Professional service organizations will often go through various stages of maturity, from their infancy, where a team’s productivity likely has no real structure, to a fully matured and well-oiled machine, with strong and sustainable operating processes.
Being able to plot your professional services function against this maturity map will be a substantial step to determining success and growth. As such delivery teams strive to meet the increasing demands of clients as well as navigate the complexities to becoming profitable (or increasing Services Recurring Revenue, SRR), understanding and actively increasing professional services maturity is not just advantageous, but essential. In this guide we will be taking a look at how you can better understand your own maturity level, thus helping visualize the steps required to graduate to the next, all with the help of our Precursive Professional Services Maturity Model.
What is Professional Services Maturity?
Professional services maturity refers to the level of sophistication and effectiveness that a service organization has achieved in managing its internal processes, client relationships, talent acquisition and retention, service execution, and financial operations. It encapsulates the organization's ability and capacity to deliver high-quality services consistently and repeatability to maintain agility, even in the face of changing market dynamics.
At the heart of professional services maturity lies the Professional Services Maturity Model, a strategic planning and management framework developed by Service Performance Insight (SPI) in 2008. This model serves as a benchmark, allowing PSOs to gauge their performance against industry peers and chart a course for continuous improvement.
Professional Services Maturity Model
In 2007, SPI developed the PS Maturity Model as a strategic planning and management framework. It is now the industry-leading performance improvement tool used by over 50,000 service and project-oriented organizations to chart their course to service excellence.
The core principle of the PS Maturity Model asserts that success for professional service firms is achieved by optimizing five Service Performance Pillars:
Leadership – Vision, Strategy and Culture
Client Relationships
Talent (formerly Human Capital Alignment)
Service Execution
Finance and Operations
SPI laid the groundwork, but we have perfected the art of developing a maturity model for professional services. Take a look at our own maturity model here.
Precursive’s professional services maturity is used to help PS organizations understand their performance relative to a vast benchmark of peers. It offers insight into crucial business processes and key performance metrics, enabling organizations to compare, diagnose, and enhance their performance. It also provides advice to enable businesses to assess current levels of maturity and visualize the steps necessary to progress to the next level.
IMPORTANCE OF PROFESSIONAL SERVICES MATURITY MODEL
Professional service organizations go through various stages on this maturity journey. They begin where services is simply a necessity to deliver what the customer has purchased i.e. “we implement software.” Further along the maturity line, a company’s services begin to be a differentiator and provide a competitive advantage in the marketplace. This leaves us with the final “grown-up” stage where services is a growth engine that leads customers through transformation resulting in expansion and growth of product and service revenue.
“There is an inflection point where services need to turn a profit and be a healthy well run business within a business. If you aren’t there today… someday that day will come. Your north star within professional services from a financial perspective will shift a little bit and you have to do a lot of things early in your journey to be ready for that inflection point. One of the most effective ways to navigate that journey is to use a maturity model.”
Rob Niehaus
Senior VP of professional services
iCIMS
THE EVOLUTION OF THE PROFESSIONAL SERVICES MATURITY MODEL
A hallmark of the Professional Services Maturity Benchmark is the continuous evolution of the Professional Services Maturity Model. Initially introduced in 2008, the model has been enriched over time through the collective experiences of the organizations that have adopted it.
As organizations evolve, so does the maturity model. It adapts to new industry trends, emerging technologies, and changing client expectations. This dynamic nature ensures that the benchmark remains relevant and continues to guide organizations effectively, even in the face of a rapidly transforming business landscape.
WHY YOU SHOULD TRY TO UNDERSTAND YOUR PROFESSIONAL SERVICES MATURITY
In the realm of professional services, navigating the complexities of the industry requires a nuanced understanding of the pivotal concept of professional services maturity. This section delves into the profound significance of professional services maturity, unraveling its crucial role in shaping organizational success, refining operations, and setting a benchmark for continual advancement.
Visibility into Critical Business Processes
One of the primary reasons why professional services maturity is crucial lies in its ability to provide visibility into critical business processes. The Professional Services Maturity Benchmark offers a comprehensive view of how well an organization is managing its operations, from leadership strategies to client relationship management, talent acquisition, service execution, and financial operations.
This visibility is invaluable for organizations seeking to identify areas of strength and weakness. By understanding the nuances of their current performance, PSOs can make informed decisions on where to allocate resources, implement improvements, and streamline processes.
Strategic Decision-Making and Proactive Adaptation
The visibility afforded by professional services maturity goes beyond mere observation; it becomes a cornerstone for strategic decision-making and proactive adaptation. Armed with a comprehensive understanding of their operational landscape, professional service organizations can proactively anticipate challenges and capitalize on opportunities. This foresight enables leaders to make strategic decisions that align with the organization's goals and market demands.
Whether it involves refining leadership strategies, optimizing client relationships, or enhancing service execution, the insights derived from professional services maturity empower PSOs to navigate uncertainties with agility. In essence, this visibility becomes a guiding light, allowing organizations not only to respond effectively to current challenges but also to shape a resilient and forward-thinking path for future success.
Benchmarking for Improvement
The benchmarking aspect of professional services maturity is a powerful tool for organizations. It allows them to compare their performance against a well-established benchmark of peers. SPI Research's Professional Services Maturity Model, with its roots in the experiences of over 35,000 organizations, provides a reliable yardstick for measuring success.
By benchmarking against industry leaders, organizations gain insights into best practices and areas for improvement. This process is not just about competition but, more importantly, about collaboration within the industry. It fosters a culture of continuous learning and improvement, as organizations strive to reach and exceed the standards set by their peers.
UNDERSTANDING HOW PROFESSIONAL SERVICES MATURITY CAN HELP YOUR BUSINESS
Professional services maturity is not just a theoretical concept; it translates into tangible strategic advantages for organizations. Let's delve into the key pillars of professional services maturity and understand how each contributes to the overall success of a PSO.
Leadership
Effective leadership is the cornerstone of professional services maturity. Leaders play a pivotal role in providing a clear and compelling strategy that unifies the organization's focus and action. The maturity model guides organizations in evaluating their leadership effectiveness, enabling them to refine their strategic approach and provide direction that resonates throughout the organization.
Client Relationships
Client relationships are the lifeblood of any professional service organization. The maturity model concentrates on the effectiveness of sales, marketing, and partner relationship development. By assessing and improving client relationship management, organizations can enhance customer satisfaction, loyalty, and ultimately, their bottom line.
Talent
In a service-driven industry, people are the core asset. Talent acquisition, hiring, compensation, and retention are crucial components of professional services maturity. Organizations need to attract and retain the best talent to deliver exceptional services. The maturity model provides insights into optimizing these processes, ensuring that organizations build and maintain a high-performing workforce.
Service Execution
The ability to execute services effectively is a key determinant of success. The maturity model details all aspects of project delivery, from planning through resource management, project management, delivery methods and tools, time and expense capture, to collaboration. By optimizing service execution, organizations can enhance project outcomes and client satisfaction.
Finance and Operations
Sound financial management is essential for the sustainability of any business. The maturity model considers the management of all financial information, including revenue, margin, billing, and collections. By improving financial and operational processes, organizations can achieve better profitability and long-term stability.
PRECURSIVE MATURITY MODEL BREAKDOWN
LEVEL 1 - IMPROVISED
Success hinges on the proficiency of individuals rather than established methodologies. The team lacks a well-defined strategy, resulting in excessive time devoted to troubleshooting. The team's processes and tools appear makeshift and pieced together without a coherent structure.
Vision: Dependent on services as a support mechanism for achieving product-market fit
Commercial: Siloed sales and services with deals completed without seamless collaboration
Resource Management: An ad-hoc methodology, with the aim of being a jack of all trades
Services Execution: Startup procedures lack a consistent and standardized project delivery process
Finance & Operations: Tracking performance becomes challenging due to ad-hoc financial management
LEVEL 2 - DEFINED
Early processes are established for managing resources and projects, with the team implementing its first iteration of services methodology. This enables the team to initiate service delivery in a more consistent and coordinated fashion, establishing the groundwork for future growth and success.
Vision: There is a heavy focus on technical implementation
Commercial: Defined handoffs promote partnership
Resource Management: Foundational processes in place for managing people and projects
Service Executions: Initial methodology allows for tracking delivery duration
Finance & Operations: Early stage financial improvements and fiscal discipline
LEVEL 3 - REPEATABLE
Concise processes and frameworks are now in place to enhance collaboration and coordination with the sales team. This is complemented by a clearly articulated vision and strategy for the team's services, coupled with the adoption of a Professional Services Automation (PSA) solution to ensure visibility and control over operations. Consequently, the team is well-prepared to consistently deliver top-notch services to its customers.
Vision: Strategy initiated to identify opportunities across customer lifecycle
Commercial: Repeatable sales process, structure and collaboration
Resource Management: Automation promotes proactive approach that helps forecasting
Services Execution: Repeatable delivery begins to drive faster, consistent delivery
Finance & Operations: More accountability and financial control due to standardization
LEVEL 4 - GROWTH
The organization has implemented enduring operational processes, placing a significant emphasis on continual enhancement. Through the seamless integration of the PSA solution with the team's CRM and financial systems, precise revenue forecasting based on delivery is achieved, offering a comprehensive view and control over pivotal metrics to propel growth. This empowers the team to consistently provide top-tier services in a financially viable manner.
Vision: Success-led strategy with strong, sustainable operational process
Commercial: Prescriptive methodology accelerates product and PS growth
Resource Management: Insight-based method with optimized capacity planning
Services Execution: Outcomes-based engagements accelerating time-to-value
Finance & Operations: Accurate forecasting and recognition of revenue and margin
LEVEL 5 - WORLD CLASS
Robust and enduring operational processes are firmly established, coupled with a dedication to innovation and operational excellence. Recognized as a trusted advisor at the highest echelons, the team excels in world-class resource management and project coordination practices. With a highly effective Project Management Office (PMO) and a seamlessly integrated approach to services execution, the team achieves predictable revenue and consistently delivers high-quality services to its customers while upholding robust profit margins.
Vision: Clear vision combining world class culture, robust operating model that fosters innovation
Commercial: PS is a trusted advisor by customers and sales anchored around thought leadership
Resource Management: Intelligent resource management function underpinned by analytics
Services Execution: Innovation is generated across project and consumption-based services architecture
Finance & Operations: Predictable revenue and high profit margins helps fund future investments
WHAT NEXT?
The importance of professional services maturity cannot be overstated. It is the compass that guides organizations through the dynamic landscape of the professional service industry. By leveraging the insights provided by the Professional Services Maturity Benchmark, organizations can assess their current standing, benchmark against industry peers, and strategically plan for continuous improvement.
Professional services maturity is not just a theoretical framework; it is a practical roadmap to success. As organizations embrace the principles of leadership, client relationships, talent management, service execution, and sound financial operations, they unlock the potential for sustained growth, client satisfaction, and industry leadership.
Looking for more? Sign up to our webinar, 'The Anatomy of World Class Services in 2024' on the 21st February. Take a look below at the key topics we will cover:
Improving alignment with Sales with well designed Services offerings
Intelligent organization design and the must-have roles in Professional Services
Lessons learned in scaling PS Revenue from $30M - $150M
We can't wait to see you there!
