A question from the Quote to Cash Webinar: why isn’t Excel a real PSA?
My favorite viewer question from our popular Thursday, March 3rd webinar on the Quote to Cash process at Professional Services firms was about the Excel files that I provided for the hands-on labs. The viewer asked about my assertion that Excel is not a real Professional Services Automation tool. After all, their new firm had been using Excel for six months and had not seen any issues.
Many small Professional Services Organizations (PSO) get started with Excel because it looks like a perfectly fine accounting system. However, the problems of using it instead of a good PSA quickly come clear as soon as there’s a second person who needs to use it.
For example, let’s say you chose to use the Excel workbook from the first lab on Thursday night. Technically, you can track clients, opportunities, bookings, billings, and resources. To make matters more interesting, your PSO has three partners, less than a dozen staff, and an accountant who handles accounts payable and accounts receivable.
Excel is not a real database, even if you put it on SharePoint or DropBox. This means that only one person can have the file open at a time. If one of your other two partners wants to schedule an engagement or check resource availability, they cannot. This forces you to have a centralized resource allocation model, which isn’t too onerous unless someone takes holiday.
These limitations with Excel become more apparent at the end of a month. At the end of each month, your accountant needs to open the books to produce billing statements for customers. During that time, the accountant will be editing the books. As such, this means that no one else at your PSO can schedule an engagement or update a timesheet – because the Excel file is a single-user system. If your end of month close-out process takes three days, that is three days that you cannot record new bookings of professional services opportunities or enter time sheet data on the Billings tab. This problem only gets worse as your firm becomes more successful.
There is also no real auditing in place. A partner who opens the file can intentionally delete, modify, or add data to the file. This means that an accidental edit can produce a cash-flow issue if someone accidentally deletes time sheet data or expense data. That risk should not be considered acceptable for any PSO that’s hoping to grow.
Finally, Excel does not provide a meaningful amount of automation. Your PSO can use it to record time sheets manually and to assign resources to accounts by hand, but there’s no function to remind staff to file timesheets at the end of a reporting period. There’s no function to reschedule personnel automatically when a client proposes a schedule change. There’s no quick way to find a signed copy of a Statement of Work document. There’s certainly no dashboard of Key Performance Indicators that your CFO can glance at to view the financial health of your PSO. While you could theoretically build all of that in Excel, it is a pointless exercise. There are multiple software packages and cloud-based services that provide all of this functionality, instead of having to build and support it yourself as non-billable work.
Our upcoming April session will cover scheduling engagements, which will further highlight the benefits of having process automation at your PSO.