Cost allocations for internal projects / internal work advice

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David Dixon
David Dixon Member
in Revenue Growth

Hello,

Any advice or best practices on the issues around PS teams performing non-billable internal work and how to effectively distribute the cost allocations for this?

As a PS team we are targeted on 17% profitability which is achievable if we are producing billable work for our customers, BUT we also have to assist internal departments with:

  • Anti-Churn Prevention
  • Advanced Technical Support
  • Sales Workshops
  • Sales 'Promises'
  • Pre-Sales PoC
  • Product development and QA
  • Product ongoing maintenance (we sell a service, PS has to maintain the service, but we see no revenue for this)

All these tasks are logged in our PSA tool as internal projects, but the costs of these are still sitting within the Professional Services P&L which effects the profitability calculations.

Do you accept these as normal PS costs, or do you have a mechanism to allocate these costs elsewhere or any best practices around reporting on these?

Answers

  • Carlos Alves
    Carlos Alves TSIA Administrator, Moderator, Founding Member | admin
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    This is a complex discussion, @David Dixon . I used to establish a high-level RACI matrix among the areas, depending on the activities and finding their goals, asking "what's in it for them". With that, we could find ways to collaborate, not fight (much).

    Later the teams could work together to detail the RACI and the processes as they found necessary.

    Any thoughts, @Dave Young?

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