Parallax Shares “Holy Grail Forecast” and Other Tips for Profitability in 2022

As demand for digital services companies continues to increase amid the pandemic due to staffing shortages, profitability remains a challenge among business owners as they look for alternative ways to maximize efficiency and automate workloads. In addition, many digital services companies lack the strategies and tools to accurately forecast supply and demand and this year, the need for specific skills is changing rapidly, customers are looking to keep budgets in-check, and the cost of talent is increasing at a rapid pace. The co-founders at Parallax are all too familiar with these scenarios and as a result, are providing digital services companies with tips for profitability in the new year.

“The most important thing a digital services company can do is get ahead of the changes in resource supply and demand so they can be less reactive and more strategic when it comes to pricing, planning and staffing their work in a way that aligns with their growth ambitions,” said Dave Annis, Co-Founder and COO of Parallax. “The profitability issue for most businesses is the reliance on instinct planning, which is why our automated platform provides them with the tools they need to predict with confidence and accuracy.”

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Digital services companies should keep the following tips top of mind in 2022:

• Use your Sales Pipeline to Forecast Revenue: It is important to proactively take action to generate new business before missing revenue targets. Visibility into and regular assessment of the sales pipeline will enable you to take action when there’s a predicted shortfall in incoming work. Responding to dips in the sales pipeline, instead of workload dips, will stabilize your revenue and increase the likelihood of meeting your goals.
• Understand and Track your Margin at the Project Level: Most organizations only think about margins at the organization or account level, but what sets mature digital services apart is that they understand and track margins at the project level. To do this, companies should price and plan each project with a margin goal in mind, and track the performance of that project weekly. By doing this, your company can more accurately manage a project’s margin goal in real-time, and/or reset expectations when the project is diverting from the original plan.
• Implement the “Holy Grail Forecast”: As a digital services company, one of the most important things you should do is regularly commit to forecasting resource supply and demand. By committing to these three habits on a weekly basis, your organization can generate forecasts that allow you to more confidently predict resource supply and demand, and know when and how best to invest in your people. We refer to this as the “Holy Grail” of insights:

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Review and refine the sold project backlog to ensure resource plans are accurate.

Make sure actual hours are submitted each week and review weekly timesheets of actual hours worked.

Review and refine the sales pipeline by adding and updating resource plans on all deal in the sales pipeline that you feel at least ten percent confident will close.

Doing these things on a weekly basis isn’t always easy, but using a tool such as Parallax helps reinforce these habits and ensures the data is reliable, accurate and up-to-date.

Strive for 100 Percent Productive Employee Utilization: High-performing digital services companies regularly achieve billable utilization rates of 75-85 percent. However, what really sets a digital services company apart from one another is how they dedicate the remaining 15-25 percent. These organizations do not just write that time off as “non billable.” Instead, they do their best to plan those hours, usually tied to internal, growth and education, and pro bono projects. This allows them to have a much clearer picture as to how employees are using their time and invest in the non billable work that is providing the most value to the individual and the business.

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[To share your insights with us, please write to sghosh@martechseries.com]