What is PSA software? Key features and considerations for professional services firms

What is PSA software? 

PSA stands for Professional Services Automation. PSA software integrates various features that support essential business processes in professional services firms into one centralized platform for operational success. 

It takes tools that often live in separate systems and spreadsheets, such as time tracking, resourcing, and project management, and combines them to support and streamline the key business operations of professional services firms. It supports the entire project lifecycle, from bid-to-bill. 

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Who does PSA software benefit? 

Professional services automation (PSA) software benefits—you guessed it—professional services firms.  

These are businesses that offer specialized skills and expertise to clients in a range of fields, and generally operate on a project basis.  

They deliver specific services or projects to clients within a defined timeframe, helping their clients to achieve their goals with valuable insights, solutions, and advice. 

PSA software addresses many of the specific operational needs professional services firms have. In a growing firm there are substantial operational complexities, as leaders strive to strike the right balance between resource demand and capacity, deliver projects profitably, and look after their most important asset—their people.  

PSA software helps firms to navigate these complexities by providing professional service leaders with data-driven insights, accurate predictions of future performance, and highlighting opportunities for improvement and growth. 

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Understanding the core features of PSA software 

PSA software unites all of the disconnected and disparate tools & spreadsheets professional services firms use to manage their projects and company performance into one comprehensive platform.  

Most PSA software cover resource management,time tracking, project accounting, reporting and some element of project management, but let’s take a quick look at some of the key features PSAs typically include: 

Resource management

Managing the balance between resource demand and capacity is arguably the key operational process in any professional services firm, and so resource management is typically the critical feature of any PSA. Functionality can include tools for resource allocation, utilization calculation, capacity planning and forecasting, skills matrixes, and even integrations with HR systems. 

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Time tracking

As selling time is one of the defining aspects of professional services work, time tracking is another highly common feature in PSA software. It enables leaders to monitor project performance by comparing the ‘actual’ (from timesheets) to the ‘budget’ (driven from a schedule of stages/tasks, or a resource plan).  

Typical functionality can include timesheet submissions, differentiating between billable and non-billable hours, and task and activity descriptions. There are plenty of potential problems that poor timesheet adoption can cause, but easy-to-use PSA software can help to combat this. 

Project accounting

Professional services automation (PSA) software also helps professional services firms to track, allocate and analyze project-related expenses and revenues, at a project-by-project level and across the entire firm. This includes financial management functionality such as budgeting & cost estimation, expense tracking, revenue recognition & forecasting, and profitability analysis.

Project management 

Despite professional services firms being project-based, it’s not guaranteed that project management functionality is included within PSA software.  

To be specific about what we mean by project management functionality, it’s tools which help you deliver the work—managing the granularity of a project—which includes tasks, activities, dependencies, and how that feeds into overall project timelines.  

In contrast to delivery-centric project management functionality (I.e., “how do we get the work done?”), PSA software is operations-centric, handling the big picture questions of how those projects play into overall firm performance (revenue, margin, utilization etc). So don’t necessarily expect to handle ‘in the weeds’ project management and ‘bigger picture’ PSA / firm management in the same place. 

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CRM 

Some professional services software vendors also include CRM (client relationship management) functionality, the key reason being to provide a holistic view of resource demand across both live projects (within the PSA) and potential projects (within the CRM). The interplay of pipeline management and resource planning is a crucial process to crack in any professional services firm, and having CRM & PSA natively integrated in one solution enables you to plan your resourcing with total clarity. CRM functionally typically includes company and contact databases, pipeline management and reporting.  

Software integrations 

The majority of professional services automation software solutions integrate with a range of popular systems and packages. For example, some PSAs will integrate with standalone CRM systems such as HubSpot or Salesforce, as well as accounting packages (e.g. QuickBooks, Xero, Sage), business intelligence tools (e.g. PowerBI), and collaboration tools (e.g. MS Teams, Outlook). 

Benefits of PSA software for professional services firms 

Professional services automation software is essentially an all-in-one toolbelt for professional services firms, taking care of key business processes and allowing your team to focus on what they do best: helping clients achieve amazing results. 

But a PSA isn’t just employed to save time on administrative tasks. It can transform the profitability of professional services businesses, giving professional services leaders the data—and the tools to analyze it—that can transform their way of working. 

In fact, a recent study conducted by Consultancy BenchPress revealed that 51% of firms using a PSA as opposed to spreadsheets or no tools at all grew their revenue by 26%.

It’s then little surprise that PSA adoption is forecast to double in the next three years. 

With this in mind, let’s look at some of the key benefits of PSA software: 

Enhance growth potential 

As your professional services organization begins to grow, the ability to adapt and expand becomes crucial—especially if you’re looking to take your business to market.  

If you want to start taking on bigger challenges and handling more complex projects, you won’t have time to juggle multiple systems and error-prone spreadsheets. You’ll need that time to focus on nurturing client relationships and delivering amazing services. 

So, when resource & project management, time tracking, project accounting and more is all built into one platform, you’ll enjoy a serious boost to operational efficiency as your PSA keeps pace with your own growth aspirations.  

It also helps when you have a clear picture of the future, too. PSAs aren’t exactly crystal balls, but they do provide you with the forward-looking insights and forecasting reports you need to get an accurate view of future projects, pipeline, and risks.  

Accurate project data can provide immense value to your operations. When you’re able to identify trends, avoid bottlenecks and make data-driven decisions about the work you take on, the path of your growth journey will be practically obstacle-free.  

As Simon England, Partner at Garwood Solutions, said in a recent interview:

‍“An effective PSA should be at the heart of your operating model; without one, it will constrain your ability to grow.”

Increase margins 

Time-consuming tasks, like resource allocation and invoicing, keep you away from billable work and eat away at your firm’s profitability. When these processes become automated with professional services automation software, your team members are freed up to focus on the work that matters, helping you make every minute count toward increasing your bottom line. 

Your PSA will also keep a watchful eye on your project finances in real-time, tracking budget vs. actual and ensuring every billable hour and project-related expense is taken care of with employee time-tracking functionality and expense management.  

But perhaps the most value comes from the reporting and analytics functionality of PSAs. With a bird’s-eye view of your firm’s operational and financial health, you’ll gain vital insights into your business’s resource utilization, revenue trends, and project profitability. With this data, you’ll be able to identify profit-draining issues such as over-delivery and under-quoting and take the necessary steps to improve them. 

Discover some of the ways the best professional services organizations use PSA tools to achieve great profitability here. 

Maximize resource utilization 

Strong utilization is key to strong profits, and professional services automation software is full of functionality to help you understand if you’re utilizing your team effectively today and maintain solid utilization in the future.  

With tools to help you effectively allocate resources, avoid bottlenecks, and tackle tricky issues like resource capacity vs demand, your utilization—and your profitability—are sure to improve. 

We mentioned a study into PSA results from Consultancy Benchpress earlier; that same study revealed there was a 25 percentage point increase in the average utilization rate of firms when they adopted a PSA vs. no tools. 

With a PSA, you’ll be able to drive your revenue to new heights while maintaining total control. Live data will give you the real-time insights needed to identify the areas where you’re excelling, as well as the ones that need improvement, so you can fine-tune your resourcing strategy and start resource scheduling with confidence. 

Professional services automation software also provides you with the data you need to make confident hiring decisions. Identify skill gaps to find out where you need to expand your team and bring in specific expertise, making sure you have the right people, with the right skills, at the right time. 

Predict the future 

Professional services automation software is a single source of truth for your firm, offering a holistic view of your projects, resources, and financials. With live dashboards and reports, you’ll gain invaluable visibility over your business. By tracking project progress and key metrics in real-time, you’ll be able to avoid uncertainty and effectively predict the future—a serious project management turbo-boost. 

You can start to take complete control over your project accounting with full financial forecasts and make informed decisions about budgeting, pricing, and revenue projections. With the ability to anticipate cash flow and track profitability, you’ll be able to strategically plan the growth of your firm and set realistic goals for growth. 

Key considerations when choosing a PSA software solution  

Hopefully by now you’ll have a full picture of the scope of advantages PSA software can offer your professional services organization. You may even feel it’s time to implement a platform within your own firm. 

But what are the key considerations you should make when choosing the right PSA software for your business? Let’s take a look. 

Breadth & depth of functionality 

One of the major benefits of adopting PSA software is the fact that it can free you from a multi-system nightmare of spreadsheets and disparate tools. So it’s important to choose a PSA software that gives you everything you need, in one place—you don’t want to have to bounce around several different platforms to manage your operations.  

The PSA software you choose should include most, if not all, of the key features and functionality we went through earlier, such as resourcing, time tracking, project accounting and reporting. However, you also need to ensure that these features have sufficient depth to meet your actual day-to-day use cases and the functionality isn’t just surface level.  

Take some time to identify your requirements and fully understand how you want your PSA software to assist with them. With thorough research—including sitting demos where you can see the functionality for yourself—you’ll be able to pick the PSA software that’s right for your business. 

Native CRM vs. third party tool  

One of the big decisions to make is whether you want your PSA to have native CRM functionality. 

Having CRM & PSA functionality natively in one place provides huge benefits in terms of user adoption (one single place for your team to go to), and also the ability to seamlessly conduct resource planning across both live and pipeline projects (the latter originating in your CRM). 

On the flip side, PSAs intentionally focus on core operational functionality, so won’t have the depth of functionality of specialist best-of-breed CRMs such as Salesforce and HubSpot. 

What’s right for your firm depends on your scale and sales & marketing sophistication. If you’re early in your growth journey with a relatively straightforward sales process, the benefits of an ‘all-in-one’ CRM & PSA solution likely outweigh the user adoption challenges (and greater cost) of two best-of-breed solutions. But if you’re looking to run multiple sales pipelines with complex approval workflows and pipeline attribution, it’s worth digging into how PSAs can integrate with a third party CRM.  

Sector focus 

Let’s face it, there’s lots of solutions out there, covering the full spectrum of professional services markets. 

When choosing your preferred solution, it’s crucial to align with a provider who has a deep consulting specialism—as opposed to majoring in another area of professional services (creative agencies, accountants, managed services providers etc). 

Choosing a provider with a deep specialism sets you up for success and means that you’ll be working with a product honed for your industry, and just as importantly, a team who deeply understand the nuances (and challenges) of scaling businesses like yours. 

For example, let’s take consultants. Key ‘consulting specific’ PSA features to keep front of mind are: rate cards in days (not hours), easy-to-use resourcing tools, clear utilization reporting, flexibility to handle fixed fee and T&M work, robust timesheets-to-WIP-to-billing processes and revenue recognition & forecasting. 

User experience  

So, let’s say you’ve got yourself a PSA software with all of the robust tools and functionality you could have asked for. But is anyone actually going to use it?  

If your PSA software is clunky, complicated and difficult to use, you’re going to have a hard time getting your team on board with using it and inputting the information you need. The phrase ‘garbage in = garbage out’ couldn’t be more relevant here, and to achieve the key PSA benefits around visibility and report, you need consistent, well-inputted data from a bought-in team. Buying processes that don’t involve actual end users who’ll be interacting with the system day-in, day-out, are often doomed to fail. 

That’s why it’s so important to adopt PSA software that your people actually want to use; software with intuitive functionality, clear navigation and logical workflows. If learning and navigating the system is made easy, you’ll enhance user adoption and ultimately increase the volume and accuracy of the data you receive—all of which plays a part in your firm’s profitability.  

Scalability  

It’s all well and good buying PSA software that works for your firm now, but what about when you begin to grow? The platform you choose shouldn’t stunt your growth—it should scale with you. 

Make sure to take into account how well your chosen PSA software can accommodate increasing demands. Can it support an increase of users when your team grows in size? How about expanding your portfolio of clients and projects? Or a growing volume of data? 

The right PSA software will be able to maintain optimal performance in project portfolio management without experiencing resource limitations or performance issues. It’ll also be able to adapt to increasing functionality demands, tailoring the system to your changing requirements without significant disruptions or costs. 

And if you’re thinking about exit or investment, there are plenty of factors and considerations that go into getting “exit-ready”—in fact, there’s a whole growth wheel of them. Your PSA should be your operational backbone, providing the reporting and forecasting integral to any M&A process, but also demonstrating the operational rigour you have in place to support future growth beyond any investment or acquisition.  

Customization & flexibility 

Your firm is unique—it has unique needs, unique workflows, unique aspirations. That means you need a PSA software that can adapt, and cater, to these unique aspects of your business. 

Consider the level of configurability your prospective PSA software offers. Can you easily flex rate cards for your differing grades and types of projects? Can you customize fields to capture skills & specialisms specific to your own firm to factor into resourcing? Can you build your own reports and dashboard suites, specific to the nuances of your firm and without being beholden to generic reports or having to pay for custom reports? 

A PSA software that is tailored to your individual professional services organization and your way of working will promote improved efficiency and productivity, removing barriers for growth and ensuring a smoother implementation process. 

Integrations  

Even though your PSA software will act as one centralized platform for all of your project and resource management needs, you may still want to use some of your favorite existing tools as well.  

The best PSA software facilitates integrations with these systems, so when data is updated in one place, it pushes through to the other. Best-of-breed PSA solutions with high-quality integrations will result in the highest level of productivity. 

The best professional services automation systems offer a wide range of integration types, from CRM to accounting to business intelligence tools. Some PSA software offers the ability to synchronize data with these tools in real-time, which minimizes manual data entry and, in turn, reduces errors.  

Implementation & training  

The overall success of a PSA software typically depends on the success of its implementation. A smooth, well-executed implementation process, ran by a team who’ve ‘been there and done it’ with comparable firms, guarantees rapid user adoption and allows you to realise the benefits of your PSA software. 

Consider the implementation, training and support provided by your prospective PSA software provider. Do they offer assistance with data migration, configuration, and customization? Do they offer a range of training materials to facilitate user learning and adoption? Is this training continuously offered? Can they demonstrate they’ve done this before with firms of your scale? 

The best PSA software companies provide comprehensive customer success and support offerings, giving you tailored advice on how to get the best out of the product, user adoption strategies, managing organizational change, and more. With effective roll-out and knowledge sharing, the disruption to your business will be minimal and you’ll soon begin to see positive results. 

Mobile accessibility  

In today’s world of remote working—and the itinerant nature of consulting itself—the accessibility of software across different devices and platforms is crucial. With mobile-friendly PSAs, activities such as timesheets and expenses submissions can be completed anywhere, at any time.  

Naturally, these apps will have limited functionality compared to their desktop-optimized counterparts, but they should keep your team productive and bought in. 

Future development  

We already know how important it is for your chosen PSA software to scale with your professional services organization, but you shouldn’t just be thinking about your own growth—you should be thinking about how the platform plans to grow, too. 

The PSA software you choose should demonstrate a clear commitment to innovation and continuous improvement, with a clear roadmap showcasing how the platform will evolve and adapt to emerging industry trends and technological advancements. This will ensure the product remains relevant, competitive, and valuable in the long run. 

Conclusion 

We think Professor Joe O’Mahoney said it best: 

“Regardless of your size, it’s important to use some form of PSA earlier rather than later... It will save you a lot of time and money – it’s correlated to a higher exit value, higher multiple, and even higher profit margins.” 

(https://www.cmap.io/webinars/how-to-grow-your-consulting-firm-on-either-side-of-the-atlantic)  

The benefits professional services automation (PSA) software can provide for firms of any size truly cannot be understated—there’s no better investment you could make to your firm’s tech stack than to introduce professional services automation tools. 

From increased resource utilization rates through to higher gross margins, PSA software will put your business on the right track for growth and beyond.