Professional Services Organisations (PSOs) face the same challenges for 2012 – delivering engagements on time and under budget to improve profitability, growth and cash flow. There is still an opportunity for growth for best in class companies who ensure their systems are ready to capitalise on every new business opportunity, driving benefits to the bottom line.
Aligning project estimation, execution and existing capacity is the key, avoiding making ‘guesstimates’ on projects which is often the key driver in resource under- or over-utilisation.
Many PSOs today do not have a proper overview of their capacity situation more than a month or two ahead, making resource planning a near-impossible task. Too many companies are either working with old systems or use individual spreadsheets for compiling crucial data.
Inevitably this means that decision makers lack cross-departmental, company-wide visibility into engagements with clients and available resource. This causes bottlenecks, unnecessary use of contractors and idle resources in the longer term.
Use the full bandwidth of the business
Being busy does not necessarily mean billable. PSOs need to run with surgical precision to stay ahead of the competition and driving optimisation of people and processes – effectively using the full bandwidth of the business – is one way to achieve this.
Our calculations show that if a company operates a 100-man business and is able to capture and bill just one extra billable hour per month from each employee, it can boost the bottom line by £115,000 a year. Independent data from SPI Research supports this, finding that when PSOs use standard business processes more than 80 percent of the time, they grow twice as fast as those that do not.
A large part of this growth is due to being able to plan work and resources, essentially packing more work into the schedule, which increases annual revenue per billable consultant.
The case for resource management
The equation that defines business success for PSOs is straightforward: optimising people skills = increased profitability. While the maths may be simple, the realisation of this potential can be a lot more challenging. Resource management (RM) – essentially a solution for planning, managing and deploying the right people skills at the right time on the right projects – is the key.
It monitors availability, load, utilisation and revenue across all employees, providing a framework within which PSOs can easily and effectively plan, implement and deploy their people skills.
Resource management –best practice top tips
1. Let your employees complete their registrations from familiar, shared applications
2. By integrating your sales pipeline system with RM you can achieve a better understanding of resource impacts, both short- and long-term and support your strategic and tactical recruiting, subcontracting and organisational development
3. Have a uniform RM system that spans all departments and all resources to give visibility of account and project progress across the organisation, from project manager to senior management level
4. Use your RM to package up resources and proactively sell them to your client base. Use it to identify skills that the organisation may not have been unaware of, creating new market opportunities for tomorrow
Without a real-time view on staff utilisation and an ability to forecast resource requirements, PSOs miss critical opportunities to target resources properly, reduce over spend, identify cash cow projects from loss leaders, and scale the business without increasing unnecessary people costs. The time is now for PSOs to stop basing their businesses on guesstimates and start maximising resource planning and staff utilisation to ultimately increase profitability.