10 Ways to Improve Resource Management & Allocation

By Team Kantata

Often, when people talk about resource management, they are describing functions that fall within the domain of Enterprise Resource Planning (ERP) like human resources management or the procurement of physical resources like workstations. However, this term has a specific meaning when running a professional services organization, and it requires its own tools and strategies.

In the context of services, resource management is about conducting staffing, capacity planning and resource allocation activities across a diverse workforce of internal and external contributors – put simply, ensuring people are in the right place at the right time. Managing resources is complex and often riddled with challenges, but when done effectively, it results in countless benefits that drive value across an organization. To see one example of how, try this Resource Utilization and Revenue Calculator, which shows the potential impact a seemingly small improvement in your average billable utilization rate could have on professional services profitability – even a 1% improvement could mean millions of dollars in added revenue for your business. Ultimately, when you get resource management right, people’s time is used effectively on the appropriate projects, improving profitability, customer engagement, and employee experience.

On the flip side, if resource management goes wrong, it leads to a variety of issues:

  1. Employees’ time is under-utilized
  2. Projects are delayed
  3. Resources with sub-optimal skills are matched to projects
  4. Last minute hiring of contractors, which reduces profit margins
  5. Customer satisfaction is impacted

The Future of Resource Management

Technology is changing the ways resource managers think about resource allocation and resource utilization. In the past, cumbersome manual processes and silos between teams that had valuable resourcing inputs made it difficult to get an accurate idea of incoming demand and each resource’s utilization rate. This meant resource allocation tended to be done reactively, close to the start date of projects, and only within specific teams or areas. A recent study on resource forecasting from the Resource Management Institute shows that many services organizations are still living in the past, with 77% of respondents relying on spreadsheets to put together forecasts, and 50% saying they aren’t able to forecast resource needs accurately beyond the next two months – not enough time to fill emerging gaps through hiring, onboarding, or cross-training resources.

The future of resource management is one in which resource managers are assisted by purpose-built resource management SaaS solutions specifically designed for the unique needs of professional services organizations. These solutions seamlessly bring together essential information on incoming demand, ongoing projects, and availability across the workforce, enabling resource managers to work more proactively and confidently make decisions which have a direct impact on revenue and margin. In the same way that cloud-based ERP has transformed the way HR and Finance manage the business back office, the emergence of professional services industry clouds has altered the services landscape, creating new possibilities when planning and executing resourcing processes.

As you look for software that aligns with your future state in established categories like Resource Management, Professional Services Automation (PSA), and Project Management, be sure to find a solution that provides capabilities which augment the decision-making of your resource managers as they create teams that blend people with different skills and levels of experience. The right software solution can be the key to finally giving resource managers the visibility they need into accurate, up-to-date information to work across boundaries and use data to plan more effectively.

10-Step Guide to Improving Resource Management

1. Review Who Manages Resources Within the Organization

Effective resource management is key for success in services, as having the right people on projects is what ultimately drives profitability and the ability to scale and take on more clients. You need to recruit, train, and assign skilled resources to meet incoming demand, and this can only be achieved if you have an individual or team dedicated to making this happen. In order to improve how resources are managed, you first need to understand which parts of the organization play a role in the process. From recruiting, to scheduling, to maintaining an accurate skills database, you need to know who is accountable for the effectiveness of resources, how they are assigned to projects, and who is responsible for pulling levers when new skills or resources are needed to deliver on customer demand. As organizations grow, it becomes more and more important to establish a resource management office (RMO) that can coordinate staffing decisions across the organization.

It is crucial to understand who actually makes resourcing decisions in your organization. A few questions to ask when improving the way resources are managed include:

  • Is it done by individuals or groups?
  • Are resources managed within teams and departments or flexibly across the organization?
  • Do the individuals who are tasked with this understand the most up-to-date methods of resource management?
  • Do they know how to use business intelligence to facilitate and improve resource allocation?


2. Build an Up-to-Date Knowledge Base & Company-Wide Resource Pool

The key to effectively allocating resources is having complete visibility of the skills and availability both today and in the future (best practice is to be able to forecast needed skills and availability at least six months out). Getting the best fit resources on projects — in a strategic, profitable, and repeatable way — requires a comprehensive view of the entire resource pool, their skills, and their availability. This becomes increasingly difficult to keep up with manually as an organization scales. Resource visibility tends to be siloed across teams, leading to suboptimal allocation and missed opportunities when it comes to getting the right skills, level of expertise, or resource cost associated with a project.

A recent study by the Resource Management Institute (RMI) reveals most services organizations feel there is room for improvement in terms of skills tracking and management capabilities — 6 in 10 organizations do not believe their current skills database effectively supports their business needs. The survey found that regardless of evolving technology, establishing an accurate and up-to-date skills database continues to be a primary challenge for organizations trying to optimize their resource management processes. Those businesses that say they have an effective skills database are much more likely to have skills defined for each role, have employees update their skills at least once per month, and ensure skills information is regularly validated by managers or SMEs.

Resource data usually becomes unwieldy and fragmented as an organization grows. Establishing a single, company-wide knowledge base for resource information is the key for resource managers to move from manual to strategic allocation of skills across projects. Having one source of truth for the entire organization, rather than separate pools that are segmented by team, department, or geography increases the potential for resource managers to put together the best team, a blend of people with different skills and experience.

Resourcing globally across the business is likely to increase billable utilization across the board because it uncovers pockets of people’s time that have been locked up within the management structure. Raising utilization in a services organization has a direct effect on revenue.

3. Manage the Resource Pool in Line With Market Shifts

The best resource managers understand that their resource pool must be able to meet both current and future demand. Managing your resources in line with the market requires a constant process of review, evaluating whether the business still has the right mix of skills to supply what current customers and prospects are asking for. This allows the business to recruit or train for roles or skills that may not have been in high demand previously. Customer expectations continue to change, and optimal resource management takes this into account. This requires a concrete understanding of the skills and types of resources previously in demand as well as those that are prominent in the pipeline, reveal any trends that could help shape the resource pool. Some skills that were previously valuable may be losing their relevance while brand new skills that may require training or recruiting efforts become more relevant.

As new skills, expertise, or roles are being added to the resource pool, data in the knowledge base must be updated. An effective knowledge base is regularly updated and reviewed for accuracy. This becomes increasingly difficult to do on a manual basis as more resources and skills are added to the organization. Purpose-built software enables resource managers to do their job without being inundated with updating data across spreadsheets or siloed databases. They can clearly see who is on the team, what their skills are, and can trust the information is accurate and up-to-date. A resource pool is only as effective as the data being collected alongside it. Manual resource management simply cannot keep up with the pace of change in the services industry.

Another advantage of automation software is having access to previously lost deal data to drive future decisions. Business intelligence tools can reveal the opportunities that were lost because the business didn’t have the skills to win them, which informs future resource management decisions. This visibility can clarify what skills the market may be looking for that your organization needs to hire or train for. The data also reveals any trends and what to expect in the future, giving businesses ample opportunity to develop an action plan and address anticipated skill gaps.


4. Strategically Utilize Contractors

Most services organizations use a mixture of contractors, partners, and freelancers to deliver projects. Having access to a diverse pool of suppliers will bolster an organization’s talent pool, as long as they are strategically leveraging the right type of resources to drive profitability and success. Resource managers must have a handle on when and why they are using contractors and how they impact the bottom line.

Relying too much on contractors might be a sign that resourcing is being done too reactively — for instance, the organization is committed to deliver a project with a start date in two weeks time, but the resources they need to staff it are not available. This results in a last-minute scramble to find contractors to deliver those services — oftentimes at a higher cost rate than is optimal. Having visibility into demand and the deals in the pipeline at an early stage allows resource managers to use contractors to drive value and profitability instead of filling a skills or availability gap.

There are situations where utilizing contractors on projects might be the most cost-effective solution – for instance, demand for the relevant skill is a short term need or relies on supplementary skills which are not part of the business’ core offering. Where this is the case, it helps to have a resource management solution that lets resource managers see — in real-time — how hiring contractors rather than using full-time employees impacts margins. The right end-to-end solution will also make it easier to handle time-tracking, billing, and invoicing for both contractors and full-time employees, ensuring that a major gap does not exist in processes for managing internal and external contributors. This allows the organization to maintain a single system of record that tracks the work and associated costs of all types of workers in the resource pool.

5. Proactively Recruit Resources and Skills

Human capital does not materialize overnight. Finding the right person, hiring them, and onboarding them takes time. Scaling a services business relies heavily on hiring resources proactively. When hiring is only done in a reactionary way, it can negatively impact profitability and actually stunt growth. Rather than hiring in response to shifting or increased demand, the most successful organizations have access to pipeline data and proactively recruit, train, and hire before deals are won or contracts are signed. A forward-looking recruitment process that is based on an accurate forecast also improves time-to-value for your customers. Resources with the right skills can be hired and trained before project kick-off. That means that rather than spending time after a contract is signed trying to understand exactly what the project requires, resources can start logging billable hours as soon as the deal is won and delivering on what your customers need.


6. Open the Lines of Communication Between Sales and Resourcing

In a services organization, the sales team is selling the time of the resources, so it is imperative that sales and resourcing teams have an open line of communication. Visibility into the deals that are coming down the sales pipeline allows resource managers to assemble the most profitable and successful teams. However, optimized resourcing requires more than just visibility into the sales process — it requires active collaboration between sales and resourcing teams.

Effective communication between these teams does not just benefit resourcing. Sales will be more successful if they understand the skills and resources that will be available in the future, as they can focus their efforts on closing deals that will get resources off the bench — improving utilization and ultimately profitability. When used effectively, an accurate resource forecast informs the sales process. For example, if sales understands that several resources will hit the bench in two months without any projects to move to, they can strategically sell services or close deals they know can be immediately staffed.


7. Allocate Resources as Early as Possible — Before Opportunities

A common resourcing mistake is waiting until the contract is signed to allocate resources to projects. There is often ample time before close where deals reach a high degree of confidence, giving resource managers the opportunity to schedule resources in a proactive —rather than reactive — manner. This increases the chances of matching appropriately priced resources to projects — improving margin, overall profitability, and ultimately successful delivery. If resourcing begins once a deal reaches a certain degree of confidence to close, they can build a balanced team with the right mix of skills, experience, and cost.


8. Ensure Start Dates Don’t Slip

If project start dates are continually shifting, it becomes very difficult to allocate resources effectively. For example, when a start date for a project slips by a month, the resources that were allocated to the project are likely no longer available to do the work. Resourcing then has to be done reactively, plugging the gap with whoever is available, even if that means turning to more expensive contractors.

Keeping expected close dates accurate is critical, as they dictate when the project will start and resources will no longer be available. It’s inevitable that delays will happen in the sales process, but any changes need to be communicated to the resourcing team. The longer the delay from expected close to actual project kick-off, the longer resources will be stuck on the bench, unable to start billable work — immediately eating into margin and ultimately revenue.

Business leaders need to be firm about the fixed nature of the close and start dates, perhaps attaching financial conditions to these. Resourcing can only be optimized if the sales process is predictable. While change is inevitable, it must be recognized that confidence in the sales forecast increases the chance of having the best-fit resources assigned to projects. The more close dates slip, the less likely it is that the resourcing team will actually trust the pipeline and have resources ready to start billing as soon as a deal is won.

9. Capture Demand Coming From Existing Projects

Demand does not come exclusively from new opportunities. Existing projects run longer than expected or expand in scope, which requires more resource time than originally forecast. Delivering services is innately unpredictable, and requires agility and flexibility from resources and project managers. The best resource managers know that project demands often change, and are ready to respond to these changes before it’s too late. Acknowledging this change and working it into the resourcing process improves overall utilization, reducing the number of resources being overworked or stuck waiting on the bench.

The only way resourcing managers can account for demand coming from existing projects while also keeping on top of potential demand from new projects is to have a single view of current and future demand. This is one area where a purpose-built resource management solution, particularly one that links customer relationship management (CRM) with sales and delivery, can be extremely useful.


10. Enforce Accurate Data Entry and Time Tracking

Effective resource management relies on consistent, reliable information from multiple individuals and teams across the organization. If resource time is not being accurately tracked and measured, it’s impossible for managers to make strategic and proactive decisions. Resource management can only be optimized if all areas of the organization have bought into the importance of data quality and are actively keeping all resource information — especially billable time being spent on projects — up to date.

This means that resources need to adopt the system and processes for tracking time. If not, managers cannot gauge the effort and time still required from resources to finish a project. There is a domino effect when resources fail to accurately track time because resource managers will typically start allocating a resource to their next project before the current one is done. If resources are keeping track of billable hours both spent and remaining on a project — even if they do not match with the initial forecast — then managers can adjust resources as needed without surprises. Much like it is the sales teams’ responsibility to keep close dates accurate, project managers must be honest when things start to shift and more billable hours are required.

Time tracking is more than a box-ticking exercise and requires project managers and resources to work together to understand how much effort is actually left on a project. If time tracking is not considered a priority or enforced by the project manager, margins will immediately be negatively impacted. For example, it may look like half the hours on an 80-hour project have been used up when time and expense submissions come in for the week — but has half the expected progress actually been achieved? It might turn out that while 40 hours of work have been done, 60 hours of work still remain. If time hasn’t been accurately tracked, resource managers are kept in the dark until it’s too late.

When people across the organization have a consistent and disciplined process for entering and approving data, it benefits the entire business. Resource managers in particular will benefit because they will have access to real-time, accurate information which they can use to make future resourcing decisions.

Final Thoughts

Prior to purpose-built software, services organizations really had no choice but to resource reactively. In the past, the limitations of spreadsheets and home-grown or on-premise solutions meant that resource management and allocation tended to be done on an ad-hoc, reactive basis within teams and departments rather than on a truly global scale. Resources are the major cost in a services business and managing them more effectively will have a direct effect on profit margins. The advent of purpose-built resource management solutions is changing the practices businesses use to strategically manage their most valuable asset: their people.

Get the clarity, control and confidence only Kantata delivers