Resource utilization is one of the key measures that services firms use to gauge the efficiency of their businesses.
It expresses what percentage of their time people spend generating revenue for the organization. Since the vast majority of resources in most services firms are salaried employees, that time not spent generating revenue is still costing the organization money.
Whether you’re the VP of services, a project manager, resource manager, or consultant, you should know that utilization is critical to your bottom line, and always look for better ways to track it and improve it.
Here are a few essential ways to improve resource utilization for your professional services business:
Have the right people for the right job at the right time
Being “resource-ready” is about more than just ensuring your employee headcount is large enough to handle influxes of work. It’s also about knowing you have the best possible resources, with a variety of skills and experience under their belts, to equip you to handle projects of all types and sizes. Having the right team on the right project at the right time is what truly drives success for services organizations. It’s a huge piece of what keeps projects on track, margins in line, and customers happy.
One way to improve this is by ensuring your sales and services teams are working with the same data, in the same system, from the same customer record, so everyone involved has a view of current customer projects, staff commitment, and pipeline. The sales team will know what service levels they can promise, while the services team can see what’s in the pipeline and build the right staff to deliver.
Track utilization using the right tools
If you’re still using spreadsheets to track utilization, the time to stop was yesterday. Resource managers can attest that nothing throws utilization off its axis quite like the chaos of managing resources, conflicting schedules, and a wide-range of billable rates. Not only is it extremely time-consuming to use spreadsheets to track utilization, but it also sets you up to make numerous potential errors that could be damaging to your margin tracking and profitability.
To improve utilization tracking, look for a powerful and modern professional services automation (PSA) solution that will make it possible to automate utilization tracking with speed and accuracy.
Don’t forget to track utilization against profits, too
Tracking utilization in itself is important, but at the end of the day operating a successful professional services organization will not be possible if your utilization rates are at an all-time high, but your bill rates are going down.
In the professional services industry, utilization and profitability are two sides of the same coin. It’s quite simple to optimize one at the expense of the other, at least in the short run. Discount your rates heavily, and your utilization will soar, but to the detriment of profitability. Overwork your people without investing in training and professional development, and you’ll see great resource utilization today, only to see major drops in profitability next quarter. Figuring out how to optimize both at the same time is one of the real keys to running a successful professional services business.
This is another instance where it pays to have sales and services teams on the same page with access to the same data.
Leverage a PSA solution built native on Salesforce to keep Sales and Services in sync
By unifying all the data related to your customers, projects, resources, financials, all in one place, not only does it make calculating utilization and increasing it easier, but it accounts for every detail and ensures that your sales team and services team will have access to the same data and be able to work together for the greater good of the organization as a whole.
One way to improve the synchronicity between sales and services teams is to leverage a PSA solution that is connected to your CRM tool, like Salesforce. A modern PSA solution connected to your CRM system has become a no-brainer when it comes to boosting your utilization figures. Leading industry analyst firms like Gartner, Services Performance Insights (SPI), and Technology Services Industry Association (TSIA), report that when organizations have a PSA solution integrated with a CRM, their utilization is 4% higher than organizations that don’t have the same system in place.