Introduction
In response to market demand, a relatively new software space aimed at professional services organizations has emerged as a viable software category. Viewed as "Enterprise Resource Planning for People," this class of software is continuously redefining its parameters. Although professional services organizations were initially targeted by niche vendors, in the last couple of years, we have seen the entrance of major enterprise resource planning (ERP) vendors staking their place with extended functionality and the acquisition of smaller players. In turn, vendors are redefining their position in this dynamic landscape. As a result, service organizations are inundated with mixed messages and changing acronyms, such as professional services automation (PSA) and portfolio project management (PPM), making it difficult for them to navigate this new marketplace.
The following article provides a general overview of PSA and its historical development. Please note in this article the terms professional services automation (PSA) and portfolio project management (PPM) are used interchangeably.
PPM vendors tend to classify their solutions into two primary customer segments:
Vendors selling to internal IT departments traditionally target enterprise organizations that manage multiple portfolios across various business units. Returning to their original roots, many vendors recognize the enormous potential of portfolio management for IT departments. This avenue opens doors to many vertical markets outside professional services organizations. As technology becomes increasingly central to an organization's survival, solutions that can facilitate, streamline, and monitor IT governance are becoming a "must have" to large IT departments.
Vendors targeting the professional services market position themselves as cost efficient best-of-breed solutions that can easily adapt to the business models of small and medium business (SMB) service organizations. However, it is important to note that these vendors have jumped into the professional services space with varying expertise. Many of these vendors have competed in niche markets, such as time and billing or accounting, to differentiate themselves from their competitors. For most SMB professional services organizations it is crucial that the PPM vendor they select integrate with their existing systems. From an end user's perspective, best-of-breed vendors must be carefully evaluated by identifying their strengths and their relevance to a service organization's business model.
Every service organization is unique in its IT strategy. Managing multiple vendors and adopting the integrated solution approach both have their strengths and weaknesses. Best-of-breed solutions are strong in providing deep functionality for specific areas of business; however, they tend to be weak in providing seamless integration among different software packages. The murky waters of integration among different applications can range anywhere from basic flat file import/export functionality to real time live updating of data between two systems. Moreover, the detail of data transferred between applications can vary widely from vendor to vendor.
Single-vendor solutions cover all components of the service cycle; however, they can typically show signs of weaknesses in terms of their functionality. Similar to ERP systems, integrated solutions for professional services organizations can have difficulties addressing the core competencies of a particular industry or business model. Consequently, best-of-breed solutions will adapt better to the diverse requirements of SMB service organizations.
Identifying which components are core competencies in a service organization will impact the success of PPM software selection and implementation. Although most PPM vendors claim to provide all components of the service cycle, the depth of functionality in each area will usually depend on the origin of the vendor. In most cases, in order to stay competitive PPM vendors that once played in a niche market (dedicated to one of the above components) have already developed the best functionality in that area. For this reason, service organizations need to dig deep into a vendor's past when evaluating the best solution to meet their needs.
PPM vendors are still defining their space. Currently, service organizations are faced with a changing market conveying mixed messages. Separating the market messages from the functional capabilities of vendors will illuminate the strengths and weaknesses of PPM applications. Professional services organizations and internal IT departments need to identify their pain points and match the vendors with the strongest functionality to their weakest areas. To facilitate users in this process, future articles will evaluate the strengths and weaknesses of vendors in the context of the different components of the service cycle.