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SaaS Professional Service Organizations Achieve Strong Growth: SPI Research

By Rajani Baburajan
TMCnet Contributor

Nineteen SaaS (News - Alert) PS organizations achieved net profit of 23.1 percent in 2010 compared to eight other industry segments’ average net profit of 6.6 percent, according to SPI Research’s “The 2011 Professional Services Maturity Benchmark report.”

The year 2010 marked the beginning of a recovery for the professional service sector. The strong indicators including average bill rates for growth are all up. The professional service sector will show stronger growth in 2011.

“The PS Maturity Benchmark report is an outstanding resource that serves as the information backbone I use to manage our PS Practice including: revenue and profitability goal setting; billable utilization targets; and services pricing establishment. The key metrics included in this report provide the ruler by which our organization is measured,” said Brandon Walsh, vice president of Professional Services, Clearpath Solutions Group, in a statement.

Annual revenue growth, headcount increases, and percentage of revenue in backlog were all up in 2010, recovering nicely after a significant decline in 2009. Year-over-year revenue growth has outpaced year-over-year headcount growth (7.6 percent and 6.9 percent respectively).

Average bill rates increased from $175 to $178 per hour. Embedded PS organizations increased their average rates by 7 percent while independent bill rates declined by -3 percent.

The average base salary for six job titles (project manager, business consultant, technical consultant, solution architect, account manager and training specialist) jumped 11 percent from 2009 to 2010.

The 2011 Professional Services Maturity Benchmark report was created by Jeanne Urich and R David Hofferberth. The report offers information received from 611 PS organizations over the past four years. It contains analysis of 180 key performance indicators (KPIs), base, bonus and bill rate information for 11 job titles.

Meanwhile, the SMB adoption of SaaS products exploded in recent years, specifically in WFM, IVR, CRM and other call center based technologies.  According to a recent study by AMI-Partners, SMB spending in the U.S. on SaaS will grow dramatically in the next five years, out pacing the premise based alternatives by a considerable amount.