Tracking PS Profitability

Bo Dimuccio and the TSIA PS Advisory Board have been discussing the business model break points PS organizations actually use to track the profitability of the business. There are four major break points that a PS organization “could” be tracking to understand the health of the business:

  1. Project Margin: Track a margin contribution that is based on PS revenues – the direct costs associated to deliver projects.
  2. Delivery Margin: Track a margin contribution that is based on PS revenues  – the total cost of
    billable PS resources in the region. This calculation takes into account all of the unbilled activities incurred by billable resources within the region.
  3. Field Margin: Track a margin contribution that is based on PS revenues  –  (the total cost of billable PS resources in the region and the cost of non-billable PS headcount in the region). This calculation is taking account for any non-billable operational expenses being incurred within a region.
  4. PS Operating Income: Our margin contribution is based on a true Net OI calculation that includes delivery costs,  non-billable costs within the region and non-billable global operating expenses directly related to the PS business.

So here is the question of the day. What break points does your embedded Professional Services organization track?

 

Advertisements

One Response to “Tracking PS Profitability”

  1. Bo Di Muccio Says:

    I look forward to seeing the results of this poll, Thomas. Your readers should know that we’ll be fielding a full-blown survey of the TSIA PS members next month on this very topic, as well as on the topic of how Cloud is impacting PS organizational and business models. Should be really interesting!

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s


%d bloggers like this: