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  • Nov 10,2016

Research Reveals $35 Billion in Billings is Lost Every Year

A recent study by BigTime Software, a cloud SaaS provider of time management software for professional services firms, found that $35 billion in billings is lost every year because of poor or nonexistent notes supporting employee time entry.

Previous studies, including one published in the Harvard Business Review last year, surveyed timekeepers own opinions on how valuable their time entries were. The BigTime study is unique in that the time management software company used economic value, rather than opinions, as a more neutral yardstick.

BigTime Big Data Study 2016 Uncovers value of Time Tracking

Unique In Scope

The study is unique in ways beyond its economic valuation of data. The scale of the project, analysis of 12 million timesheets, has not been undertaken before.

Quoting Saunders, “The study is so groundbreaking because of the large amounts of metadata collected by BigTime data analyst Matt Kwiecien – including what location the time was entered from and even what device was used to enter the data. Other studies fell short because they simply asked users opinions on the value of the data and didn’t review the data collected.”

Insightful Findings With a Practical Payoff

The findings reveal that more value was placed on an employee’s activity notes rather than on “real time” data entry. In other words, the data indicate that it is more valuable for businesses to know what theIr employees are working on rather than exactly when they enter their time, as long as it’s every day or so.

Interestingly, the activity notes don’t have to be more than a few keystrokes. Big Time’s study showed 140 characters, essentially a Tweet, is enough to support a more billable note. Time tracked the next morning was found to be equally billable in the study.

Of special interest to small- and mid-sized firms is that they can increase realization by $5,000 to $10,000 per employee annually by adding notes to the time entry, regardless of when the notes are entered.

Potential of Big Data Realized to Help Firms Succeed

Five years ago, BigTime CEO Brian Saunders probably wouldn’t have guessed that his company would be part of the Big Data movement. “You don’t start out saying ‘I’m going to develop a set of data that I can use to help professional firms run more effectively,’” he said. “You head out in one direction, and keep an eye out for potential value.”
Saunders continues, “The thing that makes Big Data so compelling is that cloud companies, like BigTime, have created multi-tenant data warehouses. It’s really a gold mine of information that has the potential to help our customer base elevate their business in a way that they couldn’t if they were on their own.” For more, read the article on AccountingWeb.com.

BigTime’s Study Isn’t About Big Data. It’s About Discoveries Made Using Big Data

When asked why BigTime invested the resources to undertake the study, Chairman John Howell explained, “Our purpose has always been to help our professional service firm customers be more profitable. This research is consistent with that philosophy. It’s another way that we can leverage the data our software captures to help our customers, and the industry at large, achieve greater economic success.”

Howell emphasized, “BigTime’s study isn’t about big data. It’s about the discoveries we made using big data. The fact that note length and timely entry increase billing realization is of immediate value and useful even if you don’t use our product.”

The Study Is Mathy And Here’s Why

Admittedly, the BigTime study is long on math and deliberately so. The research was meticulous and thorough in the coverage of what was analyzed. BigTime wanted consumers of this information to know that it is credible, worthy of being shared, and sufficiently important to establish industry best practices. While we realize most readers will not dive into the details, they are there for those who are interested. Read the abbreviated version of the study.



BigTime Software delivers real-time, metrics-driven time tracking, billing and project management for more than 2,000 professional firms, tracking over $2 billion (USD) worth of billable time each year. Their flagship product is a SaaS-based system that is custom-built for the professional services industry – specifically, Accounting, Architecture and Engineering, Consulting, Creative, Government Contracting, IT Services and Legal firms. BigTime is a venture-funded company based in Chicago committed to helping clients run professional teams more efficiently, unlocking potential revenue and improving profitability within the knowledge economy.

  • Jul 22,2015


I’ve spent a lot of time lately talking about how the cloud will fundamentally alter your relationship with your customers.

“Great,”  is the typical response, “But what does that actually look like in real life?”

So – I did a webinar, recently, targeted to accounting firms.  The goal was to fast-forward a few years.  To talk about how three trends that are reshaping the way we interact with our customers will play out within the accounting industry specifically (and, more generally, across most professional services industries).

I liked the basics, and we’ll do more specifics over the next few months, but you can already see these trends alive and kicking in the market for professional services today.  To understand them, we took a detailed look at three basic forces at work in this new cloud-based services economy:

  • The Network Effect
  • The Demand Economy
  • Co-opetition

These are all interesting forces on their own, but their interaction – specifically how they are amplifying each other and re-shaping the market for professional services, is significant.

The Network Effect

This isn’t my phrase, it’s Bob Metcalfe’s (the guy who was instrumental in devising the protocol that the internet runs on).  After much consideration and study of telephone networks, Metcalfe figured out that broad ranging networks that incorporate smaller networks can be extremely valuable to business.  And that value is actually derived through developing the connections that can be created between people or devices.  Ultimately, Metcalfe determined that the value of a network is worth the square of its connecting points – a number that, as contact points increase, grows exponentially.

Metcalf's Law graphic
 

So why do we care?  We care because that same law, it turns out, can be applied to the value of your network.  To the value of the network of people (and devices and applications) that your firm “connects” with.  The more deeply your people (AND your data) are connected within the uber-network of the web, the more potential value you’ll see showing up on your virtual doorstep.

I argue that this rule ALONE is reason enough to shift all of your systems to the web.  I see it all the time — firms that used to keep their data “locked up” in proprietary or on-premise applications are suddenly able to make faster and more informed decisions because BigTime does nothing more complicated than FREE UP their data!  Suddenly, managers can connect that data (eg – who’s responsible for what/when; how much time is it supposed to take; how much time did it ACTUALLY take; etc) to a host of web-based BI and reporting tools.  As a result, decisions take a quantum leap in terms of speed and accuracy.

But, the other two trends in the market amplify the network effect.  In fact, they seem to be working together to deposit new revenue on your doorstep.  Keep this idea in your pocket.  We’ll look at that trend a few paragraphs from now.

The Demand Economy

Compare the number of times you’ve downloaded and “tried” an app on your phone to the number of times you’ve called the app manufacturer in order to get a demo first (describe what you’re looking for, ask the sales guy to verify your needs, get a quote, send a PO).

My guess is your answer is 100:0.  That phenomena is at the core of the Demand Economy.  This is not new to software.  Think of some more traditional examples in which transactions are completed with minimal points of contact.  The process of browsing in a bookstore, or pumping self-serve gas illuminate the point well.

In a bookstore (brick or online), if you don’t have a specific title in mind, you wander the aisles until — for whatever reason, something catches your eye.  It would be very rare for you to be approached by a sales agent offering help.

The same can be said about self-serve fuel.  When we pump our own gas, our interactions with a sales clerk are extremely limited, maybe even non-existent.

Looking for something more tech-focused?  How about the ATM machine? At the time they were introduced, nobody thought that they would replace traditional bank tellers.  In fact, they were just there to cover “non-banking hours.” But over time? They’ve gradually morphed into our primary banking interaction.

atm machine

 
Why?

The value of the convenience of being able to bank anywhere and at any time rendered the traditional teller obsolete.

While the real world has provided a steady stream of these interactions, the internet has fundamentally changed the way we act as consumers.  Not only have we come to expect this sort of low-touch purchasing experience, we crave it.  We start every product search on Google.  We solicit input from services like Yelp or Reddit or a thousand other recommendation sites. We click the “try now” button and get completely configured without ever talking to a sales person, even on systems which would have required a detailed RFP 5 or 10 years ago!

This type of low-touch interaction has permeated nearly all of our web activity.  And, the web has infiltrated nearly every buying decision a consumer faces today.  Ergo – even the accounting industry is being shoved toward low-touch “demand-centric” buying.

Just like the ATM’s of the physical world, these self-service purchases let us get what we want, probably even more, and on our terms, independently.

So, what does low-touch look like in the accounting industry today?

First, thanks to the Network Effect, it’s no longer an issue of your people working face-to-face with a customer.  Today, your organization is represented by all of the applications that you bring to the table, including social media. That means, the more apps people and devices you have tied to your firm’s “network,” the higher the probability of potential clients finding you.

Value-based pricing is a direct response to that trend.  Consumers need a clear way to purchase the thing they want (eg – the product they “value”) at a price they don’t need you to sit down with them and explain. Value pricing represents your firm’s quest to commoditize/simplify the things that you do and to present them to consumers clearly.  They are services with a clear beginning and a clear end, and they are designed in such a way as to minimize inaccurate expectations.  That’s a great independent goal, but the side benefit is that a consumer can now “sign up” for that value-based model without talking to you (via social media, review sites, third party sites and more).

Value based pricing is the buy-now button of the accounting industry.  It lets customers know the exact time and cost parameters of a project right upfront, and it lets them make a single decision:  buy/don’t buy.

Of course, to do this accurately, firms need to have very clear data that tells them what projects cost to produce.  And, the systems that manage that data need to be able to adapt quickly.  Managers need real-time access, etc.  So – the Network Effect makes demand-based buying possible.  Not on the web with all of your internal systems?  Then not only are you making it harder to manage your firm, you’re missing out on genuine revenue opportunities today.

Of course there is a lot more happening in today’s demand economy.  Take a look at the webinar for a brief look at Fiverr.com (one of my favorite potential game-changers in the industry, and another example of how a network-savvy firm can piggyback on the Network Effect to generate real revenues in the years to come).

Co-Opetition

The final trend that we discussed in the webinar was Co-opetition, a hybridized combination of cooperation and competition.  It refers to the benefits that might be derived when competing organizations pool elements of their resources for a mutual benefit (a term that originally grew out of Game Theory).

A good example of this is the licensing of interfaces by Apple to Microsoft in which Microsoft uses Apple’s technology to build devices that are designed to compete with Apple.  At first blush this might seem odd but, under closer scrutiny, you can see that, by doing this, Apple gets paid for its research and development and Microsoft is able to enter new market segments.

steve jobs and bill gates laughing

 
So how does that play out in the accounting world?  How does partnering with the competition help your firm grow?  There are two ways:  sharing customers and sharing workers.

Sharing customers used to be complicated.  You’d have to introduce your contact to a competitor, and that would open you up to all sorts of problems.  But what if you could share a customer’s data with someone (eg – someone specializing in sales tax rules for a given territory, or someone with specialized audit expertise), but you could control the deliverables yourself?  Even better, what if you could share that limited information with a firm that specializes in those deliverables?  A firm, for example, that had a strong value-based approach to “sales tax filings in Texas” or “DCAA Audit Prep.”  The broader your network, the more likely you are to find that type of relationship.  In addition, the more directly you embrace the Demand Market (eg – the more clearly defined your “buy button” is), the more likely that type of relationship is to seek out your firm.

How about virtual workers?

During the busiest times of the year, your associates are probably working to their fullest capacity.  So what happens if your workload outstrips your capacity?  When this happens, you’re confronted with the question of adding full time labor to solve short term issues.

If your firm is operating on the cloud, you’ll soon be able to have contract workers completing tasks remotely.  But if all of your firm’s necessary systems aren’t on-line, you’ve created a series of personal interactions that must be fulfilled in order to bring those people on board.

In fact, firms are beginning to ask BigTime about how they can push excess work to other accounting firms that have free short-term capacity.  In other words, “how can I just click this payroll project out to another firm on BigTime’s network and have them file the docs so I can review it?”

Granted, the notion of sharing virtual clients is closer to viability than virtual employees right now (in the long run, it will require less technology to bring on-line), but both are on the horizon.

One Specific Example:  Lacerte & BigTime

BigTime currently handles work from thousands of accountants, which equates to usage data on hundreds of thousands of tax returns.  Personal and corporate returns are being updated in real time, and are constantly shifting from one workflow status to the next (and, sometimes, backward again).  All of that workflow data is flowing from Lacerte into BigTime and up to the cloud so that it can all be managed on BigTime’s workflow dashboards.

lacerte bigtime partnership

 
This year, for the first time, all of this has been done independent of Intuit’s servers.  As a result, for the first time, BigTime has had an audit log.

In other words, our customers get to see where tax engagements were in the workflow when hours were logged against each of them.  They get to see how long every return waited in a given stage with no work logged against it, and they get all that information for free — just because we linked their tax prep system to BigTime (their cloud-based workflow system).

More importantly, the logs tracked how long each return stayed in each status code.  So, for the first time, a firm can look at its tax season and, basically, see a box score that shows how the entire firm performed as returns went through the process.

With this kind of data, firms can figure out where their money is made and lost and where calendar time might be made up and lost.  So – they can make smarter decisions next tax season.  Maybe returns sit in queue waiting for “partner review” for days or weeks — and maybe that backlog means partners have way too much to do “all at once” (and at the worst possible time).  Given that information, firms can game out next season (what if we incentivise clients to get to that stage earlier? what if we pushed that stage later in the process? what if we could clear out the other things on a partner’s calendar for that 3-4 weeks so that they recapture “lost” time?).

That means — next tax season — the firm across the street could be smarter and more efficient than you are, even though both of you use the same set of tools (Lacerte and the customer’s tax data).  While you’re counting CPE credits on both hands this summer, someone in your area is figuring out what it would take to offer a fixed-fee price on a corporate return, and you’re going to think “that’s crazy, how could they possibly know how long it would take.”  Then – they’re going to figure out how to offer a guaranteed turnaround time.  Then, once those things are in place, they’re going to innovate again. And again. And again.  And they can make that happen because they had the tools in place THIS tax season to understand how to make that “buy button” work!

cloud time tracking trend

 
That firm should be your firm.  It could be.  You just need to get your systems on the cloud, ride these three trends and watch the market bend toward you.


If you missed out on this live conversation, you can reserve your seat below. Seats are limited.
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  • Feb 27,2014

While most well-run professional organizations are using employee timesheet software data to help them run more efficiently, it’s not always a path to greater productivity.

If you’re asking your staff to track too much, then you might lose more than you gain. There’s a pretty steep diminishing return once you ask your staff to track more than 2-3 pieces of information for any given time entry. That descending returns takes a nose-dive if the information you are asking them to fill out involves data they don’t have at their fingertips (e.g. – you want them to track time “per task,” but tasks for the project they’re working on haven’t been entered into your system yet).

As a manager, striking the right balance between the information you ask for and the information you “could use” is often the difference successful timesheet implementations and failures. Too much, and staffers are less likely to stay on top of their daily entry. Too little, and you won’t be able to leverage that data to help your business improve its bottom line.

After watching thousands of managers try to walk this little tightrope, I’ve developed a fairly strong opinion on how best to approach it.

#1 – Start with too little.

It’s way easier to ask for more clarity later. While timesheet data will make your staff more efficient in the long run, it’s still a short-term drain on their time. Asking for the bare minimum, at first, will help increase compliance and will help score some early productivity wins. Project, “type” of work and notes should be enough to start with.

#2 – Always (always) ask for notes.

Timesheet notes will force your staff to summarize the work they’ve done. And, they let you score some early productivity wins.

Just having a manager comment on timesheet notes in project status meetings will help reinforce the value of that information to the entire firm. When filling out detailed timesheets helps to reduce the amount of time staffers spend updating management, they get a productivity boost they can actually see.

#3 – Let your system to a little heavy lifting.

Employees shouldn’t have to fill in bill rates, today’s date or their own name on their timesheet. Not because they can’t — just because they aren’t in the right state of mind to do that well.

Whatever system you use should be smart enough to keep that type of data out of sight.

Focus on showing staffers only the data they need to fill in. A 20-field data entry form is still a time waster, even if 19 of those fields are filled in on my behalf (users feel like they have to verify each field).

#4 Leverage. Leverage. Leverage.

Finally, don’t make timesheet data a dead-end. If the only thing you are using it for is billing or payroll — its going to be extremely difficult to get your staff to care. As soon as you start to use that data to drive staffing, client assignments, reviews, project management, etc. — you’ll see an immediate boost in compliance.


timesheet data

My favorite story on that topic came from a customer in Dallas. He implemented a timesheet system for a 20 person firm in them middle of his busy season, and he asked me what he could do to make sure it was successful (he’s not the type of manager to beat folks over the head… neither am I, I suppose).

“Just make sure they know you care about what they’re putting in there,” I told him. “Don’t make it black hole.”

After a month, he called to tell me that he had 100% compliance without ever telling a single staff member “don’t forget to submit your timesheet.”

How? His approach was drop-dead simple.

“I just stopped asking questions that were already answered in the data.”

Morning status meetings quickly focused on missing data, and the more data users added to their daily recap, the less “managing up” they had to do throughout the day. Staffers jumped at the chance to kill two admin birds with a single stone.

  • Feb 27,2014

If you ran a factory or a retail chain or a processing plant — your firm’s assets would be obvious, and the information on how to leverage them — endless. As the owner/ceo of a professional services firm — your biggest asset is invisible leveraging it (eg – improving it’s yield) is way more difficult.

Timesheets are your inventory.

For professional firms, a great time tracking software is essential. There aren’t many successful CEO’s that don’t understand that, but you’d be surprised how much prattle there is online about closing your eyes and pretending the clock doesn’t exist.

Don’t believe the hype. While you may have an innate sense of how best to service clients efficiently, your staff needs help figuring it out. All of them; every day.

The only way for you to help them along in that journey is to track what they are working on. Of course, I’m an evangelist for the smartest time tracking software on the planet, so I may be biased…


small business time tracking software

Start by thinking bigger than just ‘billable hours.’

If the only thing you do with your timesheet data is bill it, you’re missing out. Whether your initial motivation for tracking time was payroll or invoicing, you need to do more with the data if you are going to improve your leverage. Even firms that do fixed-bid work with salaried employees can leverage timesheet data to get better at the “business of running a business.”

We work with thousands of professional firms all over the world. Some of them mint money. Many of them don’t.

What makes the successful ones successful? Leverage. They’re good at leverage.

Successful firms use timesheets (and other data they track) to get better at estimating. They use timesheet data to flag customers and engagements that need attention. They use it to spotlight opportunities for additional training. And, when they do fail, they use that data as an audit-log to help them look back and see where failed project went south.

Track the absolute minimum.

I tell every CEO that asks to track time by staffer/project/labor code and that’s it. Don’t do anything else unless you have a specific and compelling need that ties directly to revenue. And, don’t forget to require notes.

Trust me — a simple timesheet will make you smarter, and it will feel less like a burden. They result in a higher compliance rate, too. Put simply: staff will log time more frequently and accurately if the process is (relatively) painless.

Notes. Notes. Notes.

Dont accept a time entry without any notes, and never accept entry that doesn’t break out a person’s day in to at least 4 or 5 entries. Nobody spends 8-10 hours doing the exact same thing. Nobody. If that’s what you’re getting from your staff — then it’s time to regroup and get the tracking engine back… er… on track.

OK… OK… Now What?

That’s easy: buy-in. Whether you are brand new to time tracking or just trying to pull an existing process out of the ditch, your success depends on getting the entire firm to buy-in on the value of tracking time.

To help them get it — you’ll have to show them.

Let your staff know what you’re up to.

Never ask staff members

“where does ProjectX stand?”

Rephrase the question.

“I took a quick look at the timesheet log, but I didn’t get enough info from your notes. Can you catch me up on ProjectX?”

That simple change will get more detail and more frequent updates.

Of course, you should actually take a look at recent timesheet activity on ProjectX (if your system doesn’t give you real-time access to that data, then switch systems).

Incorporate timesheet data into your status meetings.

Again, let meeting participants know that you’ve looked at timesheet history as a part of your meeting prep. In most firms, both meetings and timesheet/status reporting are seen as efficiency killers. If filling out detailed timesheets reduces the amount of time staffers have to spend updating management, they’ll get an immediate productivity boost.

Get to know your metrics.

You’ll get a huge boost in value if you can monitor three key metrics: availability, utilization and realization (if those metrics are foreign for you, then take some time to research them). I know that there are lots of opinions about what to add to those metrics, but those are the essential 3 for success. You may find others you like (average billing rate, weighted capacity, etc.), but you’ll veer off the road if you aren’t watching those three.

Even if you have to hand-calculate them, work those three metrics into employee reviews and improvement plans. Set targets (for the firm and for individuals), and review those targets with staff and managers.

No fairy-tales.

The temptation — whenever you look at metrics — is to attribute some moral value to them. It’s not your fault — it’s the system you’ve been in since grade-school. No matter how anxious you get when you’re handed a status report from your son’s hockey coach, take a deep breath before you start to stress out about these little metrics.

You want a high-score? Go play xbox. You want to get a handle on what your firm is good at and what you need to work on? You need a dispassionate (eg – non-judgmental) assessment of these metrics. Your goal is knowledge, not high-scores.

That means no cheating. No massaging the data. No “I would have been more utilized, but I think there’s a lot of internal time that didn’t get tracked.”

If your entire team knows that these are the metrics you are looking at every day, and those metrics (good or bad) help drive their opportunities at training, leadership, higher-end client work and more — then they’ll be as interested in making them accurate as you are. And, you’ll take a big step toward using timesheet data to make staffers better at their jobs.