Gain an Advantage: Tap into Resource-Specific Data & Analysis
Savvy technology staffing companies are armed with a significant weapon – and it is enabling them to optimize operations in a way that leads to a sea of competitive advantages. Unfortunately, basic financial statements do not provide the insight required to make the kind of business decisions that disrupt the competition and increase a company’s market share. Smart technology staffing companies are going beyond the basics – they are tapping into resource-level financial insights to improve operational effectiveness.
While basic financial information – like GAAP-based income statements and balance sheets – may be required for compliance and lending purposes, they do not offer the insights needed to make pivotal business decisions. However, individual, resource-level financial information is a game-changer. By tapping into resource-level financial information, executives can leverage strategic advice and reporting and analysis to inform sharp decision-making. Doing so enables technology staffing companies to improve operational effectiveness by:
• Making data-driven decisions that elevate the bottom line
• Managing cash flow and improving competitive posture
• Enabling benchmarking and stronger valuations
Make Data-Driven Decisions for a Stronger Bottom Line
Only meeting the bare minimum of financial reporting and compliance needs is a thing of the past. Technology staffing companies need more by way of data-driven reports that enable strong decision-making. They need reports that offer insight into optimizing the staffing mix.
As fast as technology changes, so too must the mix of technology resources. As technology changes, resources that are adept at the newer technologies can demand higher bill rates. For example, as Java-based technology was introduced, it would only make sense that a technology staffing company to divert more of its staff resources accordingly to maintain or accelerate its bench strength. So having access to resource-level data that points to Java propelling 20-30% higher margins in Salesforce compels a business owner to groom the Java-based technology resources into a Salesforce certification to attain higher bill rates. Unfortunately, standard financial reporting cannot bring this level of strategic decision-making. Resource-level strategic advice, reporting, and analysis provide the visibility needed for a smart “re-mix” of resources – quite simply, it helps to optimize resources and maximize revenue.
But increasing revenue is not the only benefit of improving operational effectiveness. Having access to resource-level financial information helps technology staffing companies manage costs. It brings visibility to costs by-resource on a monthly basis. It helps staffing companies calculate gross margin by-resource type – including visibility into allocated costs such as insurance and other employee benefit costs. When technology staffing companies know the costs of what they are selling (technology people resources), they are able to make more informed business decisions that drive profitability.
As a technology staffing company that depends on people as the finished product for sale, it only makes sense to access profit analysis data that offers gross margin information at a “people-level.” Just as companies with inventory must access product-level profit information, so too must staffing companies access gross margin and profit analysis on a person-by-person level. Organizations that do not have resource-level financials do not have all the information needed to make the kind of decisions that boost growth in ways that basic financial information cannot.
Manage Cash Flow and Improve Your Competitive Posture
Resource-level financial information and analysis help companies manage cash flow and avoid cash shortages. Technology staff resources have various compensation arrangements – some are paid a standard amount per month regardless of hours worked while others are paid hourly. For cash-basis organizations that have sizable debt on their balance sheets with large payments due to technology resources, cash planning is essential to operational effectiveness.
Having resource-level granular analysis enables cash planning so that the company’s debt can be paid in a timely manner. It prevents – or at least mitigates – unforeseen cash shortages. And it also facilitates expense-matching and planning so that expense deductions can be optimized and deducted in the applicable tax year. In addition to the advantage of planning for cash outlays, resource-level financial information also helps companies access the granular information needed to facilitate more efficient banking transactions for loans and other debt arrangements, including lines of credit.
Enable Benchmarking and Stronger Valuations
Resource-level financial data offers the kind of information that can be analyzed and used to benchmark an organization’s standing in the industry as compared to its competitors. Benchmarking offers insights that enable an organization to pivot where needed. It helps them increase market share by re-planning and reconfiguring the drivers of key performance indicators to improve their standing among competitors by improving their operational effectiveness.
Lastly, as technology staffing organizations grow and build value, it is important that they are able to provide the documentation and data necessary to support their valuations. For organizations positioning for an acquisition or buy-out, having resource-level financial information brings the clarity needed to substantiate an organization’s valuation story. Having independently managed resource-specific analysis offers credibility that goes a long way in establishing a reliable valuation.
To Stay in the Game, Get Granular
Technology staffing companies who are strategically moving through the race for talent and optimized bill rates know they need more than generic financial statements to operate effectively. They demand data that enables them to move forward – data that places their chess pieces where they are most effective.
To disrupt competitors, technology staffing companies must leverage granular-level data that can be analyzed for game-changing insights that can move markets and increase market share. By tapping into resource-level financial statements and strategic analysis, executives can make the kind of data-driven decisions that elevate profits, help manage cash flow, enable benchmarking, and improve valuations and competitive standing.