Historically, services organizations have managed the planning and scheduling of resources through informal ways, where tribal knowledge is a critical element of the process. For example, resource planners often have years of history and close working relationships with many personnel, with conversations across the office, email, unintegrated point solutions, and spreadsheets most commonly used.
The complexity of delivering services has accelerated — for example, the shift to short-term project-based engagements and increased expectations of diverse technology skills — and resource management has become correspondingly more complex. The risk of getting it wrong is continued, gradual margin erosion in your business.
Unfortunately, many services companies still perform resource management in this ad hoc manner. In fact, the 2018 TSIA State of Professional Services report found that only 59 percent of service organizations have a dedicated resource management function. That is a surprisingly low percentage given that effectively planning resources are at the core of how these companies make money.
It’s a direct comparison to the manufacturing industry’s supply chain management, in which it’s essential to manage the supply of available components in order to fulfill production in a timely and cost-effective manner. In the new Service Level Economy, this same level of strategic planning needs to be applied to your services supply chain as well, and your objective is to align resource skills and availability to client projects.
Today, developing a dedicated resource management function is necessary for business viability. Here are the best practices to get you started.
1. Define resource pools based on service lines and skills
This provides up-to-date visibility into your workforce (employees and contractors) on multiple levels, such as availability, skills, experience, geography, and cost and bill rates. To add value, supplement this with employees’ personal preferences in work and career development needs. This enhances capability development for the organization through optimal resource scheduling. It also helps your workforce learn and grow in addition to best serving your clients.
2. Establish a resource management function and role
Resource managers are responsible for strategically aligning and assigning critical company resources in a way that will increase profitability and likelihood of success, as well as determining hiring needs based on future demand. Typically, a resource manager (leveraging appropriate technology) can be effective at managing 150 to 200 resources. In the future, emerging technologies such as machine learning will assist resource managers in making the best resourcing choices for the company and workforce.
3. Soft allocation of resources early in the sales cycle
If you start assigning resources to projects after the deal is won, it’s too late. Resource planning needs to start in the sales process. This is the opportunity to identify the most effective ways to match available resource supply (resource pool) to incoming resource demand (projects, tasks, or clients). The goal is more than assigning resources, it’s about managing those resources in a way that increases profitability of the work and the likelihood of project success.
4. Deliver, analyze, and then optimize
To become a high performer, leverage a combination of insights from the actual performance, data, and analytics to understand how to improve your resource management process. Was there an opportunity for a different team construct that could improve margins? Were the right skills and the right experience levels staffed on the project? What types of roles or skills are in greater demand than others? Do team members need additional training? It is critical to apply this knowledge to processes to make overall operations more efficient.
The beginning of a major workforce transformation
Frankly, the issue (and opportunity) for businesses is more than adjusting the mechanics of the process; it stems from the very nature of how companies think about their workforce.
Historically, it was effective for an organization to grow by hiring the majority of their workforce. It provided a perception of greater control of resource availability. However, the services industry is in the midst of major transformation: client needs are ever-changing, demand fluctuates frequently, and increased competition is squeezing margins. To survive, you need a more fluid and nimble workforce. The new model emerging consists of a maintaining a smaller core team that is supplemented by a larger, and trusted service provider network.
Leveraging business networks has tremendous upside. It allows you to tap the right skills and resources at the right moment, without the larger investments of time and cost associated with recruiting, training, and managing resources internally. Your organization will stay lean while leveraging highly specialized expertise that helps drive your business forward. It maximizes flexibility and speed while optimizing costs — hallmarks of success in the 21st century.
This is more than vision for future of the services industry. It is a pivotal transformation, one which will propel us into the next era of business. Welcome to the future of work.