An intense concentration on specific vertical business processes must be a business priority for Professional Service organizations, according to industry analysts at SPI Research. Competition and off-shoring have reduced horizontally-focused Professional Service firms to little more than staff augmentation providers with low margins and limited client loyalty.

According to SPI Research’s “The 2010 Professional Services Maturity Model Benchmark” report the top performers concentrated on business process optimization in narrow and highly specialized vertical industries. Of the 225 professional service organizations that participated in the research, top performers addressed specific industry issues such as retail price optimization; commercial real-estate portfolio management and call center optimization. Other top-performing firms focused on recession-resilient industries: not-for-profit fund raising; education learning systems and aerospace and defense.

Only one firm in this year’s best-of-the-best was a large global systems integrator.

The benchmark covers six professional service segments: hardware and networking; software and software as a service (SaaS); systems integration; managed services and management consulting. The Top 15 firms significantly outperformed their peers and the benchmark average with almost double the revenue growth and 30% higher net profit.

Top 15 Professional Service Organizations
Measurement		Top 15 Firms			Benchmark Average			Advantage
Annual Revenue Growth		6.0%			3.4%			76%
EBITDA		34.5%			26.6%			30%
Annual Revenue per consultant		$262K			$201K			30%
Annual Billable Hours per person		1,685			1,362			24%
On-time projects		92%			78%			18%
Reference clients		80%			73%			10%

Source: Service Performance Insight, 2010

About this study

The SPI Research report, “The 2010 Professional Services Maturity Model Benchmark”, identifies the growing trend towards less on-site project delivery as a significant productivity accelerator with almost 40% of all billable hours now delivered remotely. Real-time information visibility is a key enabler: best in class professional service organizations have instantaneous control over all facets of their operations, and deploy consistent processes for the management of projects and resources. They establish their differentiation through effective sales and marketing campaigns, which translate into higher bid-to-win ratios and a lower level of discounting.

About SPI Research

Service Performance Insight focuses on the global service economy. We provide a unique depth of operating experience combined with unsurpassed analytic capability. In our consulting engagements, we help our clients ignite performance by objectively assessing strengths and weaknesses to develop a full-faceted improvement plan, with measurable time-bound objectives. SPI Research provides an informed and actionable third-party perspective for service executives and technology providers. Our market research and reporting forms the context in which both buyers and sellers of information technology-based solutions maximize the effectiveness of solution development, selection, deployment and use.

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