The services space in this economy – Major research findings
Dave Hofferberth at SPI Research is a good friend and colleague. He covered the services marketplace forever at Aberdeen and is doing even cooler things at SPI Research.
Dave was super nice to shoot me over a copy of their latest mega-opus research report: 2010 Professional Services Maturity Model Benchmark. I’ve read prior year’s reports and noticed a lot of different material and conclusions in this year’s report.
I got Dave on the phone last week. We had a great conversation and I got a chance to hit him with these questions. As interviews go, this recap’s pretty good as there’s lots of content below:
“Dave, I just read your 2010 Professional Services Maturity Model Benchmark. It’s quite a comprehensive compendium of stats and facts re: service organizations. I noticed you’ve added sections on culture and other areas. What were some of the newest additions to your benchmark?”
We’ve added several interesting chapters on “What the Leaders Do” profiling the Top 15 best-of-the-best PS organizations; a chapter on “Going Global from the Get Go” showing the growing trend for PS organizations of all types and sizes to use a global workforce from inception and a chapter on “Service Transformation” showcasing our experience in helping service and project-oriented organizations build and execute business improvement initiatives. We’ve also augmented our coverage of software applications and developed detailed profit and loss statements by organization type and size.
“What were some of the bigger surprises you learned this time around?”
We were pleasantly surprised by the extremely high net profit margins leading firms were able to achieve despite lower revenue growth due to the recession. We were also surprised at the frugality, ie extremely low costs for facilities and management overhead posted by the leaders; many top-performing firms are operated “virtually” with almost no brick and mortar facilities and almost all members of the organization are billable. Another big surprise was that almost all the top performers focused intently on specific vertical markets and business process optimization. Biggest losers were broadly oriented horizontal organizations due to skill and price commoditization. Bill rates have been relatively stagnant for almost 10 years so PS organizations are demanding and getting more and more productivity from their employees every year, remote service delivery has been a big catalyst for higher productivity.
“I noticed you started the report with some observations regarding the economy. Can you elaborate on some of the short-term and long-term changes the economy will push onto service organizations?” …