Today, we can definitively state that we are in a services economy. The services sector, including professional services, marketing, IT, and consulting, to name a few, has experienced an epic rise in demand in the last decade.
It is estimated that the global professional services industry will generate a staggering, $3 trillion in revenue in 2017. That number is expected to continue to climb dramatically in the years ahead. However, the services industry is also embarking on a period of significant transition. In the 2017 State of the Services Economy Report, more than half of the executives surveyed stated in the last year it has become increasingly difficult to operate a services business profitability.
So, how can a services organization benefit from this increased demand and opportunity, while trying to navigate new pressures on their business? They have to completely reenvision longstanding—and now completely inadequate—business models.
Resource Management is the Biggest Challenge to Service Organizations Today
In services, your product is your people. Profitability, project success, and client satisfaction all rely on effective planning and staffing of our resources. It may sound easy, but those who do resource management, will tell you otherwise. It’s the most complicated component of any services business. That’s why we call it the “secret art” of services delivery.
However, it has never been more important to get it right. Proper resource management will determine if you succeed in the Service Level Economy, or not. We hope the following will serve as a framework for change.
Resource management is tricky. Really tricky. It's also misunderstood. Historically, most services organizations have been able to get by managing and scheduling resources to projects in informal and isolated ways—conversations across the office, whiteboards, and spreadsheets, and home-grown solutions. Even those firms with more mature processes for resource management have been typically relying on a sophisticated web of spreadsheets to tackle the process.
As the complexity of delivering services continues to accelerate—for example the shift to project-based engagements, the increased demands for hyper-specialization, speed, and transparency; and the overall pressures on project margins—so do the complexities surrounding resource management. With the combination of market forces and desire to scale their organizations, many firms today are finding their informal resource management processes completely breaking down, and creating varying levels of chaos through the process.
The Fundamental Lack of Knowledge
Exacerbating the issue, resource management as a practice has been a bit of a black art, with very few people holding knowledge on how to do it well, and very little published content and education available for public consumption. And yet there’s market-wide acknowledgement that resource management is one of the biggest headaches for those who do project-based work.
According to Project Management Solutions, “Our research over the past three years shows that resource management issues are consistently the biggest challenges to organizations that practice project management.”
One underlying problem is that current thinking about resource management often only addresses a singular portion of the project delivery lifecycle, instead of considering the flow and constant change of resource needs as the business operates. Especially considering how much more dynamic and fluid work is becoming today. As projects progress, resource managers and project managers struggle to see how changing resource needs affect project success and profitability. One certainty is that resource change happens and will continue to happen, and businesses that are unable react quickly in the Service Level Economy will ultimately struggle to survive.
If you are a services organization, your bottom line relies on getting the available resources, with the right capabilities, on the right assignments, at the right margins. The need for a new approach is likely urgent.
A New Business Model is a Requirement, Not An Option
The resource management process is broken today, so let’s discuss the solution. If you sell a service, that service needs to be profitable. To do so, you need to be accountable for properly estimating the time and resources needed to deliver the service. Of course you also need to make sure that you’re delivering a service that meets or even exceeds client expectations.
The truth is, selling projects with good margins is actually not the hard part. It’s managing all the changes that happen once the project starts, compounded by all the changes in other projects across all the timelines, that make this incredibly difficult. Resource management is not a single step, or even a series of steps, it is an ongoing and dynamic process.
To help firms think more holistically about resource management, we created a framework that can be applied to the project lifecycle of services businesses: The Resource Management Lifecycle.
Introducing the Resource Management Lifecycle
In The Resource Management Lifecycle there are five phases that mirror the project delivery lifecycle from inception to analysis: Estimate, Plan, Execute, Analyze, Optimize. After each stage there is an evaluation piece designed to inform both the previous and next phase in the process. Furthermore the last stage of the process, Optimization, is a feedback loop that will help inform the first stage, Estimation. By treating resource management as a continuous loop, you can better prepare for conflicts and proactively make changes to your project, your team, or your plan to greater execute and increase profitability.
However, the most important quality of The Resource Management Lifecycle is that it helps to create order within the chaos. Stepping back there are a lot of moving parts, but each phase encapsulates only a few things to consider. This makes the model simple to apply and adhere to.
How is the Resource Management Lifecycle Unique Valuable?
- It’s Constant.
The phases are not meant to be linear, they bleed between each other. It’s designed so you can always be looking forward and back.
- It’s Iterative.
At each phase of the project lifecycle there is an opportunity to make changes that will enhance success and profitability.
- It’s Ongoing.
It’s a full time commitment.
- It’s Dynamic.
Current processes are too rigid. Great resource management practices have flexibility. It’s almost like a dance; you take two steps forward, and then one step back.