5 Key Metrics for Operational Success in the IT Services Industry

Before we dive into the top KPIs you should be tracking, let’s take a look at the four most common challenges operations leaders encounter:

CHALLENGE 1: No single, trusted source of truth
Operations leaders are responsible for keeping the entire delivery machine running smoothly, so they need a clear view of what’s happening across people, systems, and outcomes. But when data lives in disconnected tools or spreadsheets, it’s impossible to get a handle on how a project or initiative is actually performing. Without a centralized, trusted source of truth, it becomes harder to make fast, informed decisions, pinpoint trouble spots, or keep your teams on track. This leaves your team scrambling to reconcile their processes or getting stuck in unnecessary bottlenecks.

CHALLENGE 2: Low visibility into performance-to-plan metrics
You can’t improve what you can’t see. Operations leaders need to track how real-time performance measures up against plans, whether it’s through delivery timelines, resource allocations, time management, or budget status. But when visibility is limited, issues are flagged too late, and leaders aren’t able to proactively course correct or accurately report on progress. This puts them at risk of falling short on the KPIs they’re responsible for.

CHALLENGE 3: Lack of trust and security in decision-making
Decisions can’t wait when you’re trying to stick to a deadline and deliver work on time. But without reliable data, decision-making can become a challenge. Leaders are tasked with making smart calls that affect cost, quality, customer satisfaction, and so much more. And when they can’t trust the numbers in front of them, every decision feels like a risk rather than a strategic step forward. This not only slows down operations and deliverables, but instills a lack of confidence across teams.

CHALLENGE 4: Inconsistent operational efficiency
For operations leaders in the IT services world, inconsistent workflows, manual processes, and siloed systems are an all-too-present challenge. They create delays and add more work to your teams already full plates, forcing them to work harder, not smarter. Without the right tools and insights to drive a consistent workflow, it’s impossible to see what’s working, what’s not, and where you best need to course-correct when obstacles arrive.

Key Performance Indicators (KPIs) are important operational metrics that PS organizations use to evaluate performance and success across operations. KPIs give insights into how a company is achieving their objectives in areas like financial health, operational efficiency, client satisfaction, team performance, and overall project success. Understanding and tracking KPIs allows your team to be more strategic, make decision-making easier, and strengthen operational performance.

There are two main types of KPIs that operations leaders should be aware of:

• Lagging KPIs: Lagging KPIs provide a historical perspective to measure outcomes after a project is completed. These KPIs are crucial for understanding how effective an initiative was.
• Leading KPIs: Leading KPIs offer a future-looking view to empower leaders to predict future performance. These KPIs allow leaders to proactively adjust workflows to ensure success.

Let’s dive into five of the most critical operational KPIs IT leaders should be focusing on — including what they are, how they benefit your business, and what you’ll need to know to track them.

Profitability is a key metric in determining operational success, making project margins a top KPI for operations leaders looking to make sure their systems are running smoothly. 

High-performing organizations treat each project like its own profit center, complete with its own profit and loss (P&L) report to monitor revenue, costs, expenses, and profit margins. By diving deep into this level of detail across the project lifecycle, leaders get the insights they need to predict outcomes, mitigate risks before they arise, and scale processes. 

Of course, project and workflow scope will inevitably evolve and change as you progress — making it critical to track both current and forecasted costs. That’s why, when it comes to evaluating project margins, you need to be able to calculate the Estimate at Completion (EAC) margin percentage. This gives you a predictive view of your system’s overall health and performance before an initiative is complete. 

By looking at both current and future project margins, you can easily navigate change, maintain profitability, and uncover new trends that can inform your systems and strategies in the future. 

Why Track It?

Staying on top of project margins helps you identify potential roadblocks and make strategic adjustments before they become a problem, allowing your team to hit their targets efficiently and effectively.  

What You’ll Need:

• Fixed Fee Revenue + Time & Materials Revenue: The budget amount for project delivery.
• Non-Billable Expense: When a certain resource is doing work that can’t be billed to a client (like administrative duties).
• Resource Cost Rate x Hours Logged: The cost of a specific resource multiplied by the number of hours worked.

Example:

Let’s take a look at how a business can  monitor their project margin more effectively with Kantata’s next-gen PSA solution.

For this fixed-fee project, the Project Margins at Completion report shows:

• Projected Costs: $174,100 (from accumulated and scheduled resources)
• Client Invoice: $400,000
• Estimate-at-Completion Margin: 56.5%

Project margins are only part of the picture. Even if your projects are profitable, your organization can still be losing money by not properly distributing your manpower. When too few employees are assigned to a project – or when team members with the wrong skill sets are used – your profit potential can go down, leading to what’s known as “margin leakage.”

This is why tracking utilization metrics is important to each project’s success — and why operations leaders should understand how utilizing the right people for the right amount of time affects their business’ overall performance. 

Utilization can be broken into two main types: planned and actual. Planned utilization represents the billable hours you expect a person or team to spend on a project, while actual utilization is what your team actually ends up delivering. By tracking both planned and actual utilization, you get a clear view of each employee’s real and scheduled hours and how they compare to your organization’s targets. It also aligns staffing strategies with demand and helps you avoid system roadblocks like over-hiring, poor resource staffing, or underperformance.  

Why Track It?

Knowing both actual and scheduled utilization allows you to make hiring, staffing, and overall personnel usage decisions with ease. It also allows you to easily correct any potential issues before they derail your operations. If your two utilization percentages match, you know resources are properly allocated across projects. If these percentages vary and your actuals are often exceeding your scheduled hours, it may be a sign that you need to adjust how you scope projects. 

What You’ll Need:

• Billable Actual Hours: Billable hours logged up to the day of reporting.
• Scheduled Billable Hours: Hours a resource has been scheduled in the past or is scheduled for current or future projects. 
• Utilization Targets: Resource-specific goals an organization sets for maximum financial gain.
• Resource Work Weeks: Actual billable potential for each resource based on their work week.

Example:

Here is a look at tracking Actual vs. Scheduled Billable Utilization in Kantata:

• Post-holiday recovery: Strong performance January-March, exceeding targets.
• Scheduling discrepancy: Actual billable time currently surpasses scheduled.
• Future gap: May and June’s scheduled utilization is under target, suggesting a need for project/resource managers to update schedules and fully plan new work.

While tracking utilization percentages is important, leaders also need to look at the larger picture to understand how their business is trending. That’s where billable performance to target comes in. 

Billable performance to target focuses on raw billable hours (rather than percentages) and compares them against predefined goals. This KPI is generally evaluated on an annual or semi-annual basis and helps leaders identify trends based on the time actually spent on revenue-generating projects and how it compares to planned goals. It also gives  a clear view of gaps between actual and target performance, helping leaders be proactive in reallocating resources or resetting expectations. 

Why Track It?

This operational KPI is especially useful in the IT services realm, where delivery windows and project workflows can be easily interrupted when unplanned changes occur. If you find that an individual or team isn’t on track to hit targets, you can easily course-correct by asking: 

• Is each  individual or team’s time being tracked accurately? 
• Is there demand for an individual or team’s work?  
• Is the individual or team working on enough revenue-generating work versus promotional projects?  
• Is there a need for growth or guidance on work performance?

What You’ll Need:

• Billable Actual Hours: Billable hours logged up to the day of reporting.
• Scheduled Billable Hours: Hours a resource has been scheduled in the past or is scheduled for current or future projects. 
• Target Hours: The amount of time that a resource is expected to be billable.
• Resource Work Weeks: Actual billable potential for each resource based on their work week.

Example:

Here’s an example of how Kantata assesses a specific resource’s potential to hit their annual billable target:

• Initial performance: Started slow, falling under target.
• Recent pick-up: Performance has improved in recent months.
• Projection: With upcoming scheduled projects, this resource is projected to exceed their 1,016 annual billable hours target by 120 hours by year-end.

Efficient IT services organizations need to anticipate resource supply, not just manage it — something that’s only possible with accurate operational metrics. Monthly availability helps leaders optimize their resource capacity planning, so they have visibility into both planned and scheduled availability to have an accurate outlook on who on their team is actually available to take on work. 

Understanding the difference between planned (or soft-allocated) and scheduled (or hard-allocated) time helps clarify where there may be flexibility and where your team is already locked in and unable to change. 

You can understand remaining availability by calculating billable planned, estimated, and scheduled hours against total capacity. This allows you to analyze both hard- and soft-allocated resources and uncover potential availability on your team versus those who are truly unavailable. 

Why Track It?

This KPI gives you insights into who’s underutilized, who’s overbooks, and where new work can or cannot be slotted in. It allows for stronger forecasting and decision-making, while giving you the opportunity to pivot as needed.  

What You’ll Need:

• Total Monthly Availability: The total hours available for a given resource over a one-month period.
• Planned Availability: When a resource is tentatively put on a task, project, or client where the details are likely to change or the resource is likely to be shifted to another project. 
• Scheduled Availability: When a resource is officially put on a task, project, or client, and is officially unavailable for other work.

Example:

Struggling to see your team’s availability? Kantata PSA  can provide an in-depth, real-time view:

With the Total Availability by Month report, you can quickly see your organization’s aggregate capacity from March to August, ranging from 48% to 59%. This allows you to understand how much bandwidth you have as planned work becomes scheduled.

For roles like Engineers, Kantata pinpoints availability at roughly 36%, empowering you to quickly identify and staff the right resources.

One of the most impactful KPIs operations leaders should be tracking is supply vs. demand. Supply vs. demand offers a real-time view of how available resources can be matched to current or outstanding needs. 

This metric compares total available hours against how many hours are required to complete all of the projects currently in progress. It also helps identify staffing gaps and opportunities to redirect or reassign resources before bottlenecks occur, so you’re always making sure the right people with the right skills are assigned to the right initiatives. 

Supply vs. demand also supports a proactive approach to staffing across your entire organization, giving you the insights you need to plan ahead to meet demand and anticipate resource needs before a project starts, rather than after it’s already underway. 

Why Track It?

Tracking supply vs. demand metrics empowers leaders to plan with confidence, build their team effectively, and scale delivery across your entire operations systems — all without sacrificing quality or profitability. 

What You’ll Need:

• Planned Availability: When a resource is tentatively put on a task, project, or client where the details are likely to change or the resource is likely to be shifted to another project. 
• Scheduled Availability: When a resource is officially put on a task, project, or client, and is officially unavailable for other work.
• Task-Estimated Hours: The estimated number of hours needed to complete a given task with your given resources.

Example:

What does it take to have a companywide understanding of both resource availability and remaining needed hours for projects? Here we can see a report calculating Total Availability. 

• Left: See your planned resource availability (capacity).
• Right: View projects with unassigned or under-assigned remaining estimated hours.

This allows you to quickly match available talent to project needs, ensuring all work is properly staffed and you can proactively fulfill demand.

Visibility into real-time operational metrics is essential for running effective and efficient operations. With client expectations higher than ever and delivery timelines needing to become more and more streamlined, the ability to monitor and leverage real-time performance metrics turns a reactive team into a proactive powerhouse.

Tracking KPIs like project margin, utilization percentages, billable performance, monthly availability, and supply vs. demand gives you a centralized, actionable view of your entire services operation. This means less time buried in spreadsheets or disconnected data, and more time improving the systems, people, processes, and strategies that power your organization. 

Getting the Most from Your KPIs:

Once you’ve established your operational KPIs, you’ll want to make sure you’re getting maximum value from them as possible. Consider these tips and tricks for making the most of your metrics: 

• Prioritize real-time access to your data. Waiting for month-end reporting is too late. Instead, build reporting processes that give key metrics in real-time, giving you time to adapt and adjust as needed. 
• Create clarity at a glance. Use visual cures, like color coding, to quickly spot what’s working and what’s at risk, so decisions can be made quickly. 
• Share data with the right people. Give individuals visibility into metrics they have influence over, like their own utilization or availability, to empower them to take ownership of their performance.
• Automate reporting to save time. If your team is spending more time gathering data than analyzing it, your business intelligence tools aren’t doing their job. Automated reporting streamlines your workflow by delivering instant and actionable insights.

Enterprise-Grade Business Intelligence

The Kantata Professional Services Cloud delivers enterprise-grade BI that puts comprehensive, real-time project analytics within reach so you can get the information you need to drive the results you want. Designed by a team of professional services experts, with Kantata Insights you can gain control over margins, improve resource utilization, and better forecast revenue and costs.

Benefits of Kantata

• Get real results with integrated insights and data accessed all in one place, with customized dashboards for individual needs.
• Scale with confidence and gain instant insight into your future business health with accurate, granular revenue, margins, and resource capacity forecasts.
• Streamline your operation to optimize outcomes based on real-time contextual insights so that you can make strategic decisions with confidence.
• Empower your team and improve performance at every level with actionable data that supports each role and visibility across the board for informed management decisions.

Key Features

• More than 60 expert-built services-centric reports automatically answer key questions — and predict future outcomes — impacting profitability, utilization, and project success.
• Tailor business intelligence insights to answer your most unique and complex business issues with an interactive ad hoc reporting engine.
• Forecast demand, availability, and more to prepare your business and steer your teams into a more successful future.