Service-based companies are beginning to turn to automation to boost efficiency and profitability, just as manufacturers have done by employing supply-chain management (SCM) products.
Services companies, or those using people and knowledge to make money as opposed to those that make products, comprise the larger half of the economy, according to John Bantleman, CEO of Evolve Software Inc., an Emeryville, Calif-based company that offers professional services automation (PSA) software.
Service companies cut across virtually all fields, including information technology, law, medicine, accounting and construction. Collectively, they will generate $2.1 trillion in revenue in the U.S. this year, Bantleman said, and PSA applications can help these companies become more profitable.
For instance, PSA software can help companies keep track of their staff and projects and turn around bid times in days or weeks instead of months, giving these companies the upper hand against competitors, said David Hofferberth, an analyst at Boston-based Aberdeen Group Inc. The PSA software market is growing: This year it will be worth $264 million; in 2003, that number will jump to $1.3 billion in license fees, he said.
Most service companies have already automated some of their business processes, but in only a piecemeal way, said Marylin Muller, an analyst at Summit Strategies Inc., a Boston-based consulting firm.
Established service companies want to make these business-process applications more accessible and Internet friendly, she said, and "newer companies are using them to ramp up more quickly and manage their resources in a much more streamlined way."
Evolve is one of a number of PSA software companies; other companies are Changepoint Corp. in Richmond Hill, Ontario, Niku Corp. in Redwood City, Calif., and Portera Systems Inc. in Campbell, Calif., said Ted Kempf, a senior analyst at Gartner Group Inc. in Mountain View, Calif. "The No. 1 reason for resources management is knowing what people have, what skills and qualifications, along with their availability and billing rates," he said.
PSA applications can also be used to let a company's customers see the status of a project, he added, or to speed up and simplify the processing of change request forms, as well as to do fast revenue calculations for billing. In particular, IT managers might find these applications useful when handling external service providers as well as internal projects. On the downside, integrating PSA software into a legacy IT infrastructure can be a struggle, said Kempf.
However, it can be worth the effort. For instance, Evolve's Bantleman said, a 20% improvement in the efficient use of a company's staff can spell the difference between bleeding red ink or making a significant profit. His company sells ServiceSphere, a Java application that sits on a Microsoft Corp. Windows NT or Sun Microsystems Inc. Solaris server and lets services and consulting firms perform a task such as locating staff for a given job or finding out their availability and sending them an embedded XML message to contact them. ServiceSphere can be accessed via a browser and can interface with human resources and financial applications to link it to back-end business processes, he said.
PSA applications should appeal to service organizations, but it's crucial that they be Web-based for easy access for the mobile workforce, said Anthony Brady, vice president of e-commerce product development at Mellon Global Cash Management in Pittsburgh. Mobile users need to both input and access data easily for a PSA system to be efficient. He said his company offers financial products, so it probably wouldn't be a good fit for PSA, but he could see where the automatic "allocation of intellectual capital inside a company" could offer significant benefits.