Services organizations have been historically underserved by technology and it's time for a change. This blog uncovers the challenges faced by service organizations looking to scale during the age of digital transformation.
The History of Technology in Services
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.
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. A majority 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 Collaborative Work Management Tools
The most significant weakness with PSA tools is that they do not facilitate the collaboration that is 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 bridge project management, task management and collaboration to enable distributed teams and drive business productivity. 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. Without the adoption of these applications, services operations would come to a halt.
To learn more about the challenges felt by services organizations today, read our most recent ebook "Transforming the Services-Centric Tech Stack."