Tips to Keep the Consulting Bench Profitable in Your Firm
May 24, 2018
Thinking seriously about adding a lucrative consulting arm to your accounting firm? One of the biggest challenges is making sure you have enough work to fill your billable hours and that each job is consistently profitable.
Capacity management is a bugbear for firms managing compliance work. Even the most sophisticated cloud accounting firms tend to resort to ye olde spreadsheet to work out who is doing what and when. Adding more highly paid staff to your bench makes this an even more important skill to master.
Mavenlink is an app designed for consulting practices of every guise. CEO Ray Grainger was in Australia recently to launch the company’s first local office, in Melbourne. The company has 2,500 customers globally and 80 in Australia, including a Big Four accounting firm which is implementing Mavenlink in its consulting practice.
I asked Grainger why Mavenlink was worth adding to a firm’s back office tools.
Digital First: What’s your background in professional services? How did you get involved with Mavenlink?
Grainger: I very much understand how firms who do compliance work naturally also work in the consulting world. When I started out of college I joined Arthur Andersen, then we created Anderson Consulting and from that Accenture. We created Accenture to sue Arthur Andersen for competing with us; they had said they wouldn’t compete but then they did.
Accountants know where the improvements can happen in a business and how to advise them.
Digital First: There are a number of tools that plan your workflow and schedule staff. What makes Mavenlink stand out?
Grainger: Mavenlink started nine years ago as a vertical saas product specifically for the professional services industry. It was made for project based businesses that also did consulting and technology services too such as digital agencies, engineering and architecture firms.
If you look at the breadth of the business processes that we enable we would site between a CRM and a general accounting system.
Mavenlink does all the processes to run a services business, from estimating the work to all the business intelligence and resource planning, which is a strength for us. It can manage staff across geographies, whether in-house or sub-contractors, and optimise the delivery and profitability of each job.
Digital First: Mavenlink seems a fair bit more expensive than other scheduling tools. Why is that?
Grainger: When people tell us, “We think your stuff is great and expensive,” the first thing I say is, “Compared to what?” The most thoughtful answer is, “Compared to our business case”. In nearly every case it’s a gross margin expansion exercise. They are trying to make their people more profitable.
We do that in spades, and you do that by having the most effective allocation of resources at the right time and place. All the project planning, time and expense and billing and statusing, all those things have to inform the entire planning and delivery cycle for the business. Mavenlink would move more levers than any other product in the market.
Digital First: But what about Wrike? It includes budgeting and capacity planning.
Grainger: Wrike is a task management system. Mavenlink is a business management system for the professional services industry. Wrike doesn’t have a multi-currency rate card, pricing controls, or profitability by business unit. So you would have to couple Wrike with a project management and business intelligence too.
Gantt charts give you schedule control but not cost and margin control. In professional services the profitability construct is on the fee base and cost base of the business. Mavenlink can give every single person their own P&L.
Digital First: How does the business intelligence work?
Grainger: When you’re managing a services business, what you’re wanting to do is to have the right amount of staff. It’s very expensive to have people in your company when they’re not billable to clients. Every single hour that you don’t bill you can't get it back, it’s perishable. You need to know where they are, their utilisation, which clients they have now and in the future, plan that over short and long term horizons, to know if I have the right staff at the right time. Business intelligence does all that.
Ultimately this is about supply and demand. Do I have the right supply to deliver on the demand? How profitable am I with every employee now and in the future, and what projects are driving that profitability? And that goes all the way up to groups, divisions and geographies.
Then you can make business decisions on the workforce mix and whether I have enough demand to support the staff I have. On a revenue basis I can look at the status of when I have revenue hit the books, and pull it in ahead of the quarter by accelerating the project? Every metric and lever is managed by our business intelligence tools.
Digital First: Mavenlink sounds complicated. It sounds like you would need a degree to use it.
Grainger: Every person in a services firm would understand it. It doesn’t matter whether you’re an engineering firm or an accounting firm. It answers the most important question: Are my people staffed on billable work and are they the right people to give me the right margin that I expect to make on this work?
The complexity is pulling it all together because the data resides in all these different systems. If I’m only measuring task activity in Wrike, all I understand is the schedule. It doesn’t tell me whether I have the right people on the right work. Can I rate my staff? Does that rating go into the planner to staff them for the next project?
All these systems are disparate and it’s a distraction from knowing the profitability.
Digital First: How do most firms do their capacity planning?
Grainger: Most firms do their resource planning in spreadsheets because all the operational data is sitting in different systems.. They may have 100 people they need to be responsible for. Accounting work is always up for bid to the next firm and the margins are always being squeezed, so resource planning is always fundamental to these firms.
Digital First: Will you connect Mavenlink to practice management software?
Grainger: We usually replace the practice management software. We can link to different tools for certain activities and tasks in the execution of a project. Recording all the time activity in MavenLink allows you to have a very simple and low transaction integration. MavenLink is an operational system of record that integrates to the financial system of record, for example Xero and QBO.
On the CRM side we would take any of the demand triggers – say, if I have an opportunity for a new client – and once it gets to a certain stage it would trigger an event in Mavenlink to look at the mix of staff and subcontractors, and how profitable that deal will be.
If a firm has a templated set of services offerings in their practice management system then you can push that into Mavenlink and provide a very broad estimating, resourcing and collaborating capability. Then Mavenlink becomes the centre hub attached to the accounting system. We would augment the practice management software and then provide all the execution data that would inform who is available, is this deal more profitable, and do I need a subcontractor?
With the larger firms there’s a change management component; it’s too much to bite off at once. They put Mavenlink in the middle. They often keep their timekeeping app and we provide the resource planning and business intelligence for planning.
Digital First: What are your marketing plans to grow clients in Australia?
Grainger: Prior to us creating an Australian office we had 80 customers here, split between Sydney and Melbourne. It was becoming challenging to support them from California. We had enough presence here to believe we understood the market potential and size here.
There are a number of things that attracted us. It’s a rich target market in the service industry. From accounting to management consulting and digital agencies. The service industry is more than half the GDP of Melbourne. We are targeting businesses with anywhere from 50 to several 1000 people.
That was the initial reason. From a marketing standpoint we have very significant customers like Taylor's (a civil engineering firm) and a couple in the 200-300 person range. We are leveraging their success with referrals.
Digital First: Which apps do you integrate with?
Grainger: We have a very strong relationship with Xero, NetSuite, Intacct Sage and Microsoft – Microsoft is very, very strong for us. At the higher end we integrate with SAP and Oracle. On front end, we connect to CRMs such as Microsoft Dynamics and Salesforce. Also Jira integrations – we have several hundred software developers. Other integrations (worth mentioning include) Concur, Expensify and ZenDesk.
Digital First: What is your most successful market development strategy in the USA and will it work here?
Grainger: We have a pretty significant presence in software advisory services like G2Crowd – an online advisory service where software companies are ranked through client ratings. We are highly ranked in that – prospective clients do a lot of searches. We would get hundreds of leads a month from those services and we also have an outbound gen team - we have a lot of articles and research that we send to prospective clients. That provides a good flow of demand into the company as well.
Digital First: Who is your closest competitor?
Grainger: Probably FinancialForce.com, which is built on the Force.com platform. We are the open systems play, but with FinancialForce.com you have to add a business intelligence app. They would be a principal competitor.
Also NetSuite’s OpenAir, even though we are a very large integration partner with NetSuite.