Scaling Up Professional Services

We are building the rocket as we are flying to the moon…

Growth is great. All companies aspire to grow, and the faster, the better. Having worked in companies experiencing explosive growth, there is nothing quite like it. The energy, awe and satisfaction are contagious, the results motivating.

Led by the market buying into the value of the solution, demand generation and solid execution by the sales team, comes the next challenge: how do customers extract the promised value fast and efficiently? Almost all enterprise software needs to be configured to fit the specific customer environment and requirements, and it can be complex and frustrating.

The challenge in a growing enterprise is apparent, how do we increase deployment capabilities that ensure successful adoption and sets the stage for growth and renewal in growing software companies?

Assuming the strategic mandate and approach for implementation is clear and understood, the building blocks for effective scaling up of customer success need to be put in place. Professional Services practices, whether embedded in software vendors or standalone entities, are not immune from the scaling lifecycle, and the so-called “valleys of death”. With growth comes increased complexity. With growth things get harder, not easier.

Professional Services, by definition and necessity, is a people business. Scaling up the capabilities of the Professional Services team means adding more roles, people and increasing efficiency, both in onboarding people, and the delivery processes. In addition, scalable infrastructure needs to be added to support the management, communication, and predictive needs of the services business and larger enterprise.

?A word of caution is also in order here. There is a fine balance between hiring for excitement or hiring based on predicted demand. Too many times do we see the “hiring for excitement” approach, which leads to over hiring, with all the negative outcomes that may follow.

Expanding the Professional Services team should happen in lockstep with predicted demand, budgeted in accordance with expected sales, and structured for growth.

Structuring for growth must account for anticipated team size, functions and capabilities, organizational alignment, and leadership. As complexity increases, more functions and capabilities may be necessary. Leaders that can plan, guide, coach, delegate, motivate and execute are non-negotiable.

Predicting demand needs to lead to a simple model: The number of hours we expect to deliver, broken down by role and capability, and when these capabilities need to be available. Two models should concurrently be followed here to reach consensus on the hiring plan. The first is to use validated assumptions (historical and analytical) to extrapolate billable hours from overall sales, assuming that Professional Services represents a subset of the revenue, using blended hourly rates. This calculation could look like:

Expected Overall New Bookings: $200m; Professional Services Share: 15% ($30m); Blended Rate $225/hr; Billable Hours Forecast: 133,333

Assuming 70% billable utilization (which is above industry average) this gets us to a total raw headcount of 100 billable people, which excludes management and administrative functions, normally a 10-15% uplift to support the billable teams. Incremental hiring is planned by following the expected bookings curve and backing into a hiring plan that allows for full onboarding and upskilling of the team.

The second model is focused on capability and capacity by role. It’s almost like Moneyball for Professional Services. This starts with a matrix of all skills needed across the Professional Services team. It includes technical knowledge of both the application, domain knowledge and adjacent skills. Typically, the adjacent technical skills include ETL, security, access, API, and various programming languages. Consulting skills such as communication, conflict resolution, negotiation and escalation handling are included, as are management skills. Every person on the team is scored on a 1-5 scale, and this very quickly shows where capabilities are missing, and where incremental hiring as well as training should be focused.

The next part is to put it all together in the context of project teams, and validate capacity needs against the number of expected concurrent projects and ensure that there is sufficient capacity for each capability and project.

The Professional Services team structure should align with the go-to-market model, whether by vertical, geographic region, customer size or solution. This increases collaboration between the different parts of the organization, enhances solutioning capabilities and ensures warm handovers from sales to implementation to support, while working closely with the customer success team.

Effective onboarding for new hires or promotions is critical, and while it differs from company to company, both formal and hands-on training is essential, not only for technical skills, but also for team and company culture and expected behaviors. Typically, any new person should be fully billable after 10-12 weeks.

Capacity can, and in fact must be, increased by also onboarding implementation partners that can provide a consistent experience to customers. This allows not only for a balanced investment approach but also presents an ideal opportunity to supplement offerings to customers with vertical specific knowledge and solutions.

To support the smooth operations of Professional Services, the necessary communication, operations and analytics infrastructure must be implemented, along with the processes to fully utilize those tools. The backbone of Professional Services practices is the Professional Services Automation application, such as Kantata or FinancialForce. It allows for planning, resource management, time recording, expense management, capability management, billing and analytics from a single platform. The addition of an information management tool, such as M-Files makes it easy to keep track of and share information internally and with customers.

All of the above will be at best a struggle, and at worst a complete failure without scaling up leadership. As the Professional Services team and the demand for services increase, the pressure likewise increases to manage execution, remove obstacles, predict performance, and build strong customer relationships. Theory has it that a good span of control is 7-10 people, and in the pressure cooker environment of Professional Services, that holds true. Leaders that can function independently, drive execution, accurately predict and plan, make good decisions and lead from the front are critical to the scaling up process.

Nothing beats the excitement of growing a business and leading a team of people to accomplish great things in the process. Organized, structured and planned scaling sets up the organization for future success, minimizing the chaos and reaping the multiples.

As always, comments and thoughts welcome.