Trending Key PS Metrics: Margins, Rates and Utilization

Whenever I take the latest quarterly snapshot of the TSIA PS benchmark data, I like to take a look back to see what key trends can be discerned.  Trending has been a key preoccupation for us this year … for obvious reasons.  Not since 2000/2001 has the technology sector been under this much pressure.  The pressure exerted over the last year has been starkly different from what we saw after the infamous tech bubble burst of almost 10 years ago, but the pressure has been enormous nonetheless.  To help PS executives and practitioners better understand and react to the current pressures, we have looked at trends across a number of topics:  revenue, revenue mix, profitability, market rates, compensation … and the list goes on.  We have done this with an eye on a variety of data sets and against many different time horizons.  In fact, trending the data has become so central to what we do that Thomas Lah, on his blog, just yesterday introduced a new framework for organizing our thinking on the very task.  In this spirit, herewith a new blog entry looking at trends for three of the most important KPIs for any professional services organization:  margins, rates and utilization.

Happy Birthday, TSIA!!!

For every person, for every organization, for everything, there is one … and only one … actual birth - day; the day of their birth.  For TSIA … the Technology Services Industry Association, that day is today.  TSIA represents the bringing together under one brand, one company, one association, three previously related but separate associations:  SSPA, AFSMI and TPSA.  Whether you’re reading this blog for the first time or the hundredth time, you are probably doing so because you’re interested in technology professional services.  You might be an employee at a company that — up until today — was a member of TPSA, the Technology Professional Services Association.  Now, your company is a member of TSIA, which means you get to benefit from the bringing together of all three associations.  I know what you’re thinking and asking yourself.  Is this going to dilute the former TPSA’s focus on technology professional services?  I’m not interested in field services or support services or education services, and so on.  I’m here to tell you in this post, that TSIA is going to be an incredibly good thing for you.  Here’s why.

In Which Tech Companies Ineffectively Confront the Services Chasm, Making Us Queasy in the Process

My boss, Thomas Lah, is clearly on a roll.  Many of the services economy principles that he has been talking about for some time and that are articulated in his new book, Bridging the Services Chasm, are playing out — as if on cue — in the tech industry news.  Just in the last couple of weeks, he’s blogged about two noteworthy examples of this here, and here.  In a nutshell, we’re witnessing a proverbial sea-change in the technology sector, particularly among technology product companies.  Organically in some cases, and through huge acquisitions in others, technology providers are simply becoming more services centric.  We’ve been documenting this general trend for some time, leveraging among other things, the huge amount of data we have from our quarterly TPSA Service 50 program.  Analyzed together, software and hardware companies now have more revenue coming from services than from products.  For the software companies in the TPSA Service 50, our latest data (Q209) show that almost 70% of revenues is coming from services.  And we’ve only begun to understand the implications of developments such as these.

Update: Benchmarking Technology Education Services and Beyond

Since we completed the TPSA member survey on Education Services a few months ago, some very interesting and exciting things have happened.  For those of you interested in Technology Education Services, hopefully these developments will pique your interest.  In this post, I’ll briefly shed some light on these developments, providing links/pointers where appropriate.

View from TSW Santa Clara: Obstacles to Breakthroughs in Economic Impact Analysis

Like all of my TPSA colleagues and many of the TPSA member companies, I am, at this moment, listening to the opening keynote presentation of the 2009 Technology Services World conference.  It’s being given by the CEO of TPSA, SSPA and AFSMI, J.B. Wood.  I’ve seen the presentation (even contributed my small part to it), so I know that he’s going to be talking about the massively increasing pressures on services businesses to deliver return to their companies and what we need to do to respond.  It’s an extremely interesting presentation, and one that you should review as soon as you can, (if your company is a member of one of our associations).  But what I want to talk about is a topic that we discussed with our Advisory Board members earlier today:  economic impact analysis.