Many agencies are discovering that their creativity is being stifled by their business software. A typical agency still runs about ten different business applications, creating islands of data that’s hard to share across departments. Excel, everyone’s favorite reporting tool, leaves valuable information scattered across all departments. Meanwhile, the IT team is constantly working to integrate all this disparate data to try to give leadership a view into what happened in just the last month. That leaves finance resorting to a myriad of manual processes and calculations just to be able to close the books each month. No one has bandwidth to spend on strategic initiatives because of the burden of simply maintaining what they have in place.
Indeed, many agencies are burdened with systems that make it near impossible to embrace the changing business environment of today. Simple reports like client profitability, budget vs. actuals or rolling forecasts can take weeks to generate and even then the resulting report is stale by the time it’s ready and can have errors. Eventually, executives no longer trust these reports. They need current information that’s visually appealing, easy to drill into and actionable.
The inherent complexities in managing multiple systems causes delays in closing the books, which impacts critical business decisions like hiring and capital expenses planning. It also limits visibility and ultimately erodes project margins. Additionally, many agencies struggle with multiple billing rules for a single project that need to be tracked. Suddenly, they’re over budget midway through a project and need to redo the revenue recognition and automate the schedules accordingly. Unfortunately, managing the custom schedules as one offs is a HUGE problem especially when there are hundreds of inflight projects. That can delay closing the books for days, and the impact of getting it wrong can be significant.
Indeed, getting bills out and payments in without delays can be a struggle for many agencies. All the costs associated with project billing including time (employee, contractors), 3rd party services, physical products and more have to be managed and billed to the client in a timely way. Vendors expect to get paid soon after they deliver, but clients take their time sending payments to the agencies. To get around the cash management issues, its important clients know what the impact of a delayed payment will be and the escalation process around this should be automated. Many agencies circumvent a part of this problem by using a retainer model to draw down from each year. That reduces client objections to an extent but the problems don’t go away. With the newer business models in play, retainers are getting obsolete.
The client management teams require visibility into the bench strength to position cross-sell, up-sells accordingly. They need visibility into what’s' sold in the past and position the offerings accordingly that maximizes client success and their commissions. Having an integrated CRM system that helps sales teams work in unison with the project and resource management teams is a critical part of improving project profitability, staffing optimally.
To stay profitable, agency executives should actively plan for sustained creativity and growth. They can do that by reducing operational costs via automation and reporting, sharing resources across departments/offices through better reporting, reducing the reliance on Excel Hell, getting real-time visibility into project profitability, and simplifying their time sheets & expense management processes.