Transforming the Services-Centric Tech Stack

Achieving Agility and Operational Excellence in a Connected World


Thriving in the Digital Age

Welcome to the digital age, where technology is the central axis of our world and applications allow us to do things that were previously unimaginable. This new era has moved the pace of innovation forward in a very short period of time.
What makes this moment in time especially unique is the speed with which change is occurring. Today, business agility is more important than ever. A startup can emerge tomorrow that will transform an industry and take down companies that have led a market for decades. This profound shift has the potential to transform every business model and every industry.
Leaders looking to thrive in this digital era must be flexible, prepared for change, and in a constant state of innovation. It requires a look to the future and an understanding of the existing, and coming impediments to growth.
A critical starting point is understanding the technology underpinnings of a business. Digital transformation is the quickest way for organizations to modernize operations. However, digitizing a business means more than just introducing new technologies—it fundamentally changes the way a firm thinks and does work. Most businesses have approached application architecture haphazardly and don’t have an explicit digital perspective or strategy that drives technology priorities. This often results in a tangled web of systems, which decreases productivity, increases the cost of work, and ultimately makes it very difficult for management to oversee the day-to-day work at a services firm.
We have created the following whitepaper to serve as a manifesto for change. We will review trends driving the growth and transformation of services industries, assess the limitations of the current technology landscape, and put forward an emerging model that’s enabling today’s progressive professional and marketing services organizations to operate with greater agility, predictability, and precision.
Chapter One
The Problem with
Today's Tech Stacks

The cloud has been incredibly transformative in both our personal lives and the way business is conducted. It has allowed organizations to be more agile, leading to numerous new models and practices. Businesses in every industry are pursuing the promise of digital transformation.
However, adoption of new technology alone does not usher in necessary change. In the services industry, it has actually hindered progress. A sea of applications have been deployed in an attempt to simplify, streamline, and propel business, and in the process created many gaps in process and systems.
Therefore to understand the opportunity for the rapidly growing $3 trillion services sector in adopting a modern technology environment, one must first understand how technology has underserved these industries to date.
The Promise of ERP
Even just one decade ago, Enterprise Resource Management (ERP) solutions were acting as the procedural backbone for most mid to large sized enterprises. Names like Oracle and SAP dominated the business software discussion. Although known as complex, expensive, and inflexible, ERP solutions were routinely selected due to their broad capabilities.
ERP was initially designed for manufacturing companies, which relied on producing and distributing products for revenue. As a result, the operational capabilities were designed to support a myriad of departments and functions not relevant to critical services operations; for example, materials and inventory control, distribution, order management, and production. Services-centric organizations, on the other hand, are often project-based and require complex coordination of people. These businesses have unique needs around facilitating collaboration, project planning and execution, resource utilization, and managing project costs—which ERP was not designed for.1
The Emergence of PSA
To meet the needs of an increasingly services-driven economy, some ERP vendors began offering integrated services modules, also known as Professional Services Automation (PSA) solutions. Additionally, independent PSA applications also began to emerge. These tools incorporate functionality such as project and resource planning, time tracking, expense management, and invoicing. Service Performance Insight (SPI), a global research, consulting and training organization dedicated to helping professional service organizations, found that using PSA software leads to higher rates of on-time project delivery and more accurate project estimates—so, PSA apps have provided value beyond ERP.
Yet, there have been significant limitations. PSA solutions were designed primarily with top-down planning and management in mind, and the reality is that a majority of non-management workers in a services organization access it only to enter time and expenses on a weekly or infrequent basis. Approximately 70% of the actual work happening in a services business —project management, task management, communication, team collaboration, and working with clients and subcontractors—is happening outside of the PSA solution.
The Introduction of CWM
The most significant weakness with PSA tools is that they do not facilitate collaboration required today. Collaboration is key across teams, and client collaboration is even more important in services. To fill some of the gaps and help with day-to-day operations, workers have incorporated additional productivity tools, often referred to as Collaborative Work Management software.
Collaborative Work Management (CWM) tools enable employees to bridge task management and collaboration. Today, a collaborative work environment allows workers to communicate across silos, borders, and offices. Now, companies are using both PSA as well as CWM tools, and continue to pile on more and more applications to the technology infrastructure one at a time. Today the average worker uses 5-8 additional niche solutions that support the major areas of communication and collaboration needs across the business.2 Without the adoption of these applications, services operations would come to a halt.
Collaborative Work Management tools enable employees to bridge task management and collaboration. Today, a collaborative work environment allows workers to communicate across silos, borders, and offices.
Chapter Two
Realities of a
Hairball Infrastructure

There is no doubt that with the growth of the services economy, adoption of technology to run service-centric businesses is on the rise.3
Even with an abundance of innovative ERP, PSA, and other project management, resource management, collaboration, and productivity tools tools in place—or perhaps because of these—there are gaps that exist. These gaps are often filled with manual procedures and spreadsheets, creating significant operating challenges.
Running a business with spreadsheets is limiting.
Existing ERP solutions and PSA solutions do not have the breadth of operational functionality required to effectively manage a services business. As a result, services organizations have been forced to turn to other systems to manage core parts of their business—namely resource planning and management, collaboration, and project execution. Thus, the data that is actually driving the business lives in disparate systems. In order to gain insights from this data, organizations have the option to either: layer an intelligence system on top of multiple, disparate systems (which gets tremendously complex and costly), or to take the more common solution and resort to spreadsheets to extract and tie data together.
Spreadsheet based 'solutions' pose many critical problems. It takes constant diligence and countless hours to cobble together the information needed to grasp the levers and measures that are impacting the business. They also only reveal what has occurred (e.g. historical utilization), and by the time the information is consolidated and analyzed, it’s often too late to make a change that will improve the result of a project. Therefore the entire operation slows as it waits for information to come together from the past, in order to make important decisions for the future.
Existing business systems struggle with unique projects.
Services businesses vary hugely in terms of what they deliver to their customers and the scale on which they operate. The issue is that traditional business solutions have been specifically designed to create a consistent, standard pace of production. In services industries, clients are constantly presenting new, unique, and challenging projects. Existing tools are often not flexible enough to deliver on these custom projects at the rate the business must move.
of the Hairball Infrastructure
TIME TRACKING BUSINESS INTELLIGENCE SOFTWARE ACCOUNTING PROJECT MANAGEMENT SOFTWARE TEAM COLLABORATION PSA ERP RESOURCE MANAGEMENT Chat Resource Planning File Sharing Video Conferencing Resource Scheduling Email Spreadsheets Resource Allocation Job Costing Expense Tracking Reports Task Management Subcontractor Management Client Portal
Daily operational work happening outside of PSA tool is creating chaos.
By integrating resource planning with time and expense tracking, PSA was designed to provide management visibility into resources and financials. However, the reality is, these apps offer shallow functionality and the bulk of the organization is executing and managing their work in other systems. Employees have been forced to organically adopt cloud-based tools to drive critical project management, collaboration, and communication activities. Each of these point solutions can serve a role, however too many of these systems in a stack creates chaos. It’s now more challenging to find and track critical correspondence, feedback, change orders, budgets, and more. Furthermore, jumping in and out of all of these systems is reducing productivity in the workplace. Citing research from the American Psychological Association, the Forrester Enterprise Collaborative Work Management Wave Report points out that the mental block created by this constant switching from app to app is reducing worker productivity by 40 percent.4
Poor adoption of PSA and time tracking tools is costing money.
Another result of the work being conducted outside of PSA, or point time tracking tools, is the accuracy and timelines of submitted timesheets. Both issues are costing services organizations a lot of money. Because the time tracking system is not where the work is happening, often employees bulk enter time at the end of the week, or the end of the month. It’s almost impossible to remember the particulars of where time was spent on activities that far in the past. As a result, employees are in the habit of entering what was assigned, even if in reality they spent 20 percent more time (or less) on a billable project than was allocated. Harvard Business Review reported that inaccurate time sheets are costing businesses billions of dollars every day.5
Resources are not being fully utilized.
The typical PSA user relies on outside time tracking procedures to record resource allocation, hours, and project assignments. This makes it difficult to truly know who is on the bench and who is available to be assigned to work at any given time. Even sophisticated services businesses often manage resource allocation via spreadsheets and homegrown solutions. This disconnectedness has had a significant negative impact on utilization in services firms, which hampers margins.
Project financials handled separately from project execution results in margin leakage.
Housing project financials in one system, and project tasks and execution details in another, poses significant risks to the performance of any services organization. When project management and task management is managed in apps or systems separate from the tracking of time, costs, and bill rates, visibility is difficult. Adjustments that could impact project financials are delayed or never made, and as a result, margins suffer. Every single project in a services business has the potential to leak profits. Minimizing this leakage begins with the identification of the problem at the project level. With project work disconnected from project financials, by the time a problem is identified, it is often too late to rectify. Margins suffer.
With the speed and complexity of work today, it is increasingly challenging to operate within fragmented business environments.
The emerging issue that services teams face is that not all project delivery related data is tracked in a single 'system of record'. Getting out of siloed systems is critical: services organizations must move beyond spreadsheets if they are to thrive in the fast-paced, hyper-connected, hyper specialized world of the Service Level Economy.
Chapter Three
The Digital Strategy
for Modern Services

Forward-thinking services leaders are actively seeking operating models that allow them to better connect, orchestrate, and optimize their businesses and resources.
As more systems are required to compete in today’s environment, more data is being spread across siloed systems, causing major challenges for service operations. It is becoming a requirement for business leaders to understand the implications of a disparate technology architecture. The first place to start is in identifying the key systems of record. A system of record can be understood as the authoritative data source for an organization.
There are four key systems of record that enable a successful services ecosystem: Operational System of Record, Customer System of Record, Financial System of Record and People System of Record. The following will focus on the components that make up the operational system of record first, and then take a deeper dive into the other systems that make up the modern services tech stack.
Key Systems of Record
System of Record
System of Record
System of Record
System of Record
the Operational System of Record
blue green
Undoubtedly, the single biggest systems opportunity for services organizations today is to build their technology environment around an operational system of record.
By bridging core planning, executional, project accounting, and analysis systems in a single operating environment, organizations are able to experience dramatically better visibility, predictability, and agility. This digital infrastructure also becomes the heart of the organization, and can improve processes by packaging up best practices into frameworks, guidelines, analytics, and insights required to successfully operate a fast-moving services firm today.
Another key component of this operational system of record is that it incorporates Collaborative Work Management (CWM) functionality, in addition to having traditional PSA components like resource planning, time and expense and project accounting. It is the introduction of these collaborative tools that contextualizes all the actual work and communication being done across the delivery team, including contractors and clients. CWM allows the key communication around projects to exist on one platform, creating a strategic hub for services operations. Integrating these tools into your operational system of record facilitates rapid communication with contractors and clients, and allows workers to have a one stop shop for all their collaborative needs.
The Operational System of Record Enables the Following Functionality:
  • Resource Management
  • Project Management
  • Conextualized Collaboration
  • Project Accounting
  • Real-Time Business Intelligence
Digital Strategy for
Modern Services Organizations
Percentage of Capabilities: Operational System of Record Vs. Professional Services Automation & Collaborative Work Management Tools
Collaborative Work Management