Professional services automation (PSA) software -- designed to help streamline a solution provider's business operations and optimize efficiency -- is in use by many IT solution providers, ranging from IT consultants to cloud service providers. And PSA vendors say there's growing demand for their products.
While many smaller solution providers still rely on homegrown tools and spreadsheets to manage their business operations, PSA software adopters that we spoke with said that the tools are mission-critical and that without them, company growth would be hobbled.
Core PSA functions typically include time and billing, resource management and project management capabilities. And integrations and application programming interfaces (APIs) enable extension of PSA functionality into other applications such as accounting and remote monitoring and management (RMM).
Many, although not all, PSA products are available as hosted or Software as a Service offerings. Indeed, PSA software ranks among the earliest enterprise applications to arrive in the cloud. Vendors say the anywhere, anytime nature of cloud delivery offers a good fit for solution providers and their distributed, always-on-the-go employees.
Examples of cloud-based PSA tools include Autotask Corp.'s Autotask, FinancialForce.com's FinancialForce PSA and NetSuite Inc.'s OpenAir. Other companies such as Compuware Corp. and ConnectWise offer both on-premises and cloud-based PSA deployments.
One key reason for the increased demand for PSA software: Solution providers battling tight margins are looking to PSA for an edge.
"Firms are facing a lot of competitive pressure," noted Jeff Kaplan, managing director of Thinkstrategies Inc., a consulting firm in Wellesley, Mass. "They have to operate more efficiently."
Running the business
Appirio Inc., a San Francisco-based cloud services provider, has managed its business using PSA since its 2006 launch. The company, which helps clients navigate Salesforce.com and Google Apps implementations, built its own PSA system using Salesforce.com's Force.com platform, noted Glenn Weinstein, Appirio's chief information officer.
Weinstein said Appirio decided to create a hom-grown system to track its Salesforce and Google consulting activities. Eventually, Appirio commercialized its PSA, listing it on the Salesforce AppExchange. The company then migrated from the home-built PSA to the commercial version.
Appirio sold its PSA offering to FinancialForce.com in 2011. Weinstein said the product business, which grew beyond the company's expectations, proved too much of a diversion from Appirio's cloud services core. The company continues to use the PSA software, which is now called FinancialForce PSA.
Without PSA, a services business ... is going to be fundamentally handcuffed in its ability to scale and remain efficient.
Glenn Weinstein, chief information officer, Appirio
"Other than email, it is our most mission-critical system," Weinstein said.
MasterIT, an IT solution provider based in Memphis, also grew up on PSA.
"The very first thing we did was purchase PSA and RMM," said J. Michael Drake, chairman and CEO of masterIT, which was founded in 2006.
The company purchased Autotask, which at the time was sold as a bundle with N-able Technologies Inc.'s RMM software.
Drake said PSA helps ensure accurate client reporting. For example, Autotask tracks metrics such as the number of tickets generated per endpoint per month. MasterIT aims to keep the number of tickets at less than a quarter of a ticket or less than half a ticket per endpoint per month, depending on the vertical market. Drake's company shares that data with customers to keep them apprised of progress.
Internally, Autotask lets masterIT track its engineers' efficiency ratios, Drake noted. The company can gain insight into which engineers are closing the most tickets per day, week or month for a given type of ticket. Engineers who are taking the most time to close certain tickets may be given coaching or reassigned to another role.
And from a financial perspective, PSA provides a 360-degree view of masterIT's profitability, Drake noted. The company can drill down to assess profitability by account or type of service, for instance.
"Our PSA is, in essence, the ERP [enterprise resource planning] of our company," Drake said.
While companies such as Appirio and masterIT embrace PSA, many others haven't.
Ed Marshall, general manager and senior vice president of services at NetSuite, a cloud-based business management software provider, said his company's financial software often replaces QuickBooks or Great Plains installations. But NetSuite, he said, doesn't encounter much of an installed base of PSA software, coming across numerous "greenfield" opportunities instead.
"We are still replacing a lot of homegrown tools and a lot of spreadsheets," Marshall said. "Sometimes we are replacing timesheet packages that people have tried to push to their limits."
PSA proponents argue that management-by-spreadsheet may work for smaller companies, but more comprehensive automation becomes necessary as a solution provider grows.
"Without PSA, a services business ... is going to be fundamentally handcuffed in its ability to scale and remain efficient," Weinstein said. "It lets us grow beyond a handful of consultants to hundreds of consultants serving a global market."
The cloud has become a prominent delivery model for those solution providers adopting PSA. The approach offers a couple of benefits, according to industry executives.
Kaplan said cloud solutions dovetail with highly distributed consulting workforces.
"[Midsized] to large-scale firms are increasingly becoming more dispersed ... and increasingly populated by mobile workers," Kaplan said. "Just managing that more dynamic resource, alone, is more difficult and requires something that is easier to access ... than the centralized, on-premise app of the past."
Cloud economics play a role as well. Drake cited pay-as-you-go SaaS pricing as one of the reasons masterIT selected Autotask.
But with much of the industry headed toward the cloud, for many solution providers the choice among PSA products may come down to integration with ancillary products.
Len DiCostanzo, senior vice president of community and business development at Autotask, emphasized integration within the product line and with third-party software. Autotask's business management product offers integrated billing, customer relationship management (CRM), service desk, project management and other functions in one application.
But DiCostanzo noted that customers typically use a number of tools to manage their business. Accordingly, Autotask aims to link with other software tools through its API and numerous integration partners. As for the latter, Autotask links with RMM, backup and disaster recovery, and accounting systems, among other applications.
NetSuite, for its part, provides prebuilt integration that lets customers link OpenAir PSA with their existing CRM, human resources, sales force automation and ERP applications. The company also sells NetSuite SRP, a services resource planning product that combines PSA, CRM and ERP capabilities.
ConnectWise, meanwhile, offers integrations in a range of categories, including accounting, cloud provisioning and managed print. The company's APIs let software developers create links to ConnectWise tools.
And FinancialForce PSA, as a native AppExchange solution, integrates with Salesforce.com CRM.
Appirio's Weinstein said PSA solutions, over time, have pushed forward into sales and marketing while becoming more tightly integrated into back-end financial systems. At Appirio, FinancialForce PSA ties into not only Salesforce.com, but also Workday Inc.'s financial management application.
"You can trace your dollar all the way from marketing spend right down to revenue recognition and collections," Weinstein said.
Tom Brennen, vice president of marketing at FinancialForce, said fragmented systems make it hard for a solution provider to assess the profitability of a given project. He said a company might manage sales in Salesforce, use a different system for time sheets and employ still another system for tracking project costs.
"It's hard to see if the sales and service and financial aspects are separated," he said.
Up next: Improved BI
The next wave of PSA activity is poised to take place around business intelligence capabilities. Service executives would like to see better BI options in the PSA tools that they're using.
"Reporting across the board can always be improved," masterIT's Drake said. "Reporting can be more automated and more intuitive and more driven to real time, using widgets and gadgets."
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Drake said getting information out of a PSA system involves exporting data into another database or Excel and then massaging it. The manual process is time-consuming and failure-prone due to human intervention.
"We are looking for more automation in that regard," Drake said.
Weinstein said PSA systems already have the ability to measure things such as utilization, backlog and profitability. But he said he believes there is plenty of room for innovation in analytics.
"In those areas, we can see more and more layers of abstraction and deep analytics capabilities that could be added," he said. "We get some support for those scenarios, but we want more support."
Jeannine Edwards, director of ConnectWise Community, said ConnectWise is not a BI tool, but can deliver data for such applications. Third-party offerings that can leverage ConnectWise data include ConnectSmart, CW Dash and qvWise, she said.
Drake said PSA vendors have been talking about BI for a while, but noted that he has seen evidence of real development this year. He noted, for example, that masterIT is beta testing its PSA vendor's dashboard capability. The dashboard is for displaying daily operational and management key performance indicators. Drake said the key is to be able to drill into backlogs, trends and accounts in real time.
This was first published in April 2013