.

 

CCH Tagetik’s Finance Transformation Platform is a true game changer. It takes you beyond traditional baseline measures such as utilization rate to give you deep visibility into every aspect of the business.

 

Ask yourselves this: Does your organization have this granular data available and the desire to unearth details within your organization that were previously being buried underneath your aggregated data?

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