Embedded Services Organizations (ESOs) have become an important partner to large technology companies seeking to ensure fluid product implementation that maximizes customer success. Often confused with Professional Services Organizations (PSOs), an ESO operates as an internal team within a technology product and services company and it takes on the complex task of implementing software or hardware — not to mention the management of customer support and the addition of new product features any time the client decides to expand its offerings. 

Due to the nature of their work, ESOs are masters of balance, often serving as impromptu project managers in order to achieve their goals. Unlike internal business initiatives that can flex to meet organizational needs, the externally focused projects executed by ESOs have gravitated to a fixed-fee model with strict deliverables. That means the ESO must maintain a rigid focus on cost, margins, timelines and successful outcomes in order to protect overall revenue. 

With so many parallels to the tasks performed by project management, many ESOs are examing the benefits of Project and Portfolio Management (PPM) tools to help their organization streamline implementation and ensure that every project is on time, within scope and within the fixed fee stated. Following are four ways a PPM tool can support an ESO — and the entire organization — in achieving its objectives. 

Improve Forecast Accuracy

The ESO team faces the difficult task of predicting where they are going to come in financially each quarter and reporting that data to the head of sales, chief revenue officer, or other stakeholders. The complication likes in crafting that forecast while simultaneously trying to rein in several variables: What is already in the sales pipeline? What is the capacity? Who can do the work? What is the existing and potential billable utilization? 

If you are reading this and thinking it sounds just like the type of forecasting performed by a project or portfolio manager, you’re not wrong — and that is exactly why a PPM tool can help an ESO team. Research indicates that most billable utilization comes in at under 70 percent. With an integrated PPM tool fine-tuned to the nuances of integration services, that number can be boosted by as much as 8 percentage points. A PPM tool allows for:

  • Integration with the company accounting system without the mess of spreadsheets or the need for constant meetings and check-in calls
  • Compilation of historic data over time that develops a clearer picture of time, resources and utilization for each future project
  • Real-time data on what is currently in process and what is in the pipeline
  • Accessibility at any time from any location, providing visibility to the team on the ground and those managing information on the back end

Portfolio Level Reporting

With such a tight focus on revenue in a fixed-fee delivery model, it is hardly surprising that project profitability is the key area of focus for an ESO. They operate in a special niche in that they must fulfill on promises made by the sales department while also ensuring that the work completed can return revenue. As any ESO can report, that is not always an easy order. Fortunately, the use of a PPM tool can support the ESO in creating in-depth reports about which projects are actually profitable and which projects are losses — and why. 

For example, if an ESO consistently finds themselves missing deadlines on the installation of a particular product, a PPM tool can answer questions such as: What time and expertise does it actually take to onboard a customer? Did the sales team overpromise without confirming the accuracy of their promise? Is there a common challenge with the implementation of that product that needs to be reported to the sales team or development team in order to create a more accurate timeline? Is there a lack of resources to fulfill the deliverable? 

Centralized View of Projects

ESOs operate in a fluid environment, with many teams operating offsite at any given time. That makes connecting with, and providing information to, the in-house operations that support them an essential function. A PPM tool will not only create a centralized view of projects and progress that is accessible to any interested party, it is also designed to integrate with third-party accounting systems. The latter, as any ESO will tell you, is a huge benefit. An ESO will not have its own finance department, nor will it operate like a PSO and invoice clients and maintain its own revenue reconciliation.  

At the same time, their tendency to operate outside the general office sphere makes it more difficult for the ESO to simply create a few simple reports regarding utilization, expenses and revenue. The teams are dispersed and constantly on the move. While integration with finance is certainly the primary benefit of a PPM tool, centralization and integration can be used to share information with all strategic business partners within a company. 

Better Resource Planning/Management 

An ESO’s resource planning has to be accurate at all times. When they provide a client with a delivery date for an implementation, they need to ensure the team has the resources to fulfill the deliverable — as well as the resources to complete other installations. However, their work goes beyond getting the right people to the right job at the right time. This means maintaining an accurate skillset database, a knowledge of ongoing and future projects and a reliance on comprehensive historic data in order to make accurate and timely decisions. 

With regard to “timely,” the ESO also needs to be able to make immediate decisions in the field based on real-time data. Unlike other areas of business, an ESO cannot afford to wait to get a receivables report at the end of the month. In implementation on fixed-fee projects, waiting 30 days could spell disaster for team profitability, not to mention customer satisfaction. Without consistent resource management informed by real-time reporting, an implementation team could find themselves vulnerable to scope-creep, blown deadlines or overuse of critical resources. A PPM tool supports profitability tracking and resource utilization for the life of each project. That translates into better decisions made on the fly and better forecasting for future deliverables. 


The power of a PPM tool to support ESOs in their critical implementation work cannot be understated. With the right PPM tool, the ESO can rely on portfolio-level reporting to improve forecasting accuracy, centralize data and integrate it with various departments in the company at large and make better decisions on the ground. If an ESO wants to improve profitability, accuracy and overall performance, a solid PPM tool customized to their organization might be the ideal solution.

Back to Mastering Professional Services Portfolio Management.

Rachel Hentges
PMO Influencer
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Rachel Hentges

Rachel Hentges is challenging PMO leaders to think differently about their role. Rachel is the author of key industry related surveys, reports, blogs and more that challenge the status quo of today’s PMOs.