Does Investing In Resource Planning Tools Pay Off?

Posted by Simon Montague, New Business Director on April 23, 2014

resource planning tools

Everyone knows that in Professional Services firms, where people are the main assets, good resource planning is crucial in order to ensure the profitability of the firm. If your team are not working on client projects, and are therefore not billable, your income will reduce. In many services firms, creating even just a couple of extra billable hours per month can make the difference between a profitable firm and an unprofitable firm. But are you aware of how you can create additional billable hours? Do you have the right resource planning tools in place? Does investing in resource planning pay off? 

Is your business managing resources as well as it could be?

Let’s use an example to get started: 

Let’s say Company ABC have 100 consultants in their team working on various projects. Some will be senior consultants and others may have just joined the firm. Each will likely have assignments where free time can be used more effectively on other billable tasks.
Could they find one or two hours per month where they could become billable?
And what is the average fee per hour for these consultants? £100? More? 

If we assume that there is potential for creating just 2 more billable hours per consultant per month using a good resource planning tool and that the average hourly rate for a consultant is £100, how much additional revenue could be generated each year? 

100 consultants x 24 hours per year x £100 per hour = £240,000 in additional income per year. 

By keeping a tight control over resource management, and aiming to find just an additional two billable hours per consultant per month, Company ABC could generate an additional £240,000 per year in fees. And that isn’t a one-time profit, but a potential permanent improvement which can generate the same additional earnings year on year. 

What tools do you need to improve resource management in your firm? 

Having the visibility required in order to effectively manage your resources obviously requires investment in the right tools. Yet, it is often difficult to see just how profitable an investment in IT solutions really can be for your firm. 

A Return On Investment (ROI) analysis is required in order to be certain that investment in tools like resource planning software will indeed make an impact on your firm’s bottom line. And whilst the example above certainly reads well, you might reserve some doubt about just how easy it would be to identify the additional billable hours required. This is where a real life example can help to explain the benefits of better resource management. 

In the video below, Steve Slade, Financial Director at Buro Four, a 100 man consultancy firm who have been using Deltek’s ERP for the past 7 years explains how his firm has generated 2% more turnover year on year by enabling better resource management. 

While there are many factors that contribute to the success of a new IT solution, this video gives a clear explanation of why many consultancies invest in resource planning tools for Professional Services firms.