A review of new software products that can make a big difference to your business

Third annual PSA survey*

By Michael Burns

*This is an expanded version of an article that originally appeared in the May 2006 issue of CAmagazine.

 Welcome to CAmagazine’s 2006 survey of professional service automation systems. This year we have results for 28 different products – Abak, Adagio, BalaBoss, BST, Business First, CaseWare, Corecon, Deltek Vision, Envision, Epicor, Exact Globe. Jovaco, Maconomy, Microsoft Dynamics AX, GP, NAV and SL, NetSuite, OpenAir, OroTimesheet, Project InVision, Projector, ResQ, QuickArrow, Sage MAS 500, SunSystems, Tenrox and TPS.

The Aberdeen Group, one of the leading information technology analysts, defines PSA as a system that “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 (including timesheet, time billing, and practice management) that contain components of PSA, and that we have included under the PSA umbrella.

Professional service organizations typically share similar business processes. The first step is winning the business. PSA solutions can help track the opportunity, determine the impact on resources, and even generate a contract. Next is planning the project – you need to define the work breakdown structure (the activities to complete the project), build a budget and assign resources to each activity. Employees will then enter the time they spent on the project or activity. It should be critical for every professional service organization to have visibility on project status. Everyone needs to know how they are doing compared to the budget. It’s not enough to know how your budget compares to actuals. What if the estimated costs to complete the project are greater than the remaining budget?

Professional service firms use a variety of methods to bill their clients – in detail, in summary, or by reconciling actuals to budget. Unfortunately, many firms use a manual system to generate invoices. Not only is this inefficient; it’s an open invitation for errors. Some firms might also have issues related to when to recognize revenue. Professional service firms need reports to evaluate the utilization and effectiveness of their resources. And just like other firms, they have financial business processes (accounting systems), and need to track and service their customers (customer relationship management) and to manage/pay their employees (HR and payroll systems).
 
PSA vendors offer a wide variety of functionality. At one end of the spectrum are timesheet systems, which provide timesheets, expense reporting and project management. Next are time-billing systems that include billing, and sometimes purchasing, allowing for accumulation of external costs for products and services so that project managers can compare actual costs of time and materials to budget. When targeted to accountants or lawyers, these systems are usually referred to as practice management systems.

On the other end of the spectrum, PSA vendors offer integrated solutions to meet all the system needs of professional service organizations – including timesheet, time billing, customer relationship management, as well as resource , opportunity and knowledge management.

This year’s survey includes some additions: knowledge management, multicompany considerations and the ability to assign resources to any level in the project hierarchy. Knowledge management is an important technology for any company, but especially for professional service organizations that want to share knowledge among employees and clients. Multicompany requirements can be a significant factor in deciding which system to select, according to Jonathan Taub, CA•IT, at Rimrock Corporation. (Rimrock is a value-added reseller of Microsoft Dynamics GP and Jovaco.) Complex organizations will want to be able to enter time and expenses across multiple companies on the same timesheet and have the system automatically post to the proper project subledger. Another differentiator is the ability to assign resources not just to a project but to a specific task or phase in it.

You will see from the charts that many of the systems listed also fall into the category of accounting or ERP. Vendors have finally realized that professional service organizations’ needs are different from those of manufacturers and distributors, and have added PSA functionality. But in some cases these products don’t go far enough. Eric Lacourcière of Groupe AGI (developer of Abak) explains that his company has been successful by offering PSA features that address the heart of a professional service organization. Abak is an example of a best of breed that is integrated with a number of accounting systems, including Sage Accpac and QuickBooks.

The charts also show that Microsoft offers four PSA solutions, with Microsoft Dynamics SL (formerly called Solomon) having the most out-of- the-box PSA features. However, Microsoft’s Steve Croth says each of the company’s products has PSA features as well as add-ons for deeper functionality from third parties. Croth also spoke about Microsoft’s road map for its business applications. Wave one of “project green” enhances the existing applications with features such as role-based computing (provides a personalized view and access to information and tasks based on an employee’s role), work flow, and business intelligence. Wave two will merge all the applications, using the best of each one. Wave two is scheduled for release in 2008.

Another PSA trend is the spread of the application service provider (ASP). Of the 28 products covered in our charts, nine are now offered via ASP. An ASP hosts the application on its Internet site, which is typically equipped with state-of-the-art technology and security. With an ASP, you avoid the costs associated with managing the computer and database that goes with it. This solution can make sense for professional service organizations that have people scattered across the country.

There does not seem to be as much buzz about PSA systems as there was a few years ago. But although the acronym may change, the need for PSA will not.

Michael Burns, MBA, CA, is president of 180 Systems (http://www.180systems.com), which provides independent consulting service, including business process review, business case development and system selection. Michael can be reached at 416-485-2200 or mburns@180systems.com.