How Great Technology Professional Service Companies Manage Headwinds and Excel

Run smoothly. Change quickly. Achieve more. Cloud-based enterprise work management software How Great Technology Professional Service Companies Manage Headwinds and Excel

Agenda 1. Service Performance Insight (SPI) 2. Pariveda Solutions 3. Upland Software and Tenrox PSA 4. Questions 5. PDU Credit Information 2

Today s Speakers R. David Hofferberth, P.E. Managing Director Service Performance Insight Kerry Stover COO, Executive Vice President, Pariveda Solutions Blake Bisson Director of Product Marketing Tenrox by Upland 3

Housekeeping To submit a question: Type in your question here Click Send 4

Managing Headwinds in Technology Professional Services April 7, 2015 R. David Hofferberth, P.E. Managing Director, Service Performance Insight

Introduction Service Performance Insight (SPI Research) is a global research, consulting and training organization dedicated to help professional service organizations (PSOs) make quantum improvements in productivity and profit. In 2007, SPI developed the PS Maturity Model as a strategic planning and management framework. It is now the industry-leading performance improvement tool used by over 10,000 service and project-oriented organizations to chart their course to service excellence. The core tenet of the PS Maturity Model is PSOs achieve success through the optimization of five Service Performance Pillars : 1. Leadership Vision, Strategy and Culture 2. Client Relationships 3. Human Capital Alignment 4. Service Execution 5. Finance and Operations SPI provides a unique depth of operating experience combined with unsurpassed analytic capability. We not only diagnose areas for improvement but also provide the business value of change. We then work collaboratively with our clients to create new management processes to transform and ignite performance. Copyright 2015 Service Performance Insight All rights reserved. Not for distribution. 6 www.spiresearch.com

Today s Agenda 2015 Professional Services Maturity Benchmark Market Trends What IT Consulting Leaders Do to Improve Performance PSA as a Performance Driver Conclusions and Recommendations Copyright 2015 Service Performance Insight All rights reserved. Not for distribution. 7 www.spiresearch.com

Maturity Matters! 273 IT Consultancies Level 1 Initiated Level 2 Piloted Level 3 Deployed Level 4 Institution. Level 5 Optimized Percentage 30% 25% 25% 15% 5% Year-over-year change in PS revenue 4.2% 6.3% 11.0% 14.7% 21.3% % of employees billable or chargeable 64.8% 75.1% 78.8% 79.9% 81.7% Bid-to-win ratio (per 10 bids) 4.29 4.93 5.21 5.15 5.77 Deal pipeline relative to qtr. bookings forecast 141% 216% 231% 249% 238% Employee billable utilization 62.2% 73.0% 75.1% 81.2% 79.3% Projects delivered on-time 73.6% 76.4% 84.0% 87.7% 83.8% Project Margin 28.3% 38.5% 38.3% 36.5% 41.6% Annual revenue per billable consultant (k) $137 $195 $208 $193 $242 Annual revenue per employee (k) $115 $165 $180 $170 $183 Profit (EBITDA) 0.6% 2.7% 9.5% 26.8% 34.3% Copyright 2015 Service Performance Insight All rights reserved. Not for distribution. 9 www.spiresearch.com

2015 IT Service Industry Trends Better growth than most industries Competition intensifies Faster service commoditization The war for talent intensifies Lower billable utilization Higher attrition Project quality issues are surfacing Net profit is declining Copyright 2015 Service Performance Insight All rights reserved. Not for distribution. 10 www.spiresearch.com

The Market is Improving 12% 11% 10% 9% Revenue Growth 11.7% $230 $220 $210 Project Size (k) $221 8% 7% 6% 5% 6.6% 6.7% $200 $190 $180 $187 $198 4% 3% 2% 2012 2013 2014 $170 $160 2012 2013 2014 Copyright 2015 Service Performance Insight All rights reserved. Not for distribution. 11 www.spiresearch.com

Competition Increases.. And So Does Attrition 5.2 5.1 5.0 4.9 4.8 4.7 4.6 4.5 5.12 Bid-to-win Ratio 4.92 4.68 12% 11% 10% 9% 8% 7% 6% 5% 4% 3% 8.8% Attrition Rises 7.5% 10.0% 4.4 2012 2013 2014 2% 2012 2013 2014 Copyright 2015 Service Performance Insight All rights reserved. Not for distribution. 12 www.spiresearch.com

Focus on Sales Key Performance Indicator (KPI) Lead. Rest Package services Align sales and service delivery New clients 34.8% 28.5% 22% Bid-to-win ratio (per 10 bids) 5.23 4.81 9% Deal pipeline relative to qtr. bookings forecast Average service discount given clients 234% 198% 18% 5.2% 6.3% 18% Develop and sell high margin services Price to optimize revenue/margin Build pipeline and backlog Limit concessions and discounts Percentage of referenceable clients 87.5% 74.8% 17% Copyright 2015 Service Performance Insight All rights reserved. Not for distribution. 13 www.spiresearch.com

Optimize Human Capital Key Performance Indicator (KPI) Lead. Rest Employee annual attrition 6.5% 9.2% 29% Recommend company to friends/family Management to employee ratio Days for a new hire to become productive Guaranteed annual training days / employee Well-understood career path for all employees 4.53 4.31 5% 9.91 10.60-7% 49.1 60.2 18% 9.39 8.35 12% 3.53 3.22 9% Focus on in-demand skills Align sales and service delivery College hiring and employee development programs Implement competitive compensation structure Ensure skills visibility six months out Provide collaboration and workforce productivity tools Employee billable utilization 77.5% 71.0% 9% Copyright 2015 Service Performance Insight All rights reserved. Not for distribution. 14 www.spiresearch.com

Deliver Efficiently Key Performance Indicator (KPI) Average project staffing time (days) Concurrent projects managed by PM Lead. Rest 10.91 11.80 8% 3.86 3.99-3% Average project staff (people) 3.99 3.78 6% Average project duration (months) 5.80 4.98 17% Projects delivered on-time 85.0% 78.5% 8% Implement standard processes Build templates and processes to sell and staff Deliver on-time, on-budget Stay quality focused Superior project communication and collaboration o internally and externally Projects canceled 8.2% 9.1% 10% Average project overrun 6.9% 8.1% 16% Standardized delivery methodology 76.8% 60.0% 28% Copyright 2015 Service Performance Insight All rights reserved. Not for distribution. 15 www.spiresearch.com

Manage Finances Key Performance Indicator (KPI) Annual revenue per billable consultant (k) Annual revenue per employee (k) Average revenue per project (k) Quarterly revenue target in backlog Percent of annual revenue target achieved Percent of annual margin target achieved Lead. Rest $239 $186 28% $206 $154 33% $222 $197 13% 53.5% 42.8% 25% 100.9% 89.2% 13% 97.3% 84.7% 15% Develop and abide by annual targets o Revenue, margin, etc. Build backlog Collect all financial data Ensure accurate and timely invoices Collect promptly (DSO) Maintain revenue and margin targets Project margin 43.3% 34.9% 24% Profit (EBITDA) 19.8% 8.9% 123% Copyright 2015 Service Performance Insight All rights reserved. Not for distribution. 16 www.spiresearch.com

PSA Drives Organizational Visibility and Performance Plan Optimally Increase Sales Optimize Talent Deliver Efficiently and Effectively Maximize Profit Determine the services with the highest potential for growth and profit Sell services with available skill sets, price to optimize revenue and profit Focus on skills in demand, develop compensation and training to minimize attrition Efficiently manage resources, projects, time, quality and cost Manage invoicing and Days Sales Outstanding (DSO) Key Performance Indicator (KPI) With PSA w/o PSA PSO size (employees) 236 240-2% Year-over-year change in PS revenue 10.0% 5.7% 76% Employee annual attrition 8.7% 10.4% 16% Average project staffing time (days) Project duration (manmonths) 11.1 12.8 13% 25.6 21.1 22% Project Margin 36.9% 35.2% 5% Profit (EBITDA) $4.36 $1.72 153% Copyright 2015 Service Performance Insight All rights reserved. Not for distribution. 17 www.spiresearch.com

PSA Integrated with ERP Professional Services Automation (PSA) Project timeline Project cost Resource costs Time and expenses Invoice schedule Enterprise Resource Planning (ERP) Project margin Additional costs Invoice specifics Client payments DSO Key Performance Indicator (KPI) Year-over-year change in PS headcount Concurrent projects managed by PM Annual revenue per billable consultant (k) Int. PSA No Int. PSA 11.6% 9.5% 22% 4.45 3.87 15% $208 $194 7% Annual revenue per employee (k) $178 $150 19% Quarterly revenue target in backlog Percent of annual revenue target achieved Percent of annual margin target achieved 51.4% 44.8% 15% 93.3% 90.9% 3% 88.8% 86.3% 3% EBITDA % 10.0% 9.7% 3% Copyright 2015 Service Performance Insight All rights reserved. Not for distribution. 18 www.spiresearch.com

Remember, Everything is Related Leader. Confid. Comm. Vision Client Satisfaction Growth Bid-to-Win Resource Mgmt. On-time delivery Project Margin Attrition Execute EBITDA Bill Rates Backlog Overhead Ramping Copyright 2015 Service Performance Insight All rights reserved. Not for distribution. 19 www.spiresearch.com

Focus on Low Performing Areas Can you get the Red Out? Organizational Demographics Consulting Rus Peer Survey Average Average Year-over-year change in PS revenue 0% - 5% 11.71% 9.96% New clients Under 10% 28.1% 29.0% Bid-to-win ratio (per 10 bids) 5-6 wins 4.68 4.92 Deal pipeline relative to qtr. bookings forecast Less than forecast 231% 199% Employee annual attrition 15% - 25% 10.0% 8.9% Recommend company to friends/family Neutral 4.28 4.24 Employee billable utilization 50% - 60% 74.2% 71.0% Projects delivered on-time 40% - 60% 80.8% 78.3% Average project overrun Over 30% 7.9% 8.9% A standardized delivery methodology is used 60% - 80% 67.5% 66.2% Annual revenue per billable consultant (k) $150k - $200k $193 $197 Annual revenue per employee (k) $150k - $200k $158 $167 Quarterly revenue target in backlog Over 70% 49.3% 48.4% Percent of annual revenue target achieved 80% - 90% 92.9% 90.5% Percent of annual margin target achieved Under 80% 86.3% 87.0% EBITDA 3.5% 10.2% 13.2% Level 1 Level 2 Level 3 Level 4 Level 5 Copyright 2015 Service Performance Insight All rights reserved. Not for distribution. 20 www.spiresearch.com

Service Performance Insight Accelerate Service Productivity and Profit Follow us on: www.spiresearch.com

Pariveda Solutions Kerry Stover, COO 22

Pariveda Solutions has been a participant in SPI s Benchmark since 2005. SPI s Benchmark highlights Pariveda s unique, employee-centric culture. Page 23

Upland s Tenrox solution is a core system Pariveda has utilized since 2006. We achieve efficiencies in operations through time entry, expenses, staffing, invoicing, and reporting. Tenrox provides us the visibility we need to manage our business. Page 24

Our Mission: Developing people to their fullest potential requires sustainability and transparency across and over multiple generations. Sustaining Talent Development Transparency Page 25

Enterprise Architects Product Architect Customers Suppliers Competitors Business Architect People Structure Process Technology Architect Applications Frameworks Infrastructure Our Objective: Develop solution architects who navigate white space and ultimately enterprise architects who define white space. Solution Architects Page 26

Working in white space provides value in our industry. Employees The Business of IT Gap Enterprise Architects Mastery comes from continuously building skills, knowledge and habits across a broad spectrum of capabilities. Executives Principals Managers Associates Consultants Business Strategy People Structure Processes Technology IT Mastery Expertise Proficiency Competency Advanced Beginner Novice Soft Systems Hard Systems Page 27

Employee Contribution and Potential Our view of career development is to select only the top 15% to 20% and develop them all. Fins No Promotions / Bonuses Counsel Out Remaining 45% next to 20% Top 20% of Employee Universe Promotion Pace Same or Faster than Anywhere Else Our Expectations Framework sets the meets bar at the top 15% to 20% Anywhere Else Average Top 10% to 20% Hire and Promote Top 80% Page 28

Our Expectations Framework allows individuals to develop at their own pace and guides career development to achieve their maximum potential through challenging learning, coaching, and giving. Page 29

Technology advancement makes infeasible feasible Trust Strengthened Throughout Network Thought Leadership Offered Senior Fin Growth From Exploring White Space with Client Junior Fin Growth From Implementing for Client Our focus on individual and corporate learning and growth help make the infeasible possible earlier. Value Created for Client, Firm and Fin Page 30

Compound Annual Growth Rate = 52% Our belief in growing the individual is our key success factor. comes from repeat business or referrals work at Pariveda New York Wash DC Atlanta Chicago Dallas Houston Seattle San Francisco Los Angeles of our people We believe our model is sustainable because it transparently places the needs of the individual first. Page 31

Pariveda Solutions Learn Always. Coach More. Give Back. engage with us

UPLAND SOFTWARE TENROX PSA

The Upland Family of Cloud-Based Products Built-for-purpose tools to suit your needs delivered by a single, enterprise-class software company Category IT Financial Management Project Portfolio Management Project Portfolio Management Project Portfolio Management Professional Services Automation Time & Expense Management Document & Workflow Automation Web Content Management Mobile Engagement Management What it Does Run IT as a business with transparency, visibility & control Improve business results through top-down strategic planning and portfolio alignment. Drive project & resource performance through simplified, out-of-box PPM Improve results through bottom-up, executionfocused project management and collaboration. Streamline service delivery & resource management Automate project time tracking & client billing Improve efficiency with end-to-end content & process automation Boost brand awareness, increase engagement & drive conversions Drive and manage digital engagement through two-way SMS campaigns

TENROX PSA

Do you Often Ask? Are you allocating your resources to low margin projects? How can you increase resource utilization? Are you experiencing revenue leakage due to billing delays and manual billing processes? Do you enter and re-enter data into multiple systems? How can you better manage scope change on fixed bid projects? 36

Professional Services Automation (PSA) Increase Project Effectiveness Achieve Better Visibility Improve Planning & Forecasting 1 2 3 Top Reasons why services organizations implement PSA Improve Resource Utilization 4 According to a study performed by the National Computing Center 37

The Tenrox Value Best of breed PSA with built-in connectors Dedicated team for deployment & training Continuous support to ensure your success Intuitive UI coupled with unmatched feature set Visual workflow-driven architecture simplifies configuration and reduces learning curve Built on the Microsoft stack (SQL,.NET, SSRS) Proven turnkey solution built for organizations like yours 38

Tenrox PSA Enables services organizations to improve service delivery and resource management, while streamlining accurate time and expense capture and billing. Awards & Accolades: Best Project Management Solution PPM for PSA Certified 39 Key Benefits & Capabilities: Monitor and increase resource utilization Increase control over fixed bid projects, scope change and employee-related expenditures Implement consistent project execution best practices Automate project compliance with labor and industry regulations Increase project visibility, workforce productivity and operational effectiveness Facilitate real-time communication and decisionmaking Key Functional Areas: Resource & Capacity Planning Project Planning Revenue Management Workflow Designer Time Tracking Expense Management Project Financials Analytics & Reporting Integration Mobile

QUESTIONS?

Contact Us: Phone: Direct: 450-688-3444 Toll free (US and Canada): 855-944-PLAN (7526) Email: info@uplandsoftware.com Website: www.tenrox.com Connect with us: @tenrox Tenrox Company: Tenrox 41

PDU Credits This webcast session entitles you to obtain 1 PDU towards your PMP as per the PMI Organization. This session appears on www.pmi.org web site page. Continuing Certification Requirements System: https://ccrs.pmi.org/search Course information: Provider ID#: 2750 Provider Name: Upland Software Course ID: Tenrox04072015 Program Name: How Great Technology Professional Service Companies Manage Headwinds and Excel 42