Metrics That Matter—Top KPIs for Professional Services Firms

Growing your business starts with a clear view of the future, and achieving your vision requires achieving small goals as you go. Key performance indicators (KPIs) provide a window into critical aspects of your business, set targets for teams to shoot for, deliver insights that improve decision-making, and help leaders monitor progress toward goals.

KPIs vary widely, so your professional services firm won’t have the same ones as the professional services firm down the street. But with hundreds of possible metrics, how do you know which ones are most valuable for your business?

Our professional services customers consider these metrics the most critical:

• Utilization. Best practices for monitoring your team’s utilization include three measurements: billable utilization, productive utilization, and chargeable utilization. This valuable KPI can boost profits and productivity by tracking the efficiency of time and resources with a combination of historical and forecasted data.
• Annual revenue per billable consultant. Everyone knows the importance of revenue, but fewer people realize the importance of revenue per billable consultant. Compare your total revenue generated to the number of consultants you have for a view of their effective billable output.
• Project profitability. Measure the financial impact of the individual projects that will significantly affect the bottom line and track how the financial gain or loss affects overall company goals. Project profitability uses profit and margin percentages to calculate the money made from a project, and monitoring project profitability is fundamental to understanding which projects are the most successful.
• Annual recurring revenue. Forecasting revenue is essential for business planning. Annual recurring revenue (ARR) is the estimation of your total revenue for the year based on your current month. It’s easily calculated by multiplying your current month’s revenue by twelve. ARR provides a quick measure of your growth trajectory and helps you assess your current status.
• Project overrun. Managing multiple projects makes it challenging to track the individual nuances of each project. But failing to manage project nuances can lead to overruns that kill profitability and sideline new projects. Measuring budgeted costs versus actual costs helps project managers adjust in real-time and re-evaluate how they’re allocating money. This metric is vital to ensure future projects launch on time.

SAP Business ByDesign KPI Data

With SAP Business ByDesign, setting and tracking valuable metrics to grow your business is easy. This powerful, cloud-based enterprise resource planning (ERP) solution enables small and midsized companies to create reports, extract KPI data, and filter dashboard views with customizable settings, giving leaders tools for making informed decisions and tracking performance anytime, anywhere.

Download the SAP Business ByDesign info kit to learn how this enterprise resource planning (ERP) solution helps businesses track and measure hundreds of metrics with one powerful solution.