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Conclusion 1: Inaccurate monitoring? You are in trouble
When profitability can drop almost overnight, keeping an eye on it becomes even more crucial. And you cannot do that without advanced analytics!
Creating long-term plans and forecasts for your business is the key to avoiding financial problems. However, it is also a chance for your business to grow exponentially in the future.
Why?
Because they allow you to get a better understanding of your business and see where it performs best. Then, you can use that information to focus your sales efforts on particular types of projects that generate the majority of your profits. On the other hand, you also can use the info to optimize the projects you already have and make the most of them. In other words, you can use the time of your teams better, and for more money!
How can improved data visibility help me?
First of all, our experts agree that data visibility is not a huge spreadsheet with dedicated data - it is a dedicated tool capable of providing managers with both detailed information and bird’s eye view of all the operations. With dozens of projects on board, Excel is not an option here - it only creates the illusion of transparency while trapping the managers in a trap made of dozens unintelligible columns and rows.
Using historical data to predict future incomes and expenses can make your revenue forecasts much more accurate. As a result, you can see how much your project will cost, and what margin you will need to break even or have some money left in company’s account.
Speednet’s approach is a great example using such data to company’s advantage. By precisely estimating project costs and the duration of their consecutive stages, the business have avoided delays and additional costs - all while providing their customers with exceptional services.
How can I measure my profitability more accurately?
Monitoring profitability is not an easy task, but the process is fairly straightforward to improve. For a start, you should:
- use a 3rd degree margin for your profitability calculation, so the real costs of the project won’t exceed your expectations,
- combine costs of people’s work and allocations with other finances to gain a bigger picture of the profitability of your operations,
- monitor non-billable activities. There is a chance that internal projects or support departments are costing your business too much money or are simply not necessary - monitoring non-billable hours can help you fix that!
You might also encounter some problems with project budgeting - here is what they might be and how to solve them.
Conclusion 2: Customers from the West might not be there for you
For the past few years, selling IT services to the customers from the US or Western Europe has been a backbone for the operations of many companies from Central and Eastern Europe. That is about to change.
Right now, VC funds that used to invest huge sums of money are much more reluctant to spend money. Therefore, the startups that would have successfully acquired the funding years ago are now left with empty pockets. In short, the number of IT services companies is about to drop, and so are their project budgets.
Unfortunately, this trend is confirmed not only by our experts, but also independent research. According to CBInsights, global venture funding continues to slide in Q1’2023. The drop is also rather large, with 13% less funds being transferred to startups in the last three months.
Conclusion 3: Weak parts of business need to be cut off
Do you know which parts of your business are the most profitable? If you don’t, you might be headed for a disaster.
Maintaining projects and products that are on the verge of being unprofitable is not a recipe for success, especially during crisis. The lines of operations with high performance, customer satisfaction and profitability are what you should be focusing on. By doing so, you can ensure that your business will be profitable in the long run.
Additionally, such a specialization is also an opportunity for your business to become truly exceptional in its field. By offering an extraordinary service to your customers and perfecting your offer, you can create an added value for your target audience. Providing it with a comprehensive service is the key to creating a meaningful relationship with customers - and putting a greater number of their invoice.
Of course, you should not only focus on a single specialization. Focus on maintaining two or three development lines in your company. By doing so you ensure that your business won’t become unprofitable whenever one of your fields of work becomes obsolete due to external factors.
Conclusion 4: Communities matter
During recession, business environment can change in an instant. That is why it is more important than ever to stay on top of things and exchange the experiences with other managers in the industry.
Communities are a perfect place for such a conversation. The diversity of views and approaches allows the companies involved to find the best solutions to their problems, can be the source of new opportunities, and can offer extensive support in difficult situations that would otherwise be left unaddressed.
Conclusion 5: Marketing and sales need some alterations
A slide in demand extended the duration of sales processes. It also made it more difficult for marketers to attract the attention of new customers. However, under the circumstances these teams should not be stuck in their old ways. Instead, they should move forward and change their processes.
Our experts unanimously agree that addressing customers’ concerns should become a main point on focus in sales. The audience is now more cautious about spending their money. As a result, it want to ensure that it’s spend wisely on the right services. As a result, customers should be provided with such an information in the entirety of the communication.
Additionally, the focus on the problems should be equally important. Today, customers face more challenges than ever before - and they surely would be glad to get rid of some of them. Give them a chance to learn that your services are their opportunity to do so.
Of course, you also shouldn’t limit these sales opportunities to new customers only. Try to change the prices of your services for existing or past customers that already have some positive experiences with your services. They surely have some more problems your services can solve - take advantage of it!
What is “IT Sector in the Face of Recession”?
“IT Sector in the Face of Recession” was a meetup organized by Primetric and IT Corner - Polish community bringing together leading IT companies from the region. Its main objective was to discuss the challenges faced by managers during the crisis that is currently threatening the industry. We are happy to announce that we fulfilled that goal!
To achieve it, together with our prominent guests and speakers we have discussed topics such as:
- improving the operational and analytical efficiency of IT businesses with advanced data management,
- key factors guaranteeing the success (or failure) of scaling processes in a software house,
- crisis-proof sales strategies.
We are also happy to say that later on these topics became a base for a heated debate that helped us draw the conclusion we have discussed the article.
If you have been there, we would like to thank you for your participation in the meetup. We would also like to invite you to other events organized by Primetric; you can find a full list of them here.
Want to learn more about improving your IT company?
We have prepared a comprehensive guide for you!
Read our e-book about managing IT services company during the crisis and learn:
- how to improve profitability - and why is that the wrong question to ask,
- how to use capacity and utilization to maximize profits,
- which projects to acquire, and which to avoid,
- how to generate profits from both people and operations,
- how to make the future of your business brighter than ever.
I want to see if Primetric can help me, too!
No problem - we have a lot of resources you can familiarize yourself with to get to know us better.
Read more about the features included in our tool, such as:
- resource planning,
- resource and skill management,
- project portfolio management,
- project accounting,
- timesheets and time tracking,
- business intelligence,
- integrations.
Or choose the best possible option - book a demo with our consultant and let us show you how Primetric can help you manage your business better regardless of the circumstances.
