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Today's Professional Services Challenge: Creating Competitive Advantage in a World of Skills Parity

Historically, professional services organizations (PSOs) set themselves apart with development skills. Back in the days when technology standards were few and far between, PSOs could establish competitive differentiation by assembling superior skills in proprietary programming languages, databases and other technologies.

The proliferation of technology standards and the emergence of lower-cost, IT educated, highly skilled labor in Europe and Asia have led to a number of changes in the PSO industry. The industry, perhaps predictably, is following the same evolutionary course as the automotive, apparel and other manufacturing industries, where manufacturing (or in the case of PSOs, IT development) operations are distributed across the globe, according to the availability of optimal price/performance labor. Development skills have become more of a commodity today, and skill levels and the cost of those skills are now relatively constant across PSOs. In this environment, competitive advantage can no longer be created by just the acquisition of superior or lower cost skills. Rather, it is created through a combination of the effective deployment and management of commodity skills through superior project execution and worker performance.

Global Competition

Offshore, IT outsourcing will become a viable mainstream alternative to onshore outsourcing, according to advisory group neoIT. With the maturing of offshore provider markets and the growth of offshore vendors, organizations will increasingly realize the importance of services globalization as a strategic decision. While offshoring initially was a strategy to utilize low-cost, highly skilled labor in emerging markets, today many of the "offshore" locations are now direct competitors to U.S. professional services organizations. Firms based in India, China and Russia are now competing for business in North America. Likewise, North American firms are competing for lucrative contracts in emerging economies throughout the world as well as at home.

Add to this environment the growing prevalence of fixed-bid proposals, and it becomes critical for PSOs to create service-delivery teams that can effectively compete on price while protecting margins and delivering the right skill sets. Creating such teams inevitably requires globally distributed members and resources, which introduces management challenges never before seen in the professional services industry.

Indeed, project management, especially of globally distributed teams, is the source of competitive advantage today. Companies that can coordinate and manage these teams to successful, and cost-effective, project completion will thrive. Companies that are unable to deliver extremely high levels of service and efficiency with these teams will perish, as cost overruns eliminate margins and customer dissatisfaction destroys reputations.

The Project Management Challenge

Managing globally distributed resources introduces a number of new challenges to project managers, specifically:

  • Effectively managing the project pipeline, evaluating demands and ensuring they can assign the proper mix of people. Increasingly, project managers draw that mix from global development centers that facilitate geographically dispersed teams with variable billing rates.
  • Exploring new billing options that meet the needs of both clients and the firm. For example, many firms are switching to fixed rate and performance-based contracts. At the very least, mixed fees - some based on Western rates, some on offshore rates - have become the norm.
  • Monitoring and managing risk and performance, considering challenges such as:
    • Overcoming cultural and language differences when using local project leads to oversee implementations.
    • Preserving knowledge and intellectual capital so it can be re-used on future projects, thus reducing costs and improving efficiency. This also helps standardize processes and enforce best practices.
    • As project scope changes - as it so often does - firms must have common tools and processes in place to manage the subsequent resource, time, and financial costs for both their domestic and offshore workforce.
    • To maintain customer satisfaction, firms must develop standard ways to share information, both internally and with the customer, regardless of location. Similarly, as projects close, firms must minimize the time and effort needed to transfer knowledge to the customer.

Managing these challenges requires project management capabilities that simply cannot be supported by pen and paper or first-generation software tools. Innovative project-management solutions must be able to encompass all members of the project team and automate multiple critical management tasks. They also must provide analytical and alerting capabilities to identify problems before they impact margins and customer satisfaction.

Critical Features of a PSO Project Management Solution

Today's PSOs require project management tools that enable accurate forecasting of demand for resources, easy management of skill mixes, standardized project delivery best practices, rapid identification and escalation of risks and issues, and effective communication to customers with accurate status reports. These tools also should enable organizations to share comprehensive and accurate information with customers regardless of the geographic location of development teams.

With these capabilities, project-management solutions are essential to the success of managing globally dispersed teams. By facilitating improvement in a number of essential project management functions, these solutions have evolved into powerful enterprise tools used by everyone from senior management to project managers and offshore staff, delivering the following key benefits:

1. Proposal Creation

Enterprise-class project management solutions enable project managers to define key performance indicators and incorporate them - along with potential risks and costs - into their project analysis. By enabling a rigorous examination of potential locations, available skills, and costs in an integrated manner, and by running various delivery and pricing scenarios that demonstrate possible domestic, offshore, and domestic/offshore mixes, project management provides the means to create strong, competitive proposals.

2. Identification of Global Workforce Skills and Availability

By giving project managers and senior management a clear window into workforce skills, availability, and performance across the globe, project management solutions enable managers to access the specialized skills they need for any project at any time - and to effectively manage that project regardless of location. Project managers can see resources in a variety of views, including listing functions or separating by domestic and offshore resources.

3. Enforcement of Consistent Project Delivery Methodologies

For a global PSO, maintaining consistent business processes can be a particularly thorny challenge. As the hub of enterprise communication for offshore programs and projects, project management solutions are powerful tools for maintaining or implementing the consistent business processes - such as delivery methodologies, reporting, and issue handling - upon which quality work relies. Project managers can outline step-by-step processes, with project and staffing templates that they can tailor to their needs, thus ensuring proper approval work flows.

4. Collaboration and Intellectual Capital Preservation

By using the document-management capabilities, templates and discussion threads available in project management solutions, companies can enforce consistent language (many companies create a glossary of common terms) and bridge communication differences among global teams. Managers can create role-based access to various documents, including timesheets and time and expense tracking, but also documents that include essential company knowledge and intellectual capital. Geographically dispersed teams can gain immediate access to key information and to artifacts when they need to dig deeper or want clarification.

5. Risk Management Through On-Demand Visibility

Monitoring risk and performance in near-real time is a business imperative when PSOs create offshore teams. The sooner firms uncover problems, the sooner they can correct course and inform customers, thus increasing customer satisfaction. Project management solutions enable this type of on-demand visibility. Issue and risk reporting, escalation practices, handling scope changes and transferring knowledge to the customers all benefit from this instant visibility.

6. Cross-Project Communications

Today, project managers get requests from various stakeholders - partners, clients, senior management, and offshore teams - for a dizzying array of reports. For example, clients might need the latest information on project status and delivery dates; and, partners might need a more expansive view, perhaps one that contains profitability and risk analyses of an individual project within a portfolio. Using role-based dashboards in a project-management solution, project managers can readily make available tailored, up-to-the minute views for any of the stakeholders. The result is improved "self-serve" communication throughout the enterprise and with customers.

Execution: The Key to Competitive Differentiation

Globalization is challenging PSOs with many of the same issues that have faced other industries for years - maintaining profitability and customer satisfaction in a time of global competition and skills commoditization. In this environment, execution becomes the primary driver to competitive differentiation. PSOs that can delight customers while using resources most efficiently will win the battle.

However, execution in the context of globally distributed teams is an incredibly complex undertaking fraught with potential landmines. Cultural differences, risk assessment, problem identification and sheer geographic distance all present areas of potential disaster for project teams.

Today much of this complexity can be removed through the use of an innovative project management solution. With these solutions, PSOs can manage each project to a successful and profitable conclusion by accurately forecasting project requirements, optimizing resource utilization, enforcing best practices, maintaining strict control over costs, and ensuring timely, accurate communications with all parties involved. These capabilities lie at the core of establishing competitive advantage in a world of skills parity.


Jim Rogers is currently the director of product and industry marketing for Primavera Systems, responsible for the global strategy and execution of Primavera positioning and direction within selected industries.

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