Overview of talent supply chain strategies in the Professional Services Industry

1. Talent Supply Chain Management The Evolution of Key Elements Essential for Service Firm Success Joel A. Capperella Industry Principal, Professional Services

2. External Factors and Introduction of Talent Supply Chain Results of Independent Study Elements of the Services Business Model to Consider Achieving Talent Supply Chain Efficiency

3. External Factors and Introduction of Talent Supply Chain Results of Independent Study Elements of the Services Business Model to Consider Achieving Talent Supply Chain Efficiency

4. Total Service Dollars – From TPSA Services Fifty 7% 97% 46% Q3 3% 97% 46% Q2 14% 98% 46% Q1 12% 89% 44% Q4 Q4 Q3 7% 89% 42% 97% High Service Gross Margin 13% Low Service Gross Margin 48% Average Services Gross Margin

5. Gross Margin Analysis 30% 35% 40% 45% 50% 55% 60% 65% Hardware Companies 30% 35% 40% 45% 50% 55% 60% 65% Software Companies 30% 35% 40% 45% 50% 55% 60% 65% The Service 50 30% 35% 40% 45% 50% 55% 60% 65% All Product Companies 30% 35% 40% 45% 50% 55% 60% 65% Pure Service Companies

6. Professional Services Profitability

7. Service Industry Trends Pressure on Profits More Options Optimized Delivery

8. The Service Revenue Life Cycle R evenue to r evenue PROFIT R EVENUE rEVENUE Engagement Lifecycle CUSTOMER PROJECT

10. The Service Revenue Life Cycle R EVENUE PROFIT Engagement Profit BUS. MODEL Field G&A G&A R&D Marketing CLIENT ENGAGEMENT REV. MIX FORECASTING rEVENUE DEALS Sales Engagement Lifecycle REVENUE MIX SALES PIPELINE Proposals PROPOSAL

11. External Factors and Introduction of Talent Supply Chain Results of Independent Study Elements of the Services Business Model to Consider Achieving Talent Supply Chain Efficiency

12. The Revenue Life Cycle Three Key External Variables Industry Talent Clients Service Partners

15. Traditional SCM vs. TSCM Resource Management Transportation Resource Management Warehousing Supplier Management Procurement Talent Management Manufacturing Offering Development Product Development Resource Management Order Fulfillment Demand Management Demand/Supply Planning TSCM SCM

16. Talent Supply Chain Service Partners Supplier Management Offering Development Demand Management Talent Management Resource Management Industry Talent Clients

17. TSCM Process Disciplines Securing and assigning globally. Global Resource Management Securing and assigning locally. Local Resource Management Offer identification, scoping, development, resource requirements Offering Development Partner and sub-contractor selection and management Supplier Management Demand generation, forecasting, proposing, closing Demand Management Selecting, recruiting, developing, retaining Talent Management Industry Maturity Description Process Area

18. Demand Management : Forecasting Service Sales

19. Demand Management : Forecasting Skills Spot Engagements / Consulting Annual / LOB Contracts

20. Talent Supply Chain Service Partners Supplier Management Offering Development Demand Management Talent Management Resource Management Industry Talent Clients

21. External Factors and Introduction of Talent Supply Chain Results of Independent Study Elements of the Services Business Model to Consider Achieving Talent Supply Chain Efficiency

22. Survey: Break Down of Industry Respondents Chief & Sr. Officers 72% Sr. Management 20% Other Management& Staff 6% Information & Technology Consultinguditax Business Services Staffing Services

23. Potential Risk Associated with Talent Strategies 75% of respondents site lost revenue and poor customer satisfaction ratings as the greatest potential risk resulting from inefficient talent inventory management Risk Exposure from Poor Talent Inventory Lost Revenue / Poor customer Satisfaction Increased Supplier Costs Other Key Finding Core to the business model of the service firm, talent strategies are understood to provide the most inherent value to the firm reputation and growth

24. Professional Service Firm Talent Prioritization Recruit, Train, Retain Core Resource Management Hire to Achieve Competitive Advantage Recruit to Drive Business Globalization Other 50% of respondents identify recruiting, training and retaining as their most important talent management priorities Top Talent Priorities Key Finding The investment in the maturation of core resource management tactics has lead to a greater need and desire to improve upon every process critical to developing and maintaining the talent industry

25. Current Input Driving Majority of Talent Strategies 60% of respondents underscore the importance of performance analysis and trends across similar service lines yet only 20% of respondents are utilizing Service Line Profitability as a key input into current talent management processes. Current Talent Inventory Strategies Developed in the Rear View Mirror Key Finding Contributing factors to established talent strategies are failing to consider the development and profitability of specific service lines which could lead to diminishing value of current service lines and failure to identify and capitalize on new and differentiating service lines Most Important Performance Metric Inputs Utilized in Talent Inventory Strategies Lost Revenue / Poor customer Satisfaction 60% 15% 18% 7% T&E Trends / Contract Performance Across Similar Engagements Payment Receipts Invoice Accuracy Sub Contractor Procurement Metrics Account Planning and Pipeline Analysis 50% Sales Performance Analysis 25% Service Line Profitability 20% Other 5% 20%

26. The Service Line Profitability Analysis Gap 51% of respondents identify recruitment, training and retention as the most critical processes in the development and deployment of talent inventory strategies. Risk of Poor Service Line Profitability Analysis Compounded Key Finding The risk of failing to properly consider service line profitability in the development of talent inventory strategies is compounded when considering the key processes that are most leveraged during talent strategy execution. Utilizing only historical performance to effectively recruit, train and retain key personnel could result in a talent inventory that is unable to delivery new service offerings. 51% Recruit / Train / Retain Performance & Compensation 34% 15% Knowledge Management Most Significant Process to Talent Management Strategy

27. Current State of Defined and Integrated Processes How Advanced are Current Talent Management Processes? 78% of respondents report rudimentary or standard defined processes in place to manage critical talent assets 80% of respondents report little or no integration of human capital management, business development, and resource management Level of Business development, HR, and Resource Management Integration Standard Rudimentary None Advanced 78% Somewhat Integrated Not Integrated Tightly Integrated 80% Key Finding Current standard processes and related integration lags behind most firm’s goal of improving the efficiency with which the talent inventory is (a) managed and (b) leveraged to support fundamental business strategies. Firms that are successful in calculating both historical performance together with desired direction do not have processes nor systems in place to grow or scale.

28. Fundamental Talent Supply Chain Investments 68% of respondents report open head count fulfillment completed in 4 to 12 weeks, an industry standard, which does not account for typical on-boarding period of up to 16 weeks. Front End Talent Supply Chain Investments Should Yield Immediate Results Key Finding An investment in the efficiency of the front end of the talent inventory process will provide the firm with the ability to quickly develop key billable resources while serving to establish a foundation for further improvement and development of the talent supply chain. 4 to 8 Weeks 9 to 12 Weeks > 4 Weeks 13 – 16 Wks > 16 Wks 68% - Status Quo Average time to Fill Open Head Count

29. External Factors and Introduction of Talent Supply Chain Results of Independent Study Elements of the Services Business Model to Consider Achieving Talent Supply Chain Efficiency

30. Landscape of Today’s Services Industry In-house Personnel Outsourced Personnel

31. Landscape of Today’s Services Industry In-house Personnel Outsourced Personnel

33. Talent Supply Chain Service Partners Supplier Management Offering Development Demand Management Talent Management Resource Management Industry Talent Clients

35. Where to start? Service Partners Supplier Management Talent Management Resource Management Industry Talent Demand Management Clients Offering Development

38. Suggested Reading Blueprint to a Billion David Thompson Based on three years of in-depth research, David Thomson's Blueprint to a Billion approach provides the first quantitative assessment of the success pattern common across a distinct group of 387 "blueprint companies" Developing Knowledge-Based Client Relationships Ross Dawson Illustrates for service organizations how to lead their key clients into lasting, profitable, high-value relationships Mastering Professional Services Thomas Lah Mastering Professional Services is intended to assist service companies through the process of designing a viable services strategy that complements a broader company portfolio Leveraging the Talent Supply Chain for a Competitive Advantage Joel Capperella Detailed discussion regarding the conceptual strategies of the talent supply chain and suggested alternatives for investing in its development

39. Q&A Talent Supply Chain Management The Evolution of Key Elements Essential for Service Firm Success Joel A. Capperella Industry Principal, Professional Services