Achieving Services Performance Excellence

1. Achieving Services Performance Excellence Achieving Services Performance Excellence March 5, 2008Presented by:R. David Hofferberth, P.E.Managing Director, SPI Research

2. Over a Decade of Analyst Experience • Benchmark data on 52 professional services providers • Five core “pillars” of performance improvement • Strategic improvements across five levels organizational of maturity

3. Market Drivers & Challenges Market Drivers Challenges - External • Expand services • Understand client needs • Improve pricing • Deliver value • Improve client satisfaction Challenges - Internal • Improve sales capabilities • Enhance staffing • Raise utilization • Increase speed & quality • Manage compliance • Globalization (opportunities, growth, competition, demographics) • Regulation • Mergers & Acquisitions

4. Common Issues Facing Services Orgs. • What types of work should we be doing (or selling)? • What should our workforce look like? • What additional skills do we need? • How can we work more efficiently? • How can we introduce consistency, standardization and automation? • How can we best utilize capital? • How can we demonstrate value to the organization? • How can we improve quality and accuracy? • How can we best utilize our intellectual assets? • Especially, doing more with less?

5. Five Key Pillars of PSO Success • Vision & Strategy • Finance & Operations • Human Capital Alignment • Service Execution • Client Relationships PSOs will only succeed if they integrate and optimize all areas of organizational performance

6. Support Business Processes – SDL • Plan • Strategy, forecast, budget • Execute • Sell, staff, deliver, invoice • Close • Collect, reconcile, analyze

7. Visibility Throughout the SDL is Required • Collect • Reconcile • Report • Analyze • Reuse • Forecast • Budget • Hire • Train • Market • Sell • Create • Staff • Deliver • Invoice

8. Strengthen Human Capital • Forecast Future Needs with Confidence • Balance Services Supply & Demand • Hire Intelligently • Increase Training, Manage Compensation • Reduce Turnover, increase opportunities • Increase Billable Hours

9. Resource Supply & Demand Management Revenue • Marketing and sales campaigns, service mix, clients • Pricing, scope change, billable and non-billable hours • Utilization, revenue leakage, reporting Demand — Services Supply — Resources • Innovation • Service development • Mktg. & Sales campaigns • Relationship management • Recruiting • Training, methodologies • Utilization • Retention Costs • Service development investment, tools and equipt. • billable and non-billable resources • Project cost management, Earned Value

10. Resource Selection Local: Low/no travel costs, local presence and perhaps client knowledge and experience, average rates for area National: Additional travel cost, similar language and currency, potentially higher billable rates International: Greater travel costs, potentially different languages, currencies and culture Outsourced: Potentially lower travel and overall costs, as well as different currencies and cultures.

11. Execute Projects Effectively • Continually manage hours and costs • Provide timely information to affected employees — update team members • Update project plans with impact analysis • How does it affect other projects [current, future] • Share information • Approve changes and expenditures

12. Resource Utilization Improvement • Survey results: 9.4% Improvement • From 59.68% to 69.03%

13. Project Delivery Improvements Utilization Survey results: 5.5% Improvement in the number of projects delivered on time

14. Optimize Financial Performance • Service Backlog Improvements • Increase Billable Hours • Raise Billable Rates • Invoice Accurately and Efficiently • Insure Compliance in Multiple Currencies

15. Follow the Money • Real-time Project Accounting • Employee (internal and external) • Administrative (allocate) • Time and Expense • Materials • Travel • Roll-up costs • Calculate Project Metrics • (EVA, ETC, remaining effort, percent complete, budget variance, profitability, etc.)

16. Revenue Leakage Reduction Project /Time Proj. 1 6 Proj. 2 3 Proj. 3 14 Proj. 4 7 Proj. 5 5 Project /Time Proj. 1 12 Proj. 2 2 Proj. 3 11 Proj. 4 6 Proj. 5 8 Project /Time Proj. 1 8 Proj. 2 6 Proj. 3 1 Proj. 4 10 Proj. 5 8 Project /Time Proj. 1 12 Proj. 2 3 Proj. 3 1 Proj. 4 8 Proj. 5 8 Project /Time Proj. 1 8 Proj. 2 6 Proj. 3 1 Proj. 4 10 Proj. 5 8 Project /Time Proj. 1 6 Proj. 2 7 Proj. 3 6 Proj. 4 3 Proj. 5 0 Project /Time Proj. 1 8 Proj. 1 6 Proj. 1 1 Proj. 1 10 Proj. 1 8 Project /Time Proj. 1 9 Proj. 2 6 Proj. 3 5 Proj. 4 5 Proj. 5 8 • Survey results: 3.1% Improvement • from 6.4% down to 3.3%

17. Days Sales Outstanding Reduction • Collect Time • Collect Expenses • Travel • Materials • Contractors • Prepare Invoice • Send to client • Receive Payment • Process • Accounting • Finance • Deposit • Receive & Process • Accept / Reject • Acct. / Fin. Approval • Prepare Payment • Send to PSO • Survey results: 5.7 days Improvement • from 66.4 down to 60.7

18. Improve Information Visibility • Many projects, no overall insight • Poor communication and collaboration • Solution “reinvention” • Information needs differ by role • Team Members • Project Managers • Resource Managers • Executives

19. Empower Decision Making Survey results: Multiple Factors

20. Recommendations • Review organizational processes • Benchmark performance • Focus on key improvement initiatives • Human capital • Business processes in project/service execution • Financial management • Improve Information Visibility Close Plan Execute Service Delivery Lifecycle

21. Contact Information Dave Hofferberth SPI Research 6260 Winter Hazel Drive Liberty Township, OH 45044 U.S.A. (513)759-5443 Office david.hofferberth@spiresearch.com www.spiresearch.com 21