Nine Ways To Improve Resource Utilization in the Next 30, 60 and 90 Days
By Team Kantata
Resource utilization refers to how the various resources who make up the major cost base for services organizations are using their time. In many organizations, the task of optimizing this important metric is owned by resource managers, but project managers also play an important role, as do the services professionals being utilized.
When people have a maximum workload in terms of hours per week we say they are fully-utilized. But there are two distinct categories of utilization:
1. Billable utilization: when resources are doing paid work for a customer.
Keep in mind, someone can be very busy without achieving the efficiency and productivity that your business needs to be successful
2. Non-billable utilization: when resources are doing work that is not directly billed to the customer.
This could be internal work, it could be training, or it could be pre-sales work. These are all valuable processes, but time spent on them needs to be tracked, because customers will have to pay higher fees to cover it.
Non-billable utilization can also be a result of poor project planning. For example, an engagement was estimated to take 80 hours of work and that’s what the client has agreed to pay for. However, there is more work to do after the 80 hours — this means any additional hours are absorbed or written off by the provider.
How Technology Can Assist Each Role To Improve Resource Utilization
1. Resource Managers
Resource managers are responsible for allocating individual resources to the most appropriate projects and engagements. Resourcing is about so much more than finding the perfect fit. It’s all about assembling individuals who work well together — who have the right mix of skills and experience, where junior members have the opportunity to learn and more senior ones can pass on some skills. It is a constant balancing act of the short-term and long-term objectives of the business.
Resource management is an art, and this role cannot be simply replaced by technology. That said, software that’s purpose-built for professional services organizations can augment the strengths of a resource manager, enabling them to do their jobs more confidently and efficiently. Without the right technology, it’s impossible for resource managers to access accurate and up-to-date resourcing data that helps them answer essential questions such as “Who is available, when, and what are they best at?” and “What engagements and other tasks are they already assigned to?”. Technology can take the guesswork out of staffing, ensuring resource managers can be confident they are sending in the right resource and their time and expertise will be utilized for optimal return — for both the customer and the provider.
2. Project Managers
Project managers are responsible for ensuring the milestones that were projected for an engagement are being reached. They need to keep the project plan up to date, and also to ensure that risks and issues are flagged early. This helps ensure customer satisfaction rates remain high in all engagements. Nobody wants to hear towards the end of a job that there is a lot of unfinished work and unexpected cost. Not to mention, in a fixed price or managed service contract, failing to meet milestones or keep up with the project plan means non-billable time will be required to deliver the project.
3. Services Professionals
Services professionals themselves participate in the effort to improve utilization. Businesses use technology like professional services automation (PSA) software and Kantata Professional Services Clouds for Professional Services to allow services professionals to easily see what they are being asked to accomplish with their time, and then to record what they have completed. It is important that time tracking and recording is kept up to date and accurate, as this information is vital to the process of improving resource allocation.
Purpose-built software gives managers a better idea of how resources are utilized — whether that utilization is billable or not. These solutions create the potential to look forward and make the best business decisions. Increasing billable utilization directly affects revenue and profitability in a services business. This white paper highlights some tips and tricks businesses can use to improve resource utilization in the next 30, 60, and 90 days.
1. Fill the gaps
Look at opportunities for maximizing immediate capacity. For instance, if there are people with underutilized time, can you find some work for them to do somewhere? If assignments have been canceled or postponed, can you get those people billing elsewhere?
2. Optimize resource allocation on each project
Can you look for part-time utilization on the same account across resources? Can you blend assignments so that one person is full time rather than using two or more resources part time?
3. Start early on new work
Are there opportunities to work on getting people allocated and billing on engagements where you are sure the opportunity will be won (so the delivery team can get started as soon as contracts are signed)?
1. Review the resources on each project
Looking ahead gives you the opportunity to change the team on a project to your advantage. For example, over the next couple of months can you find opportunities to ensure roles that typically go to more expensive contractors are instead allocated to employees who are on the payroll?
2. Get underutilized resources onto billable projects
Can you proactively sell resources whose current assignments are ending? Can you highlight this availability by sending profiles to salespeople or account leads for upselling? Can you negotiate reduced rates or knowledge transfer rates for resources going into accounts who are on the bench (under-utilized) with the expectation that after a certain period they will be billable?
3. Manage demand from existing customers
Are there assignment extensions that need to be worked out with customers on projects that are projected to come to an end? If so, proactively engage the customer in that conversation. This will drive the pipeline and ensure continuity of assignments, avoiding a situation where there are staff “on the bench” while the commercial details of the extension are still being worked out.
1. Assess skill sets and look for opportunities to recruit
Three months ahead, you should be looking at emerging demand and analyzing the skills you should be incubating. Is there enough work in the pipeline to create an opportunity to recruit someone with the appropriate skills?
2. Ensure vacation time is spread across the year
Can you encourage holiday bookings and other unavailable time such as training to be booked early? This avoids a build up of holiday at the end of the year – when everyone tries to take all accrued holiday and utilization plummets, or alternatively, carry-over affects utilization in the following quarter (typically carry over has to be used in the first three months). Giving people a reasonable entitlement and encouraging them to take it and to schedule it well in advance helps to create a more predictable resourcing situation.
3. Get new staff billing sooner
Can you look at new hire start dates (especially expensive ones) and correspond close dates with assignment start dates to maximize utilization from day one?