Professional Services Automation (PSA) users see 19% increase in gross margins, new research shows

A recent benchmarking survey conducted by The Consultancy Growth Network and Consultancy BenchPress has revealed the staggering impact of Professional Services Automation (PSA) software for consulting firms.

Competitive edge

The 2024 Consultancy BenchPress survey shows that businesses using PSA software are outperforming those that don’t, with PSA users reporting 19% higher gross margins than spreadsheet users, and 8% higher than multiple standalone systems users.

“Consulting firms are starting to realize that gross margin is an even more important metric than top line revenue growth,” said Ben Edwards, VP of Consulting. “Businesses that focus on gross margin are more likely to drive higher levels of profitability and scale more successfully.”

Marginal gains

Consulting firms who use a PSA also see a 2% higher utilization rate than those using spreadsheets. The study shows that just a 1% increase in utilization will deliver a 20% increase in operating profit.

“A 2% increase in billable utilization might not sound like much, but when it translates to a 40% improvement in operating profit, that should make any boutique leader sit up and listen,” said Ben.

Best in class

The report also revealed some of the best practices that those firms in the top-performing cohort followed: tracking their margins by both project and client. Shockingly, 43% of firms don’t track margins by project, while 70% of firms don’t track margins by client.

“The consulting firms that track margins by project and client are the ones with gross margins above 50%,” said Ben. “Firms that don’t are leaving money on the table, because this is a clear way to improve.”

On the rise

The percentage of consulting firms using a PSA rather than spreadsheets or multiple systems is now 24%—a 50% year-on-year increase from last year’s 16%. 

“More and more consulting firms are choosing to invest in their operations to achieve a competitive edge,” Ben said. “All of the evidence shows that PSA users are driving higher margins and improving growth prospects—the firms still clinging to their spreadsheets will miss out.”

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Want to know exactly what a PSA can do for your business? Schedule a quick chat with one of our consulting experts today to see CMap’s PSA in action.