Managing service companies: three key indicators to move beyond instinctive decision-making
Too many leaders still navigate by instinct, without a compass. But when the figures finally come in, it is often too late. Margins are eroding, decisions are being made on the fly rather than in advance… and the company is losing visibility. However, managing the activities of service companies (digital services companies, consulting firms, integrators) relies on a delicate balance between project, resource and financial management. So how can you effectively supervise an activity without ending up in that grey area where overload, inter-contract periods and pressure on profitability all come together? Discover the three essential indicators for informed management of a service company’s activities.
Managing service companies without indicators: Pascal Chiron's warning
Pascal Chiron, CEO of AlibeeZ, warns against managing service companies’ activities without indicators. Without visibility, managers only discover mistakes once the consequences are tangible. Without a few simple KPIs, the company reacts after the fact.
- Without TACE, it is impossible to know whether teams are actually productive.
- Without monitoring between contracts, margins are silently eroded.
- Without profitability indicators for fixed-price contracts, deviations are only noticed upon delivery.
The message is clear: there is no need for a multitude of indicators, just a few reliable figures and a clear roadmap to anticipate and move forward.
TACE: measuring productivity for reliable business management
What is TACE?
TACE is one of the most essential performance indicators for measuring actual productivity in a service company. It measures the percentage of time actually spent on billable assignments, excluding predictable absences (holidays, RTT). In other words, it provides a clear picture of individual and collective performance.
TACE = (Days worked ÷ Working days – holidays/RTT) × 100
Without regular monitoring of TACE, you will not know the actual productivity of your teams. It is the basic KPI for managing your human profitability.
Why is TACE strategic in a service company?
Weekly monitoring of TACE allows you to:
- quickly identify periods of underutilisation so that resources can be reallocated;
- anticipate recruitment or training needs;
- correlate performance with the average daily rate (ADR) to assess actual profitability.
👉A high TACE with a low ADR = high productivity, but insufficient rates.
👉A low TACE = silent profitability loss.
The inter-contract period: turning a slump into an asset
Inter-contract time refers to the non-billable time between two assignments. It is one of the most sensitive aspects of managing a digital services company: every day without an assignment has a direct impact on profitability.
The risk of poorly managed inter-contract periods
The inter-contract period becomes a silent haemorrhage without precise monitoring. For example, a rate above 5% can quickly tip the margin into the red. Each unassigned consultant represents costs… without any corresponding income.
Turning inter-contract periods into profit
The inter-contract period does not have to be endured. Used wisely, it can become a period of value creation.
- Training and technology monitoring to enhance employability and prepare for the skills of tomorrow.
High-value internal projects: tools, automation, POC, documentation… so many projects that are often put off. - Pre-sales support: prototypes, scoping or accelerated commercial responses.
The key is anticipation: forecasting the end of assignments, planning assignments in advance and generating alerts as soon as new availability arises.
👉 A well-managed inter-contract period means preserved margins and an organisation that no longer suffers from dips in activity.
The profitability of flat rates: anticipating cost overruns
Fixed-price projects often involve the highest financial risks. Without monitoring indicators, cost overruns are only detected upon delivery.
Continuous margin measurement: a key indicator for service companies
Gross margin (revenue – direct costs) is the key indicator of profitability. To be relevant, it must be updated throughout the project, not just at the end of the financial year. It is therefore essential to monitor the time spent versus the time remaining.
👉For long-term projects, calculate the loss on completion (LOC) as soon as cost overruns are anticipated. This realistic approach allows you to adjust priorities and make provisions for potential losses.
Reliable data for controlled business management
The management of flat rates relies entirely on data quality. Complete and accurate activity reports ensure smooth invoicing and healthy cash flow. Conversely, inaccurate data automatically leads to flawed decisions.
It is therefore essential to centralise information in a suitable tool (ERP services, project management software, etc.) in order to:
- make monitoring more reliable;
- secure margins;
- maintain an accurate overview at all times.
The piloting ritual: 20 minutes to stay in control of your business
Dual mapping for precise activity management
Managing does not mean spending hours in meetings. It can simply involve establishing a simple, visual and regular ritual based on clear data mapping.
- The current situation: your ongoing contracts and the resources currently mobilised.
- The forecast: your upcoming assignments and your future skills or recruitment needs.
This combined vision helps you anticipate recruitment, optimise your workload and secure your margins.
The right tools for a smooth operation
Forget about endless Excel files. Modern tools (business ERP, HR platforms, connected BI) allow you to:
- centralise all data: invoicing, projects, HR;
- monitor key indicators in real time: TACE, inter-contract, package profitability.
- share a common vision with the entire management team.
Once established, this ritual takes only 20 minutes per week and permanently transforms the company’s trajectory.
Key takeaways
- Managing by instinct exposes service companies to errors that are discovered too late.
- Three indicators are enough to regain control: TACE (actual productivity), inter-contract (silent margin), and flat-rate profitability (anticipating deviations).
- Reliable data and weekly monitoring transform these KPIs into levers for anticipation.
- With clear mapping, appropriate tools and a 20-minute ritual, managers can move from reactive management to controlled and predictable operations.