A recent study from research firm SPI Research, commissioned by CRM solutions company NetSuite and partner company, OpenAir, found that on-demand professional services automation (PSA) software solutions can help consulting firms gain about a 30 percent increase in project margins while reducing project cancellations by about 40 percent.

What’s more the study determined that OpenAir/NetSuite (News - Alert) had the highest market share among leading PSA providers at about 19 percent (31 out of 170 organizations). This was more than two times higher than the market share of the next highest PSA vendor.

PSA is software designed for professional services organizations, such as consultants and IT services organizations. It is typically used to manage the delivery of client projects, and the resources which are required for those projects, such as skilled personnel and equipment. Basic functions include project management and documentation, time recording, billing and reporting.

Many PSA systems are integrated with accounting, CRM systems and payroll systems. Those familiar with ERP software may think of PSA as an ERP system for a services organization.

 

In the white paper "Measuring the Value of Application Integration for Service Organizations," SPI Research found that firms that use a PSA solution such as OpenAir/NetSuite experience at least a 30 percent increase in project margins; a 30 percent increase in the number of projects that can be managed concurrently by a project manager (PM) (4.5 versus 3.5); and a 42 percent decrease in project cancellations (2.6 percent versus 3.7 percent), compared to firms that do not use a PSA solution.

Furthermore, SPI Research's study found that firms that use a PSA solution such as OpenAir integrated with their core financial applications experience at least a 6 percent increase in utilization (67.1 percent versus 60.9 percent).

The study also reveals a number of specific areas where OpenAir's customers were able to boost performance far above the benchmark average. Specifically, OpenAir clients experienced a higher percentage of billable employees vs. the survey average (74.3 percent vs. 67.9 percent) and lower project cancellation rates (1.2 percent vs. 1.8 percent) while achieving a greater percentage of revenue (101.9 percent vs. 95.8 percent) and margin targets (97.1 percent vs. 89.2 percent), compared to the survey average.

The study, conducted in the fourth quarter of 2008, is based on SPI Research’s 2009 PS Maturity Model, which provides benchmark information from 170 PS organizations (105 embedded and 65 independent) ranging in size from very small to the largest U.S.-based consulting organizations.

"SPI Research's Professional Services Maturity Model study validates the benefits that our clients have been experiencing for years from using OpenAir to automate their services businesses," said Morris Panner, CEO of OpenAir, in a release. "Higher resource utilization, improved project margins and increased operating efficiency are just a few of the many direct benefits that services companies realize from using OpenAir."

To download the whitepaper, click here.