The role of technology in aligning Sales and Service

Continued from last week's discussion with Jeanne Urich of SPI Research

What are some of the things that are holding back better sales and service alignment?

Solution selling maturity involves discussion and agreement between sales and service delivery around team roles and the types of clients to pursue. As the organization grows up, greater clarity and consistency evolves in pricing and estimating, proposal development and contract negotiation.

Mature organizations exhibit a disciplined approach to business development with clearly defined discounting, pricing and contract terms and authority levels. The business measures both the sales and service delivery organization on revenue and margin. Integrated business applications define and reinforce handoffs.

Examples of integration points between sales and service delivery include:

• Agreement on target clients and solutions.
• Agreement on the lead types to pursue.
• Shared understanding and reinforcement of sales methodology, stages and probabilities.
• Defined territories and primary business development roles for both sales and service delivery.
• Shared development of major account plans.
• Finance and legal-sponsored deal, pricing and contract reviews.
• Defined roles for proposal development.
• Clearly defined and mutually supportive roles, goals, measurement and compensation.
• Customer relationship management (CRM) sales pipeline and forecast integrated with professional services automation (PSA) for resource management.
• Dashboards providing 360-degree view of client relationships and status.

How can PSA solutions better enable sales and service alignment?

Early stage sales and service organizations use spreadsheets or stand-alone business applications to run their operations. For instance, sales might use a CRM application to track potential clients, proposals and pipeline, whereas the service organization might use a PSA solution to manage resources and projects.

Unfortunately, when the departments do not share information, both sales and service delivery may have entirely different assumptions around the desired work, deadlines, required resources and overall cost and profitability. SPI Research believes the integration level of core business applications is key to defining and improving overall organizational maturity. Properly used, business applications help illuminate and clarify core business process relationships, ownership and measurements.

How do cloud platforms, especially Force.com, provide the foundation to close this gap?

Based on our upcoming “Professional Services Business Solutions Market Assessment” report built on a survey of 244 professional service organizations in May, 2010; Salesforce.com is the dominant CRM supplier with 35% market-share. Fully 70% of service firms report using a name-brand CRM application. Surprisingly, 64% of responding firms reported using “None, Other or Homegrown” for their PSA application. We believe this demonstrates a huge opportunity for these firms to consider deploying a PSA application based on the Force.com platform as they are already using salesforce.com for sales force automation. The benefits of integrated CRM and PSA applications are undeniable because they help organizations clarify both their sales and service delivery processes and measure progress. These applications are invaluable for providing both sales and service delivery consistency and visibility into all aspects of the client relationship. The results speak for and pay for themselves as our research has shown integrated CRM and PSA applications increase the win-to-bid ratio: improve project margins; improve annual revenue and billable utilization per consultant and increase bottom-line profitability. We think any organization over 50 consultants should seriously consider implementing integrated CRM and PSA to better-run their operation.

Best practices and the impact of aligning Sales and Service

Continued from yesterday's discussion with Jeanne Urich of SPI Research

What are some of the common breakdowns in aligning sales and service processes?

A lack of understanding of key business processes that cross organizational or functional boundaries is at the heart of dysfunctional sales and service delivery relationships. Issues are typically the result of differing views of the processes themselves, unknown or misused levels of authority and ambiguity around who is the ultimate process owner and decision-maker.

How do the organizations who have sales and service processes aligned address these areas?

One way to better align sales and service is through use of the Professional Service Sales Maturity Model. By taking a more systemic approach to sales and service delivery, professional services organizations (PSOs) can optimize staff levels and initiate and complete work on schedule.

Greater clarity around roles, goals and measurements manifests in higher levels of performance and a more satisfied workforce. Maturity improvements result in superior client satisfaction and improved profitability. Once an organization has mapped out key sales and service business processes and supporting roles, goals and measurements; instantiating these business processes in integrated CRM and PSA business application software reinforces and improves alignment.

How does aligning sales and service processes impact an organization’s performance?

To better understand how the integration of sales and service delivery processes increases organizational performance, SPI Research analyzed 118 billable service organizations with between 30 and 700 employees, which is the sweet spot of PSOs. These organizations are large enough to need and deploy business applications such as CRM and PSA.

In the following table SPI Research segmented these organizations into three different categories and analyzed several of the key performance indicators:

1. PSOs that have neither CRM or PSA;
2. Those that have purchased both CRM and PSA, but have integrated neither; and,
3. Organizations that have integrated both CRM and PSA.

The analysis shows improved levels of visibility and effectiveness with integrated PSA and CRM applications. Sales effectiveness improves while sales and marketing costs go down because increased clarity means all elements of the organization are aligned around must-win opportunities. The length of the sales cycle decreases while bid/win ratios go up because the firm is pursuing the right opportunities with the right resources. Increased productivity shows up in higher revenue per consultant, improved project margins and higher bill rates.

Integration Improves Visibility,
Revenue, Margin and Satisfaction

How does this affect an organization’s interactions with their customers?

Aligned sales and service delivery means organizations are pursuing the type of work they are well-suited to perform and once they win the work, they have the right people with the right skills and the right tools available to deliver the work with quality. Sales and service alignment means the firm clearly understands the client’s requirements and has the right expertise to successfully complete the project. Satisfied clients mean clients are willing to refer more work to the service provider, ultimately both the firm and its clients benefit.

Given that the rewards are so great, what is holding organizations back from aligning sales and service processes?

Sales and service alignment is hard work and requires integrated business applications to measure and reinforce the desired behavior. Smaller organizations typically have hybrid sales and service delivery roles with key resources focused on selling one day and delivering the next. As soon as possible, we recommend organizations invest in dedicated sales, marketing and service delivery roles and methodologies and reinforce core business processes with clearly defined metrics and business application software. Quite simply, there is no way a service organization with over 50 consultants can run profitably without integrated CRM and PSA applications.

Sales and Service Alignment – Hear from the Experts at SPI Research

We recently had the opportunity to sit down for a conversation with Jeanne Urich of SPI Research. SPI is best known for their annual “The 2010 Professional Services Maturity Model Benchmark” report which is used by over 4,000 service and project-oriented organizations to compare, diagnose and improve their performance. Jeanne has been working with services organizations of all sizes for over 25 years and is recognized as a thought-leader in the space.

We focused our time on a topic that seems to be on the minds of many in the professional services industry – how can we better align sales and service delivery?

We had a rich conversation with Jeanne and have split our Q&A up into three parts:

1. Common breakdowns in sales and service delivery alignment
2. Best practices and the impact of aligning sales and service delivery
3. The role of technology in enabling alignment

Could you tell us a little bit about SPI and what you do?

SPI Research (Service Performance Insight) is a management consulting and analyst firm that focuses exclusively on the global service industry. We are best known for our annual “The 2010 Professional Services Maturity Model Benchmark” report which is used by over 4,000 service and project-oriented organizations to compare, diagnose and improve their performance. We also provide comprehensive consulting support for professional service organizations; we help our clients ignite performance by objectively assessing strengths and weaknesses to develop a full-faceted improvement plan, with measurable time-bound objectives.

Based on your work with professional services organizations over the years, where do you see the biggest opportunities for improvement?

Running a people-based service business is very complex as highly-skilled and expensive consultants are the primary cost as well as the product. There are over 200 key performance measurements, all inter-related, which could be measured and improved. However the greatest area for miss-alignment and improvement is the relationship between service sales and service delivery. Based on our extensive research, the delta between the results of the best and average service firms is truly remarkable. The following chart shows the difference between average and superlative performance. The best firms have found a way to bridge the sales/service divide to improve both their sales effectiveness metrics as well as their service delivery metrics.


What are the main areas where sales and service processes need to be connected?

We see four primary areas where disconnects most often occur:

• Proposals – PSOs often demonstrate a lack of clarity around which opportunities to pursue, or how to create a winning proposal, or who ultimately is in charge. Ambiguity can lead to procrastination; excessive bid costs; acceptance of egregious terms and not enough time, tools or resources to bring all the pieces together into a compelling value-based proposal.

• Pricing and Scoping – in many cases who has authority for discounting and contract terms is unclear. Poorly defined or unknown requirements; weak estimating tools; unclear discounting limits and inadequate or no pricing or contractual reviews contribute to mediocre financial results and unacceptable levels of risk.

• Forecasting and Staffing – many PSOs are deficient in what it takes to move a suspect to a high probability deal, or how the sales forecast is translated into the resource plan. A lack of alignment and trust are exacerbated by non-congruent sales booking and service margin goals. Unreliable sales forecasts lead to disconnected sales and resource planning processes and a lack of functional interlock regarding opportunities and required staffing. The end result is a lack of integration between sales, staffing and recruiting and not enough or too much service delivery capacity.

• Service Execution – there is often inconsistent communication between service delivery and sales regarding project status. No project dashboards; improper planning and execution of scope changes and change orders lead to project overruns, nasty surprises and unhappy clients.

Deltek Buys Maconomy - Should you care?

Balakrishna Narasimhan

Today Deltek announced that they’re acquiring Maconomy for $72M. Ray Wang of Altimeter has a typically incisive analysis of the acquisition.

Ray’s takeaway is that the acquisition is primarily about expanding Deltek’s footprint geographically into Europe and vertically into consulting firms (beyond Deltek’s traditional engineering, architecture and public-sector footprint).

However, the question is whether even this combination addresses the fundamental problem faced by most services organizations, which is the gap between how projects are sold and how they’re delivered.


Sure, Deltek has an answer to a part of this if you’re one of the handful of companies using Deltek for CRM. But what if you are one of the 6000 services organizations that uses a market-leading CRM system such as salesforce.com? That’s why we built PS Enterprise on the same platform as Salesforce CRM. We want to close the gap between how you sell and deliver projects.


We’re excited about this because closing the gap between how projects are sold and how they’re delivered is going to be a critical new growth engine for services organizations. SPI research found in their benchmarking of over 400 services organizations that those who have closed this gap average 7 points more in utilization (81% vs 74%) and 9 points more in project margin (34% vs 25%).

In the upcoming weeks, we’ll have a series of posts and a webinar with SPI about common breakdowns in sales and services delivery process alignment, how to close the gaps and the impact of closing the gap. Please email us or leave us comments if you have questions about sales & service alignment or if you have a success story or best practice to share!

Run Your Professional Services Business in the Cloud - Dreamforce 2009 Session

Overview: Traditional enterprise applications focus on inventory and transactions, not the people and projects at the heart of a services organization. In this session, a top-tier services organization will show how managing services resource planning with Appirio's PS Enterprise product helped grow its business by getting the right people on the right projects for successful delivery to customers.

Narinder Singh, Appirio
Ken Leiserson, Convio

Chatter Matters: Social PS Enterprise

Narinder Singh

Today I had an opportunity to present the next generation of our Professional Services (PS) Cloud solution, Social PS Enterprise, with Marc Benioff on stage at Dreamforce. For the last six months, we've toured around discussing PS Enterprise with great response from customers - VP of Services, Services Ops and Managers and Consultants. Our message - tying together sales with professional services, providing full end-to-end processes to manage your people, customers, projects and numbers, and ability to easily scale with a powerful underlying platform - resonated with an industry ill-served by traditionally manufacturing-centric enterprise systems.

Yet in many of the pundit conversations we've been asked why build on Force.com. Aren't we worried about losing control over the underlying platform our entire application relies on? Today, more than any other, explains the power of building on top of cloud platforms. In a single announcement, a single release, Appirio's Professional Services Enterprise Solution will become "Social." Because Force.com is a true multi-tenant cloud platform, an addition by salesforce.com to that platform (in this case chatter), allows all customer apps and ISV solutions to inherit those same capabilities.

Professional Services have always been social, their systems just haven't been able to handle a conversation
Many of our customers had asked for capabilities like these. They did not always use words like "social business apps" or "twitter" but often contrasted their business life with how Facebook, Twitter or the web work. Because people are at the very core of their businesses, services firms are always looking for ways to work better together and make better, data-driven, decisions. Their interests are in actions like improving utilization, making better staffing decisions, taking advantage of new information and knowledge across their organizations. Professional Services Automation (PSA) solutions are traditionally the domain of the administrative and financial team of a services business. Consultants only interact with a PSA application to enter time or file expenses - low value-added activities.

The success or failure of a professional services team depends on how effectively consultants and others work together. Today, that engagement happens through email, IM, phone conversations and spreadsheets/documents - all completely disconnected from the business systems of a company. Why does this disconnect matter? Because islands of collaboration without business context can be misguided. And business process without collaboration is a shell of what really drives action in an organization.

The solution: Social Services Management

Now enterprise applications, our PS Enterprise being the first, can become social-- allowing a conversation between business events like pipeline, projects and financials, and people. We've been able to add dozens of features and use cases with limited or even no additional development because of the addition of the chatter platform. Systems can chatter important updates (my project end date has changed), and people can have conversations about those changes (staffing adjustments, sending out an invoice, asking about a press release) with the context of data from their systems. (Click here to see Social PS Enterprise in action)

Join the conversation by leaving us comments with your impressions of chatter!

Appirio and PS Village launch the Professional Services Cloud "Ask the Experts" Series

Over the past few months, Appirio has been honored and excited to become a part of PSVillage, which is a fantastic community of professional services leaders. Our discussions with the PSVillage community confirmed what we've believed for a while - that we, as an industry, have not been well supported by traditional enterprise applications. If we are using a solution today, it was most likely selected by some other group (Finance or IT). The reality for most of us is that we're managing our operations using legacy and custom-built solutions, with lots of painful spreadsheet workarounds. This is 2009, we have an enormous amount of technology at our finger tips, but there has been very little innovation for services teams. We have seen the paradigm shift from on-premise to the cloud for the Sales and Support teams. Why not professional services?

Appirio was founded in 2006 to help enterprises accelerate their adoption of the cloud. We currently serve over 2,500 organizations and are proud to have worked with many of salesforce.com and Google Enterprise's largest customers. We also practice what we preach-- we run our entire business in the cloud. We spend less than 2% of our revenue on IT, and have grown from 5 to 150 employees with no changes in the size of our IT team or capital investment. Best of all, we're able to focus on what matters most to every services business, people and customers, rather than on IT infrastructure.

Since we'd like every professional services firm to experience the same benefits we've experienced, we're working with PSVillage on a series of "Ask the Expert" events to help professional services firms take advantage of the cloud:

• First, check out our white paper-- it answers the question: "What is cloud computing, and why is it relevant to professional services?"
• Second, join us for a webinar on how you can build a business-case-driven roadmap to the cloud

We want to have a conversation with you about how cloud computing can help you achieve your business objectives. In order to tailor the conversation, please take 5 minutes to fill out this 10 question survey. We'll use this to tailor our content going forward and will of course share the results with you here and in our upcoming webinar.

We look forward to continuing the conversation here and in PSVillage!

UPDATE: View the webinar recording here...