Name: A Mid-Year Check-In: Is Your Consulting Firm Optimized and Operating at Its Full Potential?
Uploaded: 2026-07-09T16:30:49.731Z
Duration: 56 min 28 s
Description: A Mid-Year Check-In: Is Your Consulting Firm Optimized and Operating at Its Full Potential?

Transcript for "A Mid-Year Check-In: Is Your Consulting Firm Optimized and Operating at Its Full Potential?": Hello, everyone. Thank you for joining us for today's webinar. A midyear check-in, is your consulting firm optimized and operating at its full potential? I'm Dan Souza from Dow Tech. And before we get started, here are a few quick housekeeping notes to ensure you have the best experience today. For the best viewing experience, please use Google Chrome or Firefox. Audio will stream through your computer. Make sure your volume is turned up. There is no dial in option. If you have a question, type it into the q and a box at any time during the presentation. We'll address as many as possible at the end of the event. Any unanswered questions, we'll follow-up with individually after the webinar. Resources, including today's presentation slides, are available in the document center at the top right of your screen. You'll receive an email with the on demand recording within twenty four hours after the webinar ends. And now I would like to introduce you to today's speaker, Dave Hofferberth, managing director of service performance insight. Dave, take it away. Thank you, Jen, and, thank you everyone for attending today's webinar. Hopefully, you can see my bright and cheery face. We'll get rid of that quickly. It's interesting. We're we're halfway through, 2026. Some of the things we expected to happen this year happened and some didn't happen. As as all of us know, it's always seems like something's going on. So it was just a good time to sit down and talk to all of you about what we're seeing, and and also the plans for additional research for you, going forward. My name's Dave Hofferberth. I've been with SPI. I founded SPI twenty plus years ago, and I was an analyst for about ten years prior to that. So I've covered the professional services market for for three decades now. Nineteen years ago, soon to be twenty, we announced the the SPI, professional services maturity model, or first maturity benchmark, that we've helped organizations use as a planning tool, a productivity improvement tool and so forth. Now we have over 50,000 firms that have viewed or used our research, in order to present to to improve organizational performance. So real quick today, I'll discuss a little bit about the benchmark for those of you that don't know about it. Talk about some of the market trends we've seen. Look at high performing organizations and what the reason I do that is to show you what the top 20% of professional services firms do versus the other 80%. The goal, of course, is for you to be in that top 20%. Discuss artificial intelligence, what's happening, how it's impacting our our market, and then the value of leveraging data and trying to elevate your organizational performance. And we'll summarize a little later then take questions and answers. So the first thing is the professional services maturity model. We break a professional services organization into five what we call pillars. Five organizational, aligned leaders. That's the CEO and his or her executive staff that creates strategy and determine, you know, where the where the organization is going. Obviously, communication, training, giving people confidence and so forth. The second is, client relations. That's your marketing and sales activities. How you go to market and sell professional services. Third is the talent pillar, which is your people. The most important part of a professional services firm. It's your biggest cost and it's how you make money. Then service execution, that's the delivery, planning, scheduling, staffing, and delivering of services. Very important is because that's really where you make profit in in a professional service organization. And then it's wrapped up in finance and operations. That's how you run the business. You count the beans. You understand profitability and and and see how you're doing at the end of the year. With that, we have five levels of maturity as we call them, ranging from level one, which we call initiated, which we also call heroic. And that's where your organization, they're working hard, but they're not they're not aligned probably as well as they could be. Three people are doing the same thing at the same time because you don't have business processes. You don't have as much structure. You're just working really hard. And it doesn't matter if you're a brand new organization or you've been around thirty years. It really doesn't matter. It's how how well you align the organization. As we, grow in maturity, we hit level four, and that's where your organization is really running at at a high level. And and that's wonderful. Level four is exceptional. That's where you become a high performing organization. Level five is that last 5% of the organizations that not only are doing well today and next week, but they built a system, a solution, the the processes that that are in place for the next five years to succeed. And again, only 5% of the organizations we survey hit that every year. And so what's the secret sauce? Well, in professional services, the secret sauce is people working together. It takes leadership, to to to drive the strategy, to tell marketing and sales what they're gonna do. And as a result of that, who do you hire? What skills? What costs? Where are they located? There's so many things in professional services. And then once you have the right people, you begin to deliver the professional services. If you do it well on time, on budget, with high levels of quality, You satisfy clients that makes you that'll make you grow in the future. You'll also make really significant project margins and overall profitability. So we all know that it's important for the organization to work together, communication in particular, but a lot of companies don't quite have this down. What's changed over the past few years, and let's say three now, is artificial intelligence is taking over. And, you know, there's a lot of ways to look at this. But what we are intrigued with is how organizations are using AI within their information infrastructure to to to to better understand how they're performing and and how they can improve. I mean, we've been doing a lot of projects in AI now for a few years, and we're fascinated with, how how how much intelligence we're getting out in the changes organizations like yours are doing. As a matter of fact, we'll start our next our third annual AI in professional services study in about a week. And hopefully, you'll all participate because the the findings are will should be interesting. So with all of this, people say, yes. I understand, Dave. People, we need to work together. That makes sense. You know, all this. Well, here's where the rubber meets the road. These are, seven or eight of the top 160 key performance indicators that we track. And you can see that the second to top row and the bottom row are revenue increase and profitability. That's what a lot of executives look at, and that's wonderful. You'd like to grow at level five at 21%. You'd like to make 28% profitability. But but what you can see is that that 55%, in other words, the level one and level two organizations, actually had negative profitability last year. So that, you know, when over half the firms that we survey did not have a good year, that's not good for the industry. What we set every year and and, of course, it it fluctuates, but we like to see your organization grow at at least 10%, and we like to see your organization make at least 15% EBITDA or profit. In a lot of years, that happens. In the past two years, we haven't seen that, and we'll get into some of that here in this, conversation. So a couple of the trends I wanna wanna share with you. And these are the big ones that that firms like yours care about. We saw an improvement in 2025, revenue growth on time delivery and profitability. And that's great, but these are nowhere near what we would want for a firm like yours to do. So it was it was not a great year in 2025, but it was a little better than 2024. And then, of course, billable utilization, for for architects, engineers for these these billable, service organizations, independent billable service organizations, was at its lowest point in nineteen years of surveying. That's that's concerning, you know, whether you love billable utilization or not. That's the hours your people work or that your people bill and that's how you make money. So, again, some good news but some bad news. And what was interesting again in our in our research is the correlation of so many of these key performance indicators. For instance, this one has revenue growth versus profit. Firms that grow make more money. And it's not just a dollar per dollar value, it's a percent of EBITDA. So the goal for all of you is to grow. Again, we like to see you grow at at least 10% on an annual basis. And you could see back in 2021, that's post COVID, basically. You can see changes. So so, again, look at your own trends if you can do that to see where you fit in. Second, two other important KPIs are on time delivery and billable utilization. Again, they're highly correlated. When one go when when utilization goes down, on time delivery tends to go down. 2025 was a little different. But in general, like, you know, it's kind of obvious that that these these these KPIs do have a high degree of correlation within them. And and, again, I show you a survey. A lot of the data that we present is of the 509 firms that we survey. I won't go into details on this slide per se, but but you can see there's a difference between IT consultancies, management consultancies, and AE firms. You know, they grew at different levels. They have higher or lower levels of attrition. On time delivery is is different in a in a many of these organizations. And at the end of the day, project margin and profitability are different. And so if you take this slide deck, you know, this is a good slide to compare your organization if you're one of these three to the benchmark to better understand how you're performing relative to our target market. And so now I'll talk about high performing organizations for do we have a we don't have a poll question. I forgot. And and so this this, you know, probably somebody like me who's an engineer MBA never thought about it that much, but how important leadership is, to your organization. We can track all 160 key performance indicators, but perhaps none are more important than leadership. And so this table on the on the left shows you on a one to five scale, meaning one, you know, you're doing it. You're doing a poor job versus five. You're doing a very good job. Your employees, you know, are are well understood. Your vision, mission, and strategy, they have confidence in leadership. It's easy to get things done. You can see the high performers, you know, on a nine to 45, 45 being five for everything. You can see how much better they perform than the non performers, the the non high performers, that other 80%. Again, you look at these numbers, you go, okay. That that makes sense. Well, here's the leadership index, of course, is built off these numbers. And you could see coming out of COVID, you know, people were ready to get back to work. People were motivated. And he saw saw this leadership index at its highest level in a long time. But unfortunately, you know, the post COVID, the the a lot of things that have happened in the economy, you know, supply chain disruptions, wars, you know, all kinds of geopolitical tension, has has really lessened everyone's confidence in the organization, in the future of the organization and so forth. And so, you know, the one thing to take from this slide is look at those KPIs on the left and work with your employees to make sure you're doing as good of a job as you can do with that. Because the better you do at the leadership level, the better you'll do everywhere else in the organization. And so getting into our other pillars, client client relationships. And again, the purpose of this slide is to show you just how much better that top 20% of the organizations are. Now last year wasn't a great year, but the high performers somehow managed to grow at about 9.4% versus the rest of the organizations. You You can see the relative improvement of one versus the other. And, again, they're bill they're doing that because they're building pipeline, they're winning bids, and they're building backlog, and we'll get into a battle a little later. And they have less less of a discount, than than their peers. So, again, you look at these numbers and you go, how can we be more like these high performers and and exceed the numbers? And and I'm sure many of you do exceed the numbers here. But it's finding those ones where you don't do as well and trying to improve those. Likewise, with, with the talent pillar, what was interesting again, and we've done this nineteen years, is that attrition was lower for the non non high performers than the high performers. Now there's a lot of reasons that I could come up with such as, even even the best people and the best firms still probably weren't impressed with last year's results, and they thought, yeah, maybe I ought to try something different. Or there was there was a fear of layoffs. There was a fear of no business. I don't know whatever. But usually, attrition is much lower for the high performing organizations. Last year, who knows? Maybe an anomaly. But you can see that that, you know, a lot of these things and, again, I'll focus on billable utilization is important. I'll look at loaded cost per consultant is important. I hate to say it, the more you pay your consultants, probably the better they are. And and so, you know, I always thought this was reversed, but it turned out, you know, and I can prove it that that paying people well tends to make them perform much better. Yeah. Maybe they have the tools at their disposal. They're smarter. You know, they're more efficient. But but again, find the best people is what that's what this slide tells me. And you look at some of the other numbers, they're, you know, highly recommended. They understand their future and so forth and so on. So, again, talent is the key in in a professional service organization. You do what you can to to to educate, train, and hire the best people. Likewise, in the service execution pillar, this is where you make money. You can see the high performers are selling bigger, longer projects. That's in terms of man months. What I found was interesting in in the survey last year, and I think this is the first time we asked this question. So I I was a little struck with concurrent projects that a project manager manages and concurrent projects that a consultant works on. I really thought these numbers would be like two two projects that a project manager manages and maybe three projects that a consultant works on. And I I guess that's not far off. So what what this tells me is that the high performers, they they manage fewer projects and consultants work on fewer projects, but that's how they they get the efficiency. That's how they get the margin. That's how they get the growth and so forth. So again, if you've got your people working on 10 projects, there's a good chance they're they're they're not gonna they'll struggle with all of them because it's just too much. Using a PMO. Using a standardized or structured delivery methodology is very important for your organization. The high performance set higher project margins, which for us is over 40%. So that's impressive. And of course, the higher project margin for these organizations as well. And again, at the end of the day, you're delivering services, high quality on time delivery, and and and making sure you achieve the margin, that you're looking to achieve. And then finally, finance and operations. You know, all of this work you've done shows up, of course, on the bottom line. You can see profitability at the bottom, Very, very high. But you can also see other important KPIs such as revenue per consultant, revenue per employee. Two other KPIs I'll I'll I'll I'll discuss real quick. Again, I talked about how important leadership is. What I'll tell you is the percent of annual revenue target you achieve and the percent percentage of annual margin target you achieve, those are highly correlated with success in the organizations. And so what we found during COVID when this really hit us hard was that the top performing firms, what they did well was, you know, March 1 when the whole world seemed to shut down, they adjusted their plans, they adjusted their target, they made sure that their they had the right, skills, you know, that perhaps they didn't hire anyone for for a few months just because they were they were afraid to lay them off. So there was a lot of things they did and they still got close to achieving a 100% on both of these. And and you can go over a 100% by the way. Sometimes you worry about that because, you may burn your employees out. So, you know, professional services is interesting compared to, manufacturing. You don't want your employees working too many hours. You don't want your employees working not enough hours. Professional services employees like to be challenged. They like to work. They like to work hard, but, you know, don't don't work them three thousand hours a year because they'll face burnout. Don't work them a thousand hours a year because they'll go to another job. So interesting interesting information here. Now on to artificial intelligence. We published an AI impacted AI on professional services last at the end of last year. So it's about seven months old, and we will start our 2026 version of this report next, week. So don't be surprised if you see a survey coming from us. So what did we do? We published this report on of the impact of AI on professional services. And then I said, what the heck? Why not ask AI? What did we learn from this report? And, again, it came up with its top 10, reasons. I went through them, and and I highlighted those in red that I thought were, you know, pretty interesting. And so, you know, the top use cases are practical, not futuristic. You hear all kinds of things about AI, good and bad. What we are seeing the best firms do is solve problems with AI because there's so much it can do. If it's embedded within your information infrastructure, you have a better chance of of of just becoming more efficient, more more quality driven, and so forth. And so it's not though these wild, stories you hear. It's just using AI to get better. Obviously, data quality is a concern in any AI system. We all have to, we all have to go QC AI and make sure it's coming up with the data is correct, the analysis correct. That takes some work. But as you get better and you get more comfort with AI, you know, it'll do a better job. But again, poor data in is poor data out. Everybody knows that. Client ex expectations are rising fast. So your clients are expecting you to use AI. They're asking about AI. Did you use AI to do this? What did AI do differently than you would have done yourself? You know, a AI is wonderful. It's a great assistant for you each of it and every one of us to have to help us do a better job. And, of course, service execution is the strongest impact area. We knew that. This is where you make money in professional services. And and AI can help drive quality into what you do on time leanness, you know, help you structure your delivery methodologies and and achieve high higher levels of margins. So, again, these were the four four of the top 10 things that our report found that are really interesting to me. And so we asked everyone, you know, how important is AI over the next year to solve some of your business problems? And and I think we added about asked about 10 questions if I'm not mistaken. And these were the top five on a on a one to five scale. One meaning unimportant, five meaning very important. And you could see increasing overall efficiency, helping you innovate service offerings, improving client engagement. Again, that's when you're delivering services. You know, optimizing financial and improving business planning. I think that's also a real important one. So you look at these numbers, and I'll I'll talk a little more about similar numbers here in the next few slides. Anything over three is important. So three three point o is in different. You can see that how these numbers are, and you could see a lot of areas where AI is not as important to the organization going forward. But we found this was, pretty interesting. And so we asked how you're incorporating AI by pillar. And what you can see is in the leadership pillar, you know, it's about 8% better than in the high performers than the non high performers. And you can see this makes, you know I I think you would expect improvements in terms of how AI is incorporated. So they're using it to to help you create campaigns. They're using it to hire. They're using it, you know, to to train employees, better understand, you know, what skills they really need going forward. That's wonderful. What struck me about this slide was the fact that none of these numbers are over three. So in other words, three, you know, how is AI incorporated? If it was three, they're kind of indifferent. If it's one or two, not really yet. And so that shows you, really where we are in on this AI journey. Organizations like yours are using AI, but they're still not fully vested in terms of of of all the results they they expect to achieve and how they're using it. And so when we conduct the survey again starting next week, this will be interesting again to compare these high performers to the non high performers, but I would expect overall numbers are going to be up. Because 2025, we were just starting to run. In 2026, I think a lot of organizations have created new new ways to use AI to improve each of these each of these areas. And so we expect real positive results going forward. And then, you know, again, this is another good slide. Percentage of organizations, that projects that are using AI. You can see the high performers are using a lot more than the non high performers. That makes sense. Has it impact has it impacted overall pro productivity and efficiency? Yeah. You know, the to a degree and again, almost a four on a five point scale. So that's positive. And the estimated ROI, interesting, the high performers had less of a, you know, more conservative estimate of AI, than the non high performers. And again, I really thought when we asked this question a couple years ago, I really was expecting answers like 30%, 20%. So I'm I'm surprised if these numbers are low. But again, we'll see what happens as these organizations get get the hit the ground running. And it and if you think about AI, you know, we went from a 100 in one year to a thousand last year. This year will be, you know, 10,000 different ways they're using it. So there's exponential growth in artificial intelligence for organizations like yours. You're creating new things every day that will help you. And so the point of of what I've done for thirty years is to help organizations like yours leverage the data. Now that, you know, let's face it. In professional services thirty years ago, it was difficult. You might have had a, financial management system, but you weren't necessarily using an an, you know, a a a online business planning solution. You were barely using CRM in professional services back then and and human capital management maybe to a degree, and nobody was using PSA thirty years ago. So what you've seen over the past thirty years is organizations like yours all of a sudden moving to an integrated information infrastructure. And I've I've used the word integrated tens of thousands of times over those thirty years because I believe, like the model that that we built that talks about the correlation of data in between each other, the ability to to for those gears to work together as one. And your information infrastructure really has to be that mechanism to support your your planning, your selling, your hiring and training, the service delivery and and and making money in the organization. It's important for the right people to have the information at their disposal to understand how they can, change as as economic conditions or business conditions change. You know, at some point, you know, you're you're the a lot of people are focused on selling professional services. We have to make sure you have the right people at the right bill rates, at the right cost rate, and so forth to do that. We all wanna sell bigger, longer projects. That's how you make money, but you can't get that until you deserve that reputation for delivering high quality on time, high margin and and value, to the organize the organizations you serve. So it there's a lot of work to be done and and information technology sits at the bottom of that to make sure that you're communicating well, that you understand where you need to improve, and how can you make a change. And so we always ask everyone, you know, do you have high visibility across the organization versus you don't have high visibility? And what you see in this slide here is just about everything is a lot better. Everything is a lot better. And, again, these aren't necessarily high performing organization. Well, they all, most of them are high performing organizations. But you can see the value of having that data, again, distributed to the right people that can make an impact to improve it. For instance, you know, billable utilization, we've talked about it, you know, for thirty years. If you don't if you hire too many skills that aren't in demand, you have people sitting on the bench that impacts overall prop that'll impacts overall build utilization. You don't wanna have too few people because then you burn them out by overworking them. But you definitely want to manage that and it's hard to do in professional services as there's a lot of things going on at the same time. You're selling different services, economic, geopolitical trends take over, and and all of a sudden you don't know. So, you know, having a well rounded workforce, the ability to train the individuals as different projects and services arise is critical, to your organization. And so, you know, we we talk about elevating professional services performance. And believe me, I've sat in enough board meetings. I've sat in enough, you know, performance meetings with a lot of these organizations with CEOs, CFOs, head of professional services, head of talent, and so forth. And let's face it, we all focus on growing revenue and profit. That's what a lot of people wanna know. That's probably what your shareholders, wanna know about your organization. But we always argue that if you don't have the right people on board with the right skills at the right cost and you're not delivering projects on time, on budget, and delivering client value because at the end of the day, they're hiring you because they need some type of value you can give them that they can't get themselves. If if you're in that situation, you won't succeed. And so the best organizations do well at all four of these. They all they all continue to ask questions to make sure they're moving the the organization in the right direction. Again, you know, three years ago, artificial intelligence was was, you know, something very few people really understood. I mean, I took a class on AI almost forty years ago, and I laugh about it, today even because nobody ever really cared about it till about three years ago. Now, of course, it's taken over everything we all do on a daily level level. So, again, these are the objectives for your organization. The best organizations, the level five do well at all four of these, in all four of these areas. So just something to think about. And so in other words, when I we talk about growing revenue, you know, there's a lot of ways to look at it. You know, a lot of people look at pipeline. A lot of people look at percentage of bids won. Backlog tends to to get the job done as your organization starts every quarter with a high amount of backlog. And and just just to make sure we're we're clear on that backlog, it's not you if you sell a million dollar project but you don't start it for six months, what are your people doing today or tomorrow or next week? So backlog, we look at the beginning of every quarter, what percentage of that quarter's deliverable is ready to go. Obviously, you have to sell the additional and and deliver the additional, revenue. But it's important to to build at least 50% backlog. And we have companies that have over a 100%, and they have to hire people. But you can see as organizations, increase their backlog at the beginning of q one, q two, q three, and q four, you can see how how how much higher they grow. Again, if they're growing like that, chances are utilize billable utilization is is higher. But you can also see on time delivery and margin are a lot better. And, again, that's what you're looking for. On time delivery is the number one KPI for a client satisfaction, client referenceability. So, again, whatever happens at the beginning during the sales cycle, make sure you deliver on time, on budget. As as as scope change occurs, which every one of us knows it does, how do you replan the project, the deliverables, and the time that you promised. So you can promise something in in two months, but if the client changes, you have to work with the client to understand the impact of that change, the the cost of that change, the timing of that change. And so on time delivery is when you and the client agree what the that date is. And, of course, margin improves as these organizations, you know, deliver start with a higher backlog. Likewise, profitability, we look at all kinds of, KPIs. But I always thought that a simple one is annual revenue per billable consultant. Again, you have consultants, maybe senior level consultants who only bill fifty hours a year, but then you have lots of junior level consultants who may bill two thousand hours a year. So you look at all the hours billed by divided by all the people who do bill to give you, you know, you know, revenue, you to give you billable utilization, a weighted average, and so forth. And so you can see that that as consultants bill more, you know, what what is the difference between those? What what I thought was interesting on this was on-site delivery. Now I'm a firm believer in about 33% on-site, 67% off-site. And and I love off-site delivery because you can work on three projects at the same time. There's always something to do whereas on-site, you're kind of dedicated to that one client. But you can see that that the firms that did the best, you know, obviously, were on-site more than the ones who did not. So there's something to be said there. But again, billable utilization improves, on time delivery improves, project margin improves, profitability improve. And so if you focus on one KPI to to to see where you're going, and obviously profit is is an important one, but, you know, focus on revenue per billable consult that helps you better understand how your firm is performing. And then, of course, revenue per employee kind of goes hand in hand with this. And the goal is always to have, again, 75% of your people billable, 25% not billable. I know that's not the case. Larger organizations, it's more like sixty forty, but, obviously, they have to bill a lot more to to make up for that. And then, optimizing talent, maximizing your billable utilization. Again, there's a lot of commentary around is this still an important KPI. Yes. It's still an important KPI. It may not be your number one key performance indicator, but it should be in your top five or 10 because billable utilization comes down to to hours and we like to use a two thousand hour basis. So in other words, 75% is about fifteen hundred hours per consult. Again, senior level may only bill 50, junior level may bill 2,000. You do the mix and match of total hours, total billable consultants to come up with an overall billable utilization. You can see is that improves. I I don't have on time delivery improves, margins improve, you know, everything, you you would expect improves. And, again, those last two columns about revenue annual revenue achieved, annual margin, target achieved, you can see those rise with billable utilization. So you'll you'll hear a lot of talk about a lot of different KPIs being very important. This one is still important. It always has been, and I I think it always will be for your organization. And then finally, client satisfaction. I love this. I this this is I tell everyone this is my favorite KPI that we track because it obviously impacts your your clients being satisfied. But guess what else? Unhappy clients mean unhappy consultants. It's not a good thing. That that leads to attrition. That leads to a whole host of things that you don't wanna have. And so when you agree on a project, you agree on a time, you have to work hard, to to achieve that. It's not easy to do. I'm not, you know, I'm I'm not here to tell you it's simple to do, But that's why firm the high performers use structured delivery methodologies. They build quality control into the project. They have a project management office to help oversee the project. Again, when people need help, they need help. Someone's there to to ship resources as they need. And so you could see on time delivery. Again, it's I already told you it's highly correlated with billable utilization, but also with project margin, revenue per employee, and so forth. So, again, if you're focusing on four KPIs, the last four I I gave you, I believe, are real important for your organization. And so with that, I, you know, I, you know, I I asked AI to do this because I wanted to see what AI thought, and I made some changes to this to the slide. But, you know, first of all, 2025 was not a great year. I expected a really good year in 2026. It's still been a little touch and go with wars and and other things going on, but we see things improving in professional services. You know, I talk to, clients every every week. I talk to firms that are looking to improve, and I'm getting the the feeling that that things are getting better. You know, we want you to to focus on that that slide with all the maturity levels and all the KPIs and just sit down and write on a piece of paper where you are, you know, circle the ones where that you're closest to to better understand where you should start with. High performers, again, I don't need to say this, they do well everywhere, and that's why they're high performers. But they but they are focused on efficiency if once they built everything else in quality and so forth, then they just wanna be more efficient now to succeed. AI, again, you know, you can hear different people say different things about where we are in that process. I I think we're in the third inning by now, the nine inning game. I I I see organizations every day, you know, adopting AI and using the different tools that that come out literally every day. And I expect, you know, I expect the the benefits to come through. So, you know, given if the economy can improve enough, you'll see the top performing firms grow, you know, quite quite well in 2026 when we do this do this survey starting in a few months. And then data visibility, again, it's always important. It makes sense. You wanna have the data at at your disposal to to better understand where you need to improve and and how to do things differently. So again, focus on the backlog utilization and deliver on time. And trust me, a lot will go well for your organization. So with that, I will turn it back, to Jen. And you tell me what what to do next. I guess we're ready for some questions. Yes. Great. Thank you so much, Dave. We'll now give everyone a minute to locate the q and a window on the webinar consult to. take questions. And if you're wondering where that's at, it's next to the docs tab where you can see all of the information that we have provided for you in the resources today. While you do so, we have a quick reminder. Deltek is in the business of powering project success. If you'd like to learn more about how we can help your firm be more efficient, please complete the survey at the end of the webinar, and we will be glad to follow-up. Alright, Dave. We have a few questions that have come in for the audience, and Okay. we'll get started here. First question. We are hovering between level two and level three. What's the single most impactful change firms at that stage can make to break through? Yeah. That's an interesting place because if you're hovering between level two and level three, you're you're, you know, you're operating better than half the organizations in our survey and not as well as half the organizations in the survey. And and just to tell you, we tend to deal with level one firms because they know they need help. And we tend to deal more with level five firms because they're already good but they're never satisfied and they wanna get better. So those level two, level three firms are good hyper they're good performing firms, but it tends to be a handful of of areas where they're not succeeding. And again, I I think all of you probably have a copy of the report that we publish every year, and you should get a copy of this slide deck. And all I ask for you to do is to look at your k KPIs and compare them to the benchmark numbers. And what happens is there there's things your organization probably does very well at at level three, level two, and level three. You're you know, you may be a very high performing organization at something. Well, I don't want you to focus on that. What I want you to focus on is all of those areas that you're not performing well, those level one performance, you know. And and maybe it's your your, you know, your projects are always late. You know, that's a that's a good one. Maybe you're losing people rapidly. Again, I've covered this this market long enough that I remember when in the .com era when 25% was normal for an attrition rate in professional services, you can't do that today. You know, you really need to keep it ideally under 5%. It it or at worst under 10. So maybe you're losing people, You don't know why. Maybe your training is not up to snuff with with, you know, other organizations. Maybe you're not leveraging AI. You're not teaching AI, to everyone in your organization to help them improve their overall performance. So there's a lot of reasons why you're stuck at level two and you wanna get to level three, which is a very good performing, firm. Just go back and look at your own personal data to better understand where you should start. And and we, again, we do consulting for organizations. I won't get into it today to help them go from level one to two to three to four and five. So and and sometimes these projects take a while. So back to you, Great. Thank you, Dave. Another question that came in asked, the data shows high performance. organizations have higher attrition than non high performing organizations. Is that a growth pain you just have to accept, or is there a way to scale without losing people? You know, Jen, I and and I don't totally know the answer to this question. I believe last year was the first year I've seen this. And perhaps what I've gotta do is put together the data over the past, you know, ten to fifteen years to show that every year, the high performers keep their their their people. Last year was different. And again, you know, a lot of us in the professional services market expected 2025 be a great year. And it was a little improved, but nowhere near we where we thought it would be. And, again, if you're not doing well as an organization, you know, you're you're you, you know, you tend tend to look for for the grass, the greener grass on the other side. And, again, you didn't know last year that your firm was growing at 6% and that was good for last year. You know, you're thinking, well, every year we grow at at 15%. Last year, we grew at six. So we must our firm may maybe has problems. And and perhaps that's why people left. I mean, we'll find out more, with this this twentieth annual benchmark we're starting in September. But, yeah, it it it it floored me too. Yeah. Definitely. Well, when we're talking about, quality of data and barriers to AI, somebody asked us, what does good enough data actually look like for a firm that wants to start experimenting with Gen AI on projects? Well, good. Yeah. I mean, again, you're right. The the, you know, you you have a database with, you know, a 100,000 entries in it. You know, who knows how perfect, how how how clean the database is. But but the first thing we do is is start with a subset of data and really, clean that data to make sure it makes sense, make sure it's logical. There are no, strange numbers in the data that that that could change things. And and once you have a sufficient amount of data and again, depending on what you wanna do, you know, I I would ideally want at least a 100, pieces of data of something, if not a thousand or more. But once you have a a good clean dataset of of an area you're trying to improve, then you run through the, you know, you start asking questions of it. And that's what AI loves to do is look at your data and tell you what it sees, and you see if it agrees with you. And more importantly, speaking of which, you you you need to make sure your AI tool is is is summarizing the data accurately. So sometimes that takes manual intervention to go through and say, okay. Let me look at these 50 numbers and and let's see if if what AI told me is what this tells me when I do it manually. So, again, we're we're all working with AI, and we're all learning. Again, you know, we went from a 100 to a thousand to, you know, 100,000 things we're doing over the next over the next few years. So using AI, getting more comfortable with it, seeing how it where it works well with your data and where it doesn't work well with your data, that's that's the key. But it's it's a learning process. And like I said, we're in the third inning in my opinion of this. I agree, Dave. We're all learning as we go with AI. Another question that we just received from the audience is what process disciplines do PS firms use to keep revenue leakage below 5%? You know, it's funny because one of the most important aspects of of of professional services is making sure that you collect the data and you bill for what you're doing. So we we see firms all the time, that people do the work and then they forget to bill or they don't include it in the bill. And so, you know, the the ability to track time and track expenses is important. The best firms that I know, that I've spoken with over the past thirty years, they tend to make sure that people are entering all that time and all that expense data on a weekly basis. At at a minimum, on a weekly basis. A lot of consultants do it on a daily basis because, you know, as you can imagine, Friday afternoon, the last thing you wanna do is go through and enter data. But the ability to capture data is becoming more efficient. You know, my goodness. You're you're taking pictures of of your expenses and it's going into your, your solution. I mean, there are all kinds of ways to do that. But but capturing the data, reviewing your data to say, okay. I I worked on this project for five hours today, not three hours, not eight hours. Making sure you have accurate data that's defensible so that when it all rolls up and you invoice your client for 50 or, you know, 10 people, you know, for a week or two weeks, that the data is accurate. It makes sense. There's no no or minimal discussion about is this correct because another area that, we don't go we don't track as much anymore is rejected, invoices. You send an invoice for $20,000 and the client says this is wrong. This is inaccurate. The these numbers don't make set, you know. And then you have to re go through that process. So getting that data clean and in your system, having every individual consultant review it is critical so that you avoid not billing, for things you should have built for. And and it's it happens every day. And if you keep leakage less than 3%, you're you're probably a high performing organization. Great. Thank you, Dave. We have one last question from the audience, and then we will wrap up for today's session. But our last question is, for firms that aren't yet using a PMO or standardized delivery methodology, where's the best starting point? Is it a process problem or a technology problem first? Well, it always starts out as a process problem. I think you have to commit to a PMO. You have to commit to structure or standardized delivery methodologies. And again, every firm I talk to, you know, they they they all say the same, we're different. Well, you you're right. You probably are different. But there are ways that you're doing things that you could structure and standardize. And again, it'd be wonderful if a 100% of the services you deliver were delivered the same exact way every time, But we know that tends not to happen in professional services. But there are there are and again, we're not talking about productizing services, but a lot of firms as they grow, they they product productize or package theirs their, services so the client understands, you know, really nice and neat how this is going to be done. And what that does when you have structure and standardized and package services is that you can sell them like a product. So it's not a customized professional services, you know, an engagement. It's, hey, we've done this type of service a thousand times. It tends to take between, you know, a a thousand hours and and twelve hundred hours to achieve it depending on, you know, variety factors such as locations of of their workforce and so forth. But what that does, that structure, that standardization, that PMO that gives the client confidence that you know what you're doing, that you've done this a million times before. So, of course, you know what you're doing and you can almost guarantee the the completion date, which I hate to do because, you know, again, in professional services, change happens. So so again, you gotta first commit to it. There's a lot of reading, a lot of research you could do on PMOs. But you know you know how you deliver services. You know how to create Gantt charts. You know, you you can you can achieve the time for each of these tasks within a professional services because sometimes it takes two hours. Sometimes it takes ten hours to complete a task. Question is why are those numbers different? And and there there are good reasons why, but understanding exactly why they're different helps you plan going forward so that you can, achieve better on time delivery, higher billable utilization, and and and, of course, that results in growth for the organization. That's it, Jen? Alright. Well, thank you, Dave. Now we're gonna close out our session. And I wanna thank you again for the insightful presentation, Dave. We really enjoy working with you, and, you know, you're one of our all star partners. So we hope all attendees walk away with better insights into where they sit on the professional services maturity model and have the tools to see continued success in 2026. As I mentioned, there's gonna be a brief survey following the webinar. Please be sure to provide your feedback and take a minute to share your thoughts. Thank you. Yes. So you're welcome. Thank you, Dave. Thanks again to the audience for joining us today. Our next webinar will take place on July 22 featuring Replicon. We hope to see you there. For more information about upcoming webinars and events, please visit deltek.com. Thank you all.