Unlocking The Power of Resource Allocation With Kantata
This is part 1 of a three-part series on how your professional services business can unlock hidden value with the Kantata Professional Services Cloud. Learn more about the power of project budgets and contextual communication in our series.
The Hidden Value of Resource Allocation
We all know that projects can’t be completed effectively and on time without team members being assigned to the appropriate tasks. However, the importance of resource allocation goes beyond simply getting the work done when it needs to be done. Detailed and effective allocation of your full-time, part-time, and contract workers has hidden ripple effects across a company.
According to Connectwise, professional services businesses average a resource utilization rate of between 50 and 60%, leaving nearly half of their team members time used on non-billable work. However, those that average around 80% billable utilization can be considered a best in class company, separating them from the rest of their markets by being both more profitable and able to take on more clients, giving them an advantage over competitors.
Effective resource allocation can improve a company’s utilization rates, billing accuracy, and budgeting vs actuals comparison, but each of these improvements have their own positive effects, too. These include:
- Preventing Task Conflicts – Using a dependable resource management software solution as the main hub for all work will prevent task conflicts which would delay and complicate multiple simultaneous projects that are depending on the same team members.
- Minimizing Resource Burnout – Jumping between projects, becoming overworked, and not having clarity in their daily priorities can all create burnout for a highly valued resource, but effective allocation can prevent these stressors from happening through a more efficient and focused schedule.
- Leveraging Unused Skill Sets – Combining a database of employee skill sets with tasks that detail their specific skill needs can help resource managers uncover underused capabilities of team members, putting them to work on important projects that they otherwise might have hired a new team member or contractor to do.
- Increasing Company-Wide Profit Margins – Consistent and well-paced resource schedules mean that team members can continuously, predictably work on billable projects. This reduces downtime and non-billable work in favor of tasks that directly improve a company’s bottom line.
- Increasing Concurrent Projects – Strong allocation and schedules mean that your current team can predictably take on more work, which will lead to a larger potential capacity. By maximizing the amount of concurrent projects that you can complete, your business can accommodate more simultaneous clients. Then, you will only need to hire as you predictably scale in size.
- Improved Forecasting and Capacity – Knowing exactly where your team should be used will help improve both your knowledge about where they will be needed in the future and about how much work they can take on through the use of diligent capacity planning and resource forecasting.
The Impact of Improved Allocation
Every resource can bring so much value to a company, but resources are only as valuable as they are well used. And while high value team members can be great at self management, they need an experienced resource manager who will continually push them in the right direction and refine their usage within the organization.
Poor resource allocation and compromised scheduling will negatively affect all aspects of a business as each team member is unable to be used to the best of their abilities, and the ripple effects can be felt in a variety of ways. However, systematically correcting your resource allocation practices can create the following positive impacts company-wide.
|Poor Allocation||Strong Allocation|
|Project Timelines||Poorly allocated resources will easily blow past project deadlines through no fault of their own. The result is compromised projects that leave clients dissatisfied, and future timelines unnecessarily adjusted for a less than optimal team.||Project managers can set due dates and task completion times for a project, confident that their resources will be able to hit their goals and create a successful project for both clients and for the business.|
|Utilization Rates||Poor allocation or simply not allocating resources at all will hurt resource utilization rates, leading to a less productive, less profitabilite company.||Efficient and consistent task allocation means that resources can be more self-sufficient and correctly guided through daily work, helping utilization rates stay consistent.|
|Capacity||Poor allocation strategies will compromise a team that is capable of doing much more work, causing resources to take on fewer projects at any given time, preventing company growth.||Companies will be able to take on more clients and new types of work by effectively leveraging their workforce. Bigger projects, multiple simultaneous projects, and a larger project portfolio can become possible with better capacity.|
|Communication||Poor allocation slows down the sales to project pipeline, creating a backlog of work due to being unable to know who will be available to provide work. In turn, this will create client frustration and poor external communication.||Strong resource allocation means faster and more accurate understanding of project timelines and needs, improving the sales pipeline and client communication regarding which team members will be working with them and how you will be providing their agreed-upon deliverables.|
|Hiring||Instead of improving resource allocation and utilization rates, companies may simply hire more people to do the needed work, resulting in a bloated workforce that costs too much to stay profitable.||Effectively allocating resources ensures that teams are used to their highest potential, meaning that every resource is leveraged right and new employees are only hired when they are absolutely necessary.|
The Financial Impact of Strong Resource Allocation and Scheduling
Choosing the right person for a task does more than set a project up for success, it has a dual effect on both the efficiency at which a project is completed and the overall utilization of a resource, which improves the return on investment (ROI) made from hiring and paying a team member.
Understanding and applying the skill sets of resources can increase the individual ROI of that team member. Keeping track of resource availability and assigning tasks that balance both a resource’s schedule and project deadlines is a tricky balance, but when done right, managers can ensure that simultaneous projects are able to be completed without conflict while sharing resources. In the end, strong allocation and scheduling processes are all about taking the team members, assets, and other resources that your company already has, and leveraging them as effectively as possible so they produce a greater ROI and higher profits without managers needing to seek additional resources to fill gaps that should not be there in the first place.
Allocating and Scheduling With Kantata
What can Kantata do for your professional services business’s resource scheduling and allocation demands? Kantata resource management gives people-powered businesses the clarity, control, and confidence they need to optimize resource planning and elevate operational performance. Here are just a few Kantata clients that have found success in improving their project budgeting:
- Kantata Helps Improve Utilization Rates by 15% for BTM Global
- Esri Adopts Kantata to Streamline Resourcing, Boost Revenues and Scale with Ease
Contact us to learn more.