professional services automation software
October 15, 2018

What is Professional Services Automation (PSA) Software and Why Should You Care?

By Scott Duehlmeier | Senior Communication Manager


Some things defy classification. Take the platypus. It’s furry like a mammal but lays eggs like a bird. It has legs on its sides like a reptile, rather than beneath the body like most mammals. It’s semiaquatic like an otter or hippopotamus but also venomous—an extremely uncommon mammalian trait. So how exactly should the platypus be categorized? As a mammal—with a few asterisks attached.

In the software world, as in the animal kingdom, taxonomy isn’t always as straightforward as one would hope. There are some solutions that fit neatly within an existing software class. There are others (like the platypus) that occupy several overlapping categories at once. There are even a few trailblazers that create brand new categories, which others will eventually attempt to occupy.

Still, classifications are immensely useful for helping users make sense of what’s out there and what will be best suited to their needs. Workfront, for example, competes in all of the following categories, each with a few asterisks attached:

The first four categories will probably be familiar to regular readers of the Workfront blog, but what about the fifth? What is professional services automation (PSA) and why should you care about it? Read on for everything you ever wanted to know about PSA as a category—and more.

What is Professional Services Automation Software?

In a nutshell, PSA software brings project management, resource planning, collaboration tools, business intelligence, and other vital business functions together under one software umbrella, specifically for professional-services types (consultants, lawyers, marketing account managers, etc.) who conduct business on a client-project level.

G2 Crowd, a software review company, goes a few steps further in its definition:

“Professional services automation (PSA) software provides companies in professional services with project management and resource allocation tools for client projects. PSA systems are used to bring transparency to the processes of a project including time tracking, expense management, billing, invoicing, and resource and labor allocation. … PSA software gives insight into the business processes of project and resource management to then improve efficiency, productivity, and profitability of the project operations in place.”

A PSA commonly centralizes all of the following functions into a single system:

  • Project management and documentation
  • Resource management and labor utilization
  • Document management and retrieval
  • Team communication and collaboration
  • Calendar management
  • Accounting, billing, and invoicing
  • Time and expense tracking
  • Client interface/access
  • Software integrations (CRM, accounting, payroll, etc.)

How is Professional Services Automation (PSA) different from Enterprise Resource Planning (ERP)?

The distinctions aren’t as intuitive as you’d think, absent any previous experience with either acronym. While the word “resource” may be encapsulated within the ERP acronym, a PSA is actually better suited to managing resources like staff and contractor time. Yuwan Effendi, CEO of kpi-insight consulting, said it best in a piece for Cambridge Network:

“If I had to make my elevator pitch on the difference between ERP and PSA it would probably be something like this: ERP software is designed for product based businesses, PSA software is designed for project based businesses. … With ERP the tangible assets are one of the main aspects that your system tracks and reports on. With PSA it is the intangible assets—your staff, consultants, researchers, etc.—that are the main focus.”

In fact, PSA software is also sometimes referred to as “Project ERP” or “ERP for professional services organizations”—a comparison that will make the most sense for those with previous familiarity with ERP as a software class.

Who Needs Professional Services Automation (PSA) Software?

Any professional services organization that delivers billable work and would like to streamline processes and increase visibility into cost, utilization, and profit margins would benefit from a well-implemented PSA solution. This includes lawyers, auditors, IT consultants, marketing teams, business consultants, engineers, architects, and more.

A recent end-user survey conducted by SPI Research shared a return on investment (ROI) model for an average 172-person professional services firm. The study found that over a five-year period, a firm could expect to invest just under $200,000 in software and implementation costs, while realizing nearly $23 million in increased revenue and reduced costs. PSA solutions are able to deliver these results by driving efficiencies in three key areas:

  1. More efficient and effective project management
  2. Improved utilization rates and resource optimization
  3. Better reporting and increased visibility to increase margins

Sounds like a slam dunk. So why isn’t every law firm, creative agency, and construction company out there taking advantage of professional services automation? It’s a good question. According to our most recent State of Work survey, a mere 23% of enterprise workers today are using a system that “combines project management, intelligent work automation and in-context collaboration to empower teams to do the right work and their best work faster”—a definition that would certainly apply to the standard PSA suite of tools. Meanwhile, 51% of respondents said they would like to use such a solution.

In a world of near-constant digital disruption, a modern worker’s only hope of keeping pace is to rely on digital tools that are designed for the job. Yet, while almost 3 in 5 enterprise workers say their organization is going through a digital transformation, just under half say that executives aren’t on board with their requests for better tools to manage their work.

Who Might Not Benefit from PSA Software?

Just like many software solutions defy categorization, so do many businesses themselves. Not every organization fits neatly into the “service organization” category (meaning a PSA applies) or the “project-based business” classification (meaning an ERP would be best). Some organizations have a foot in both camps, which means much of their work could fall through the cracks of either system.

Furthermore, both PSA and ERP solutions work best for top-down planning and the management of defined projects. But not all work done by individuals and organizations fits into the “project” box, with defined objects and clear start- and end-points. What about the ad-hoc assignments, ongoing expectations, and cross-functional initiatives that tend to fill up the majority of our time at work? (Our State of Work report reveals that we’re spending just 40% of our time on primary job duties and project work.)

Modern workers need the ability to manage the complete DNA of work—not just projects—in a world where more and more teams are dispersed, the nature of work is changing, and the Hollywood model of work is taking center stage.

Why Modern Work Management Makes Sense

Allianz Global Assistance, a global leader in consumer specialty insurance, started using a modern work management solution (Workfront) at first as a creative services ticket manager. “It allowed us to make requests for creative service work,” said Mary Ann Erickson, workflow systems engineer at Allianz, “and then we rolled it out to compliance management, and now we’ve rolled it out to almost all of our market management team and our product provider implementations team.” A couple of more teams will be coming on board before the end of the year.

Note that what Allianz started using the Workfront solution for (professional services ticketing) could have been accomplished by a less fully featured PSA software. But they quickly took advantage of more and more functionality as they brought in additional teams.

“I love the ability to have automation—the system helping us to know what we need to be working on vs. us having to scroll through pages and pages of email and go searching for it,” Erickson continued. “Because that gets to be very cumbersome and often very confusing.”

And the effects went far beyond the streamlining of work processes and task management. It transformed the business itself. “We’ve gone from a request-response sort of scenario to now being more of a solution-provider scenario,” Erickson says. “So, Workfront has allowed us the opportunity to get away from ‘place an order and we’ll give you a delivery’ to ‘let us show you all the things that we have available to you.”

Lessons from the Duck-Billed Platypus

Yes, classifications are useful, even for ambiguous, semi-aquatic animals in Australia, and even for modern software solutions that are designed to simplify and streamline work in the digital age. Not every solution—or living creature—will fit neatly within pre-defined boundaries. But that’s okay, because not every business can be so easily categorized either.

What today’s organizations need is a robust suite of tools that centralizes multiple systems into one intuitive solution, that can scale with them as they evolve, and that can handle the complete DNA of work, in all of its many iterations. Professional services automation fills one essential niche in this landscape, while enterprise resource planning fills another. But modern work management solutions, like the duck-billed platypus, manage to simultaneously fill and transcend multiple categories. Tools like Workfront encapsulate task management, project management, and all of the other work modern workers do, while also unifying individuals, teams, and departments wherever in the world they may be—even Australia.

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