When times are tough, every company looks to cut costs where they can.  Yet how can this be accomplished without eliminating key projects and people?  It is actually quite simple if you have the right data in hand.  With the appropriate per-customer per-project profitability metrics, companies can easily shave off unprofitable work and learn how to focus their time, efforts and budget on the profitable work alone.

Cutting with Precision

Do all of the top managers at your company know which of your past projects were successful and which were failures? Do they know how many employees worked on these projects or how much time was invested in them? How about which of your clients were a drain and which ones were profitable? Without this information, you certainly cannot cut costs without risking the loss of projects and people that bring in the most revenue. 

Implementing profitability metrics might sound complicated, but it is often easier than you might think.

In the event of a down economy, many companies start looking for ways to cut costs. This can include anything from reducing spending on various programs to cutting employees, yet such drastic measures are often unnecessary and harmful to the company's future. And yet, if you could simply figure out where your company is profitable and where it's not, you could simply choose to do more of the profitable work.

Planning for Profit

Companies need data to help them make future decisions. For example, how many executives really know which projects were successful? Which clients were a drain and which ones were profitable? How many employees worked on each project, and for how long?

If executives have this information in hand while planning future projects and budgets, they can make much more informed, cost-saving decisions. Here is a five-step process that can help you do so, especially in a down economy where every penny counts.

It’s not easy being a payroll professional today.  You are responsible for making sure that your company’s financial processes run smoothly, which includes gathering all of the time data throughout the organization, ensuring that everyone is paid correctly and on time, and preventing errors from finding their way into your records.  In fact, many payroll professionals struggle with these areas needlessly because they do not realize that Software-as-a-Service (SaaS) solutions can be leveraged to create seamless, efficient payroll processes.

The Benefits of SaaS Technology

• Less Work

Automated systems for processes such as time, expense and project tracking save payroll professionals an enormous amount of time and effort.  They often replace inefficient, obsolete manual or paper systems, and can also prevent double data entry by integrating with other solutions.  Not only that, but if the system is offered as SaaS, your IT department does not have to lift a finger.

Time and attendance tracking is necessary for obvious reasons, yet many business owners do not realize that this data can deliver enormous benefits to the organization, aside from payroll.  In fact, having employees track their time against tasks and projects allows managers to develop key performance indicators to measure progress against strategic goals such as increased billability, adherence to project estimates and project profitability optimization.

Key Performance Indicators

A 'key performance indicator' or KPI measures an organization's progress towards a strategic goal.  When leveraged correctly, KPIs can make a huge impact.

First, you must determine what the most important business goals are. It might be increased profitability, reduced number of defective parts per thousand, maintaining a certain percentage of customer satisfaction, or perhaps revenue per store location. Once this is established, you can create a KPI to help you measure your progress. 

Next, you must ensure that your KPI is measurable. "Make customers more successful" is not an effective KPI without some way to measure the success of your customers. "Be the most convenient drugstore" won't work either if there is no way to measure convenience.

Secure management strategies are nearly always summed up in terms reflecting a creative mindset. Thinking “outside the box” and coming up with “new, innovative techniques” is often the expectation and praise lauded on elite executives. Of course, there is great value to these attributes. The human element of management – that being the skill acquired from personal talent and the knowledge that comes with experience – separates the great managers from the mediocre. However, the development of these methods is only one aspect of a powerful managerial style. The other is a strong command of logistics.

Often shuffled into the background or carelessly delegated away, consistent logistical analysis has the ability to refine a project (or project coordinator), combining the positive results of innovation and forward-thought with the predictive ability of a hard science. Again, the key to effective long-term management strategy is consistency. That can only be achieved by keeping a close eye on all aspects of a project, team or industry.

From 1945 to 1965, the financial market in the U.S. moved upward. It then moved sideways until 1982, and up again until 2000. Right now, we are engaged in another great sideways movement. It could continue for another decade or so, and as businesses fail and members of congress pound their fists, it is natural to fear for the future.

These types of fears can be especially dangerous for businesses, as management often makes unwise decisions out of panic. For example, they might cut employees or reduce spending on various programs that are good for the economy. Consequently, many companies that slash costs in response to an economic recession find themselves unable to achieve top-line growth when the recession ends.

Extreme cutting of people and projects can be avoided, or at the very least, they can be performed with more intelligent precision. All that are required to handle such problems the right way are per-customer per-project profitability metrics.

When we started out 15 years ago, we had a simple product, no real competitors and product installation was so easy that project management for customer rollouts didn’t seem very useful to us.  Over time, as the flexibility of our products increased, we added a professional services capability to our company that was, in its earliest stages, somewhat haphazard and delivered inconsistent results to our customers.  This led to customer satisfaction issues that were a real impediment to our success as an organization.  Since delivering demonstrable customer value is the only moral way to achieve business success in our industry, we knew we had to fix this problem quickly.

Once we inculcated some repeatable processes based on project management disciplines into our delivery, we were able to go so far as to productize our initial customer rollout service.  This has been so successful that we’ve been able to strategically virtualize that service in certain instances. For example, we use a vendor to assist with every rollout that includes

Finding a timesheet solution is a difficult task for a company that’s never used timesheet software.  There is a huge learning curve that takes place in the buying process; a large amount of time taken to train employees; and communication that must happen with your provider’s support team when a problem arises.  It’s a totally new business relationship that must be developed and cultivated. 

But what if your timesheet software provider called it quits? 

This is exactly what happened to many small businesses that put their faith in Intuit Quickbooks Time Tracker.  Near the beginning of October 2011, Intuit announced that they are discontinuing Quickbooks Time Tracker & Time and Billing Manager effective December 1^st.  That only gives customers 60 days to do the impossible: pull all of their company data from the product, and find and implement a brand new time tracking solution.  Small business owners must have felt considerable panic when they heard the news.

On the back of rising volatility in the global financial marketplace and fears of a U.S. recession spilling over into the European economies, stock indices have recently shown considerable weakness. When economic storms loom, smart executives typically start looking for a way to cut costs in advance of softening demand for their companies' products and services.  But what if you could know with some degree of certainty where your company is profitable and where it's not, and figure out a way to do more of the profitable work?  What if you fired unprofitable customers instead of firing the employees who have helped you build the company to its present stature? 

Many companies that successfully slash costs to survive a recession find top-line growth elusive when the recession ends.  Their best people are gone, their long term projects were cancelled and a short term focus is all they have left, resulting in the lack of a platform designed for growth.

Today's article is written by my colleague, Bill Balcezak, and Deborah Kerr, partner at affintus. Learn more about them in their bios at the end of the article.


Successful hiring is one of the key factors to operational success for large and small businesses alike. Executives should approach the hiring process as a means to both improve their existing workforce and to secure a candidate who will add long-term value to the organization. If approached merely as a step toward replacing a lost asset, the hiring process will squander considerable resources and forfeit significant opportunity value from a potential personnel improvement. The mission is obvious, yet, according tobusiness owners, finding the right employees can be an elusive aspiration in a drawn-out process.

The results of the hiring search can be crucial for the future of small businesses and a poor decision can easily cost any organization well into the six figures. Every new hiring opportunity has the potential to advance a business's interests or set them back significantly, and should be approached using the same level of data, knowledge, and preparation required for any critical business decision.