A review of new software products that can make a big difference to your business First annual survey of PSA systems By Michael Burns For years, popular vendors of accounting and ERP systems neglected the needs of professional services organizations such as accounting and consulting firms. Yet these organizations' needs are very different from those of companies that distribute or manufacture products. Fortunately, vendors have now awakened to this fact, and have come out with a variety of professional service automation systems (PSA). That is why we are taking a tour of the landscape with our first annual survey of PSA products. Although geared specifically to professional service-based organizations, PSA can be used by any organization that manages projects and tracks time, such as internal IT or R&D departments. The Aberdeen Group, one of the leading information technology analysts, describes it this way: "PSA supports the core business processes of services-centric organizations to more efficiently utilize people and streamline the project lifecycle to save time, cut costs, and increase revenues." PSA systems typically cover most, if not all of the core business processes for professional service organizations. But there are other systems such as timesheets, time billing, and practice management that contain components of PSA, and which we have included under the PSA umbrella. Apart from the vendors that have introduced new PSA software products, many accounting system vendors are now offering their own solutions. And then there are those that have targeted a narrow range of professional services such as accounting. In the accompanying survey, we have attempted to sort out all the choices. We sent surveys to 60 companies, some of which offer multiple systems. We received replies for 25 products, and grouped them into five tiers according to customer revenue and costs. (We have not yet received any responses from Tier 1 vendors yet.)   Tier 1 Tier 2 Tier 3 Tier 4 Tier 5 Customer revenue > $250M > $100M > $25M > $5M < $5M Licence fees > $350K > $250K > $50K > $5K > $100 The products run the gamut from simple to sophisticated. At one end are timesheet systems, which provide timesheets, expense reporting and project management. Next you'll find time-billing systems that include billing, and sometimes purchasing, allowing for accumulation of external costs for products and services. When targeted to accountants or lawyers, these systems are usually referred to as practice management systems. At the other end of the spectrum are integrated solutions that are meant to meet all the system needs of professional service organizations – timesheet, time billing, customer relationship management (CRM), opportunity management, resource management and knowledge management. For an explanation of the functionality associated with PSA, check out the November 2002 article "Answering the call" General ledger, accounts receivable and accounts payable are often not included with PSA, but there are links with many of the leading accounting systems. Professional service-based organizations have different needs. Accountants typically want a system that is very strong in WIP management, while lawyers want trust accounting, engineers and architects need estimating, and so on. Many professional service organizations have big problems in sharing customer information because their systems (practice management, accounting, email, contact management and marketing) are not integrated. This is especially a problem for accounting firms. Many of the systems surveyed were weak in CRM. Most of the systems lacked features such as a French version, intercompany transactions, budgeting by employee, estimating, multi-currency, scheduling and prorata WIP write-off. Professional service organizations that lack the internal infrastructure to support a PSA system sometimes rent their solutions from Application Service Providers (ASP). The ASP hosts the application on their Internet site, which is typically equipped with state-of-the-art technology and security, allowing you to avoid the costs associated with managing the computer and database that goes with it. On the downside, you must rely on Internet availability and there may be nagging concerns, despite sophisticated technology, that your data isn't properly secured. That said, ASPs are becoming more successful with their compelling business case, decreasing costs of communication and ever more reliable Internet connections. Some organizations worry about security but their own systems usually don't come close to the high level of security demanded of an ASP. That's why an ASP seems like a good choice for many professional service organizations that lack technical resources. Do you think it's just a coincidence that ASP is PSA spelled backward? The vendors of only 25 products met the deadline for this first survey. More have asked to be added to the list, so we will update the chart in a couple of months. In the meantime, we hope the survey makes some sense of the wide world of PSA. Michael Burns, MBA, CA, is President of 180 Systems (http://www.180systems.com), which provides independent consulting advice in the selection and implementation of business systems. Michael can be reached at 416-963-1296 or by email at mburns@180systems.com