Time tracking is, besides the actual consulting work, arguably one of the most fundamental activities for consultants. Consultants charge for time and completed work, and therefore need to record time spent and deliverables, which subsequently triggers the invoicing process. Over the years, time tracking has been made easier through a plethora of more user-friendly systems and apps, while at the same time its importance as a strategic tool has, amidst a changing landscape, been on the rise. A newly developed maturity model helps decision makers in the industry understand where they stand, and what they can do to improve.
Time tracking is an approach used across most industries and business models. Through time tracking, managers can continuously understand what a companies’ pool of talent is doing, and how effective they are. For the consulting industry time management stands at the heart of internal operations, as it embodies what keeps the business up and running: chargeable hours. Consultants track their time, at the highest level differentiating between two types of time-spent: time spent serving clients (‘billable hours’) and time spent in support of internal activities (‘non-billable hours’). On average, entering and submitting time registrations is estimated to take three minutes per day, research shows, that is if employees are fully on board and up to speed with the (technical) process.
In consultancy, time tracking is at the outset linked to financials and control & monitoring. Hours tracked on engagement work can be tallied and billed to clients, while time spent internally is written-off and generally taken under scrutiny to assess if the tasks completed sufficiently support the consultancy’s overall direction. There are however a range of other benefits that can arise from time tracking. The micro management of time, for instance, allows business advisory firms to strategically assess their internal investments: what does the company spend its time on – and is it effective? Analysis of project portfolios and time spent on business development (in combination with account management) also allows for better forecasting, a process which in turn provides key input back into the time management cycle.
From an operations perspective, time tracking is the fundament of business optimisation initiatives, such as processes implemented to improve time and project estimation, to boost financials such as contribution margins and advance billing efficiency. “Consulting firms that implement time tracking in all aspects of their business benefit from a management tool which answers strategic questions based on solid data rather than a gut feeling,” comments Søren Lund, CEO of TimeLog, a company that provides software solutions to the consulting industry.
A glimpse of large trends in the industry – changing client behaviour, pressure on margins, growing shift to performance based pay – reveals that over the years internal operations has become increasingly important for consultancies, for large to medium-sized and small firms. “In line with these development we see a growing need to grasp and optimise time management, in fact several case studies show it can even serve as a key competitive differentiator,” says Lund, who says his statement is grounded on a performance assessment of TimeLog’s more than 700 clients in the industry. And looking ahead, Lund, along with consulting analysts across the globe, foresee a growing role for time tracking in the field, a movement which links closely to the rise of data analytics and technology-driven innovation.
Despite the importance of the topic, Lund says that his firm signals that consultancies sometimes struggle with their own time tracking performance, as well as understanding where they stand vis a vis their peers. “There is little representative data available on time tracking operations across the industry, and more so than in other sectors, internal operations is typically shrouded with secrecy by partners.”
To help decision makers at advisories gain insight in where they stand, and the improvement potential ahead, TimeLog decided to introduce a maturity model specifically for time tracking within management consulting and IT consulting. The model consists of five levels of organisation maturity*: Heroic, Functional Excellence, Project Excellence, Portfolio Excellence and Collaborative.
Level 1: Heroic
At this level, simply implementing a time tracking system is everything. The company typically implements a time tracking system to create a basis for invoicing. 30% of all organisations are at this level – and nearly every single one starts here.
Level 2: Functional Excellence
At this level, time tracking is in effect and the company is accumulating a statistical basis for estimating future projects. You are free to budget projects and easily follow up on them. Some workflows are optimised, but not all workflows adhere to company best practices. 25% of all organisations are at this level, says Lund.
Level 3: Project Excellence
At this level, all processes are standardised, and time tracking is implemented across all functions. You can schedule alongside project management and time tracking. 25% of all consultancies find themselves at this level.
Level 4: Portfolio Excellence
At this level, the company has an automated resource management plan. This means that the company is able to plan in detail and perform according to that plan – but also react to changes and adapt the plan accordingly. This requires, however, that all time registrations are processed in real time, and that project planning and resource allocations are integrated with the registrations. 15% of all consulting firms are at this level.
Level 5: Collaborative
At level 5, the company is constantly optimising its workflows in an integrated learning loop. They are using time registrations to change their behaviour and, as a separate objective, continuously improve their workflows. They benchmark to continuously monitor performance and improve workflows. “Just 5% of the enterprises in consulting enjoy such a high level of maturity.”
* The model is derived from SPI Research's Professional Services Maturity Model