TimeLog, a software service provider to the consulting industry, last year launched a new version of its cloud-based Project solution. Among others functionality in the field of business development, contract management and billing has been overhauled to accommodate for the changing demands in the consulting landscape. CEO Søren Lund spoke with Consultancy.uk and reflects on how shifting behaviour is changing the consulting back-office.
It was back in 2012, at the height of the crisis’ aftermath, when TimeLog’s management team bundled their minds on the way forward for the software provider. Founded in 2001, by the current CEO Søren Lund, the vendor provides software solutions for professional services firms, with a focus on management and IT consultancies. Its suite of solutions spans the primary and secondary process of consulting firms, from sales and account management, to staffing & time tracking, engagement management, financials and reporting.
Amidst a rapidly changing environment, TimeLog noticed that the way consultants were doing business was undergoing a hefty change. With financial austerity grappling organisations across sectors, spending on consultants was on the decline, and for consultancies improving their internal efficiency, including margin management, jumped to the top of partner agenda’s. The result, among others, says Lund, was a shift in focus from project revenue to bottom-line profitability. “The majority of systems in the market, supported by underlying business processes, were not fully aligned to this new way of thinking.” Lund adds that it was not just a matter of systems or governance, but to a matter of mind set: “In a buoyant market and within a wider context when revenue seamlessly translated to profits, engagement managers typically focussed on upstream financials as project revenue and overall margins. For them to take profitability to a deeper level of scrutiny and consider aspects such as cash flow management meant a change in behaviour was needed, one which systems need to support.”
Another major trend too hit the drawing table of TimeLog’s management team. The consulting industry has over the past few years seen a rise in the use of performance based billing, in response to growing client demand for risk-sharing models. Johan Aurik, the global CEO of A.T. Kearney, for instance recently highlighted that nowadays between 20% to 30% of his firms fees are tied to results, while Peter de Wit, Managing Partner of McKinsey & Company Northern Europe, last week unveiled towards het Financieele Dagblad (the counterpart of the Financial Times in the Netherlands) that around 15% of McKinsey’s engagements operate with a variable fee model. Several executives of several large consulting firms, including Bain & Company, Deloitte, Strategy&, as well as directors of mid-sized consultancies, have of late provided similar signals. Lund says he recognises the trend – TimeLog serves a client base of around 700 customers in 12 countries – and forecasts a “further increase” in adoption in the coming decade.
It was these two key development that convinced Lund and his team to embark on a large transformation, which he describes as a “re-alignment”, of TimeLog Project – the firm’s portfolio of modules and solutions. “Consulting firms were up to a challenge and increasingly noticed that their internal operations was not up to it. There was put simply no suitable business solution that coupled time recording with the new economic accounting models – at least not without compromising the ability of analysis and control,” he reflects.
What followed were three hard years of work: client investigations (interviewing consulting firms and clients), business process design, system blueprinting and more. Overall, the firm spent 6,000 hours of development time, Lund states, and by the fall of 2015 TimeLog unveiled its new, updated cloud based solution to the market. Improvements that have been embedded include a large set of automatic billing contracts making it possible to handle both simple and complex settlement types on projects and making it possible to support a new trend within consultancies, invoicing standard service/products instead of only hours. “For many consultancies this combination represents a revenue growth area.”
“We managed to create the future production system for service companies, which completely seamlessly cooperates with several well-known financial and payroll systems. This gave the service a flexible and comprehensive solution without the need for manual transfer of data between the systems – what Gartner Group calls post-modern ERP,” says Lund.
The launch of the overhauled TimeLog Project has been received positively by the market, says Lund. Although he refrains from providing concrete numbers, he says that “dozens of consulting clients” have since joined the firm’s ranks across Europe, and that client engagement and retention has been up on the back of the improved system. “The timing was just right,” says Lund. "We gambled at a time when competitors were perhaps more reluctant. So far it seems that we made the right choice.”