All Articles

PSAs and their place in the SME toolset

Lawrence Andrews
Operations technology

We explore what professional services automation (PSA) software does and where it can help. We look at how PSAs and ERPs intersect and consider how they fit into the  technology ecosystem of small and medium sized businesses.

What is professional services automation?

In the past if someone had asked me what professional services automation was I don’t think I could have given a clear answer. But why is that?

I think it speaks to a general problem that phrases and terms with extremely broad and loose definitions enter the business lexicon almost daily. People start using them, others follow and quickly there are 1000s of conversations about a subject where there is no shared consensus on what they are all talking about.

That said, I better start this article with some definitions.

Kimble, a well known professional services automation (PSA) software company describes professional services automation as business software developed specifically to support organisations which deliver billable projects or managed services to their clients.

So that’s pretty broad..

Another definition I prefer is software that is designed to make core business processes more efficient and people more productive, specifically for businesses whose saleable product is people and their time.

This is all a bit academic though.Where does it fit in, what can it do and how can it help?

How do I know if a PSA is relevant to my business?

To decide whether PSAs are relevant for your business there are two key questions to ask:

  1. Is there a relationship between the time your people spend and the value you can invoice?
  2. If you are selling something for a fixed price, does time spent to deliver that something play a significant role in determining your overall profitability?

If you have any services aspect to your business the answer to at least one of these questions is almost certainly yes. Even if you are not selling services then these statements could still be true.

In either case there is potential opportunity to benefit from professional services automation if you are not already.

What do PSAs offer?

Professional Services automation software typically provides facilities that enable a broad range of core operational processes. Typically they are geared towards businesses delivering projects or services to their customers but this doesn’t mean they are not relevant to other types of business.

To help you judge for yourself, here are some key features you are likely to find offered by PSAs:

Sales Opportunity Management

Tools to track and manage sales opportunities, their status as well as the time and cost committed to them.


Mechanisms to manage the allocation of your workforce to projects and tasks in a given day, week or month, based on their skills.

Project Delivery

Tools that support the planning and delivery of projects. Covering  essential activities such as estimation, costing, status tracking amongst others.

Project Accounting

Financial tracking at the project or job level that overlays forecast and actual time and costs to help managers better control profitability.

Time and Expenses

Facilities to help individuals and businesses to track time spent across any project as well as any non labour cost incurred.

Finance and Billing

Different from individual project accounting, PSAs provide consolidated views of sales, revenue and cost across portfolios of projects or even the whole business. Finance teams can work directly within these tools to manage invoicing and billing.


Forecasting is a key feature across all previous areas. Overlaying forecast sales, revenue, resources and costs to actuals can help you build a longer term picture of predicted business performance.


The strategy of some software vendors is to buy other software and bolt it on to their own. To keep adding new features and to make it more attractive to potential customers. However there is now a recognition that people don’t want to be tied into a single tool for everything. Increasingly how well a piece of software integrates or connects with other tools is a key consideration. But more on that later.

So, these are the 8 key areas we look at when judging PSAs at LMR Labs. The fundamental things a PSA can and should offer. Not to say you won’t find other features offered that don’t fit in these boxes. However, these are the core things we recommend assessing any tool against.

What is the ultimate goal of professional services automation?

PSAs are about increasing profitability. By improving process efficiency and employee productivity you do more, more quickly and with less effort. Professional services automation tools help you do this by introducing control and consistency.  

Through connecting people and processes through a central tool or set of tools you also consolidate data about what you’ve done and what you forecast to do.

This in turn enables better reporting. From better reporting you can identify issues and act quickly. You can use KPIs to really understand performance and drive ongoing improvements.

But there are secondary benefits too. Consistency of how you work has been shown to drive big improvements in customer experience and employee satisfaction. Assuming you are consistently good!

In summary, control, consistency and better forecasting results in more predictability. Something I hope we can all agree is a good thing. Well at least where business operations, financial performance and future planning are concerned!

What’s the difference between an ERP and a PSA?

More acronyms! What’s the difference and how do they relate to one another?

Traditionally CRMs were used to manage anything customer facing such as sales, marketing and customer service. ERPs for everything else! Microsoft describe an ERP as managing a company's financials, supply chain, operations, commerce, reporting, manufacturing, and human resource activities.

That certainly sounds like most aspects of a business. Perhaps why ERPs historically have ended up as behemoth systems. Because they do ‘everything’, businesses become overly reliant on the specific technology of the ERP. This is why even when the technology becomes outdated these systems are often incredibly hard to unpick and move away from.

So where do PSAs fit in? Well, as mentioned earlier, sometimes PSAs are seen as systems to help manage people and time in the context of projects or services. ERPs are seen as systems for businesses delivering products. I think the difference is more nuanced.

PSAs don’t concern themselves with defining exactly how any given project or service is delivered; they help bring control and consistency to the process of delivering them and the operational processes that surround them.

ERPs take your operation to a lower level, taking into account materials, supply chain and manufacturing processes which in turn increases the level of complexity of their design and implementation.

But which is right for small and medium sized businesses?

Pick the best tools for each job. Build incrementally.

Either a PSA and/or ERP could be the right choice for your business! However, consider the level of process definition you really need to run your business. The more you add, the more complex and expensive the system is likely to be to build and run. The bigger the risk they become inflexible to future needs and affect business agility.

Consider whether you really need one or two highly feature rich tools or whether you’d benefit from a more decoupled toolset. What we mean by this is that instead of getting an all singing, all dancing PSA or ERP you could find a really good tool for HR, another for CRM, another for eCommerce, another for finance. These could then be connected with more focussed PSA or ERP tools that are best in class in the things you really need them to do.

I can see why on the surface of it this may still be seen as a massive headache and risk when you could just implement one or two systems once and then get back to the day job!

The counter argument is that incredibly feature rich cloud tools are now available for almost any application. These are low cost, quick to implement and easy to maintain.

Rather than greedily trying to do everything there is the recognition by the software vendors that these tools live in a wider technology ecosystem. They are designed to be genuinely easy to connect and integrate with other tools.

If this is the case then having the best tools for each job is within reach for small and medium sized businesses and a legitimate strategy. Conversely having multiple tools can actually help lower risk.

You can digitalise or re-platform different parts of your business step by step. By doing this you avoid the challenge of trying to change your whole business all at once.  

By replacing old systems with cloud tools incrementally you have more time to consider and adapt the design to ensure it is flexible to future needs.

Most importantly, if you don’t like a tool and it doesn’t end up working for your business, you can easily swap it out.