How Tracking Time on Projects Boosted One Company’s Profits Almost 50%

I know you guys love reading about how other people do things on their projects, and I’ve been researching case studies for my new book, Collaboration Tools for Project Managers (is that the first time I’ve mentioned that the book now has an official title? I think it might be).

There are a lot of success stories out there. One thing I have noticed from talking to companies about how they use collaboration tools for project management is that it’s no longer just about sharing status with clients or instant messaging. Those features are expected but teams also need robust project management functionality and time tracking.

Here’s a case study that I wasn’t able to include in my book but is a great example of how cloud-based project management tools are today doing more than just task management and facilitating team collaboration. By integrating time tracking, an Australian company improved the profitability of its projects by nearly 50%.

And it wasn’t even hard.

Understanding the Profitability Problem

At first glance, Australian-based cloud system consultants Big Blue Digital appeared to be thriving. By 2013, the team had developed over 600 websites and had created over 100 custom internet applications. With over 12 years of experience in the industry, the team (which had started out of a home office in 2000) were strong players in website development, web applications, online communication and content management systems.

However, when CEO Brendon O’Sullivan was going through their financial statements, things weren’t adding up. They were taking on more projects than ever, but profits at the end of the quarter weren’t where they should have been. “We were losing money on untracked billable hours, and I had no way of seeing where the time was being spent,” says Brendon.

In addition to leaking the project time of their professional team, the business was struggling with inefficiencies caused by using clunky software.

“Apart from Microsoft Dynamics CRM, we were using Excel spreadsheets, and the excessive administrative burden it created was just ridiculous – it just wasn’t working for our business anymore,” Brendon says.

Slow Billing and Ties to Tools

Ineffective tools meant that they were delayed billing for their project work, which in turn had an impact on the business’ cash flow. “Historically, we got down to as bad as 60-plus days in a billing cycle, which is pretty bad from a cash flow perspective. Our invoices would be sent too late and paid too late – everything we were doing was too late!”

Big Blue Digital’s challenge was made more complex by their long-term partnership with Microsoft, which gave them incentives to try and use Dynamics to run their business. The perks of being a partner, along with their long-term expertise in the software and time sunk trying to make it work for the business made transitioning to a new platform difficult on a financial and emotional level.

“The whole reason we made such a necessary change was because it was time for us to improve the business efficiency and workflow,” says Brendon.

A New Suite of Software

Big Blue Digital decided to replace Microsoft Dynamics CRM with Accelo, which is designed specifically for professional services firms and incorporates project management functionality with client management features and collaboration tools. They also moved to Google Apps instead of Exchange, and swapped out QuickBooks for Xero.

The Challenge of Time Tracking…And the Benefit

One of the biggest challenges Brendon faced was training his team to start tracking their time, which for the industry was hardly unusual. Coping with a change in behaviour was difficult, and it took time for everyone to understand and acknowledge the importance of time tracking.

As Brendon discovered, “By taking the pain out of tracking our time with automation and real-time visibility, Accelo has really made it easy for my entire team. It has also given me the insight I needed to expose areas of inefficiencies amongst my staff or areas where they were not tracking their time.”

Improving Billable Project Time

Effective time tracking on their projects meant that Brendon was able to go from 36% of worked hours billable in November 2013 to 62% of hours tracked and billable in November 2014. Given professional service businesses spend more than half of their revenue on the costs of human resources, that had a huge impact on profitability, boosting income without having to take on more projects just be being more aware of what the team was doing.

“With Accelo, I know exactly how much we were losing every month,” says Brendon. “There was no sugarcoating it: when I broke it down, it came out to around $30-50K a month in untracked billable hours.”

Fast-forward to today and Big Blue Digital have made significant changes to their business model. New technology has improved the transparency on projects and made it easier to collaborate with clients on project work. “It empowered us to create a whole new revenue stream,” Brendon says. “Now, we have the tools we need to go after the larger digital service contracts.”

And they’ve significantly improved that invoicing cycle that was hitting cash flow. “We managed to go from a 60-day invoice cycle down to an 18-day invoice cycle, Brendon says. “We reduced it by 70%,” and I am pretty happy about that.”

This article was sponsored by Accelo and first appeared in 2016.