Building World Class Resource Management Capabilities - Part 2
Following my first blog post regarding the creation of world class resource management capabilities, it requires six key elements to achieve what we call Just-in-Time Resourcing® (JITR). Similar to how Just-in-Time Manufacturing focused on getting materials and plant capacity aligned just-in-time, JITR focuses on human capital deployed in a project-based services environment to get the right people in the right place at the right time.
In my first blog I covered the first three elements of a JITR solution: Skills Inventory, Staffing and Forecasting. The remaining three are:
4. Candidate Sourcing & Development: Intended to serve as a logical extension of forecasting, this element is designed to take whatever gaps or surpluses which exist once you map your forecasted demand to supply of resources. Once resource needs are defined over some time horizon, the organization can then target the right actions to recruit, hire, train or contract for the right resources at the right time. With a detailed centralized view of resource requirements over a given time horizon, strategic sourcing analysis and planning can occur to gain control over longer term labor costs and eliminate gaps for surpluses proactively.
5. Automation Technology e.g. PSA/PPM Infrastructure: For most organizations larger than 20 resources and distributed across multiple geographies, automation is essential. It is important that the tool you select supports your process needs, not the other way around. With careful planning and design of your RM processes, you can develop use cases to drive demonstration, testing and selection of the right tool(s) for the job. Pay special attention to your organization’s current use of spreadsheets and how the target new tool(s) can eliminate or reduce dependence on what are (spreadsheets) still labor-intensive tools.
6. Governance: Given that labor costs represent the majority of a typical service provider's cost structure, Resource Management information drives important strategic planning and management decisions, leading to tactical project performance and financial results. Like any other mission critical business process, the establishment of metrics, dashboards, corrective action/continuous improvement processes are necessary to achieve consistent and predictable results. Be sure to focus on the metrics that matter like project performance, utilization, customer satisfaction and others which are directly impacted by good (or bad) resource management.
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Some Final Tips and Techniques for Success with RM:
While the industry has made good strides over the last decade to improve the resource management discipline, more needs to be done. Four things that the RMI has found will make a difference in your transformation efforts:
- Gain top-level support to the importance of RM to the enterprise – remember most of your services cost is invested in labor! Do the math on what just a 1% improvement in utilization is worth to your business. We commonly see 7-15% improvement or more when a JITR process solution is implemented.
- Project performance is largely dependent on effective RM – it’s not just about utilization. With project failure rates in the industry hovering around 35%, there is lots of upside both financially and from a customer experience perspective.
- You won’t get it right on the first pass – especially forecasting which takes iterative improvement to achieve reasonable accuracy. Use good change management processes and stay at it.
- Make your automation tool work for you! More than 60% of PSA/PPM users are still using spreadsheets to supplement their core tool. Be sure to have elimination or at least a reduction in your dependence on spreadsheets as part of your requirements planning.
The benefits of standardized process driven resource management are undeniable. The JITR solution and underlying GRM methodology have been proven in many human capital-intensive businesses around the globe. Improved project performance, lower costs, improved resource utilization better customer and employee satisfaction are just some of the many benefits of effective Resource Management.
About the Author
Randy Mysliviec is Managing Director of the Resource Management Institute (RMI). Acknowledged by industry sources as an expert in Global Resource Management (GRM), Randy is the author and innovator of the Just-in-Time Resourcing® brand of human capital management solutions. Randy holds a B.S. from California Polytechnic State University, San Luis Obispo, California where he majored in Business Administration with a concentration in Management Information Systems.