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How can Large Service Organizations Maximize Resource Utilization to Drive Higher Project Profitability?

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Large services organizations are facing several challenges in their business. On one hand, they need to maintain a flexible hybrid workplace that supports collaborations and can bridge the gap and on the other hand, they need to ensure seamless employee experience, which are the critical components of any business. To keep up with the dynamics, services firms need to adapt to new ways of work and focus on their revenue streams and maintain operational excellence.

With businesses accelerating to the cloud and becoming more digital, services firms are reimagining new business models to drive higher profitability. According to Aberdeen, time tracking is key to drive revenue for services businesses and they need to capture 100% of all the project effort to ensure they maximize revenue and margins.

As a global professional services firm or project-based enterprise, we understand that your business leaders and project managers frequently ask this question: how many hours did our consultants spend on this client, on that project, on those tasks for billing? These answers are critical to optimizing resource utilization in tandem with project profitability and delivery success.

Why is Resource Utilization Important to Drive Profitability?

Your resources are the key driver of your business growth, profitability, and sustainability of your services business. And not just this, but the capability to develop and deliver projects on time and to maintain and retain the current customers is also directly proportional to the work done by your resources. This makes efficient utilization of resources extremely important. Work hours of any resource can either be used to increase the business value or be lost forever – it is not something that can be stored and used later. You cannot increase the working hours in a day; you can only manage and utilize your resources and their time better.

However, improving and efficiently assigning resources necessitates insights from the overall business, which can be difficult, especially in an organization that uses traditional legacy systems. The limitations of using a legacy system like spreadsheets, home-grown half-baked systems, entry-level tracking systems, etc., is that they fail to address the modern-day challenges of a constantly changing business.

Legacy Systems Fail to Enhance Resource Utilization and Overall Profitability

According to the latest Aberdeen report, “Professional services firms face increased competition by 36% while bidding for new project bids.”

This competition can come in the form of any pressure – cost, technology innovation, etc. In this scenario, professional services firms need to equip their employees with modern tools to gain the upper hand. A system that cannot manage, monitor, and provide 360-degree insights will be more of an obstruction in providing the edge over competition rather than an advantage.

The limitations of a not-connected ecosystem are not just limited to:

  • Lack of intelligent processes
  • Bundles of intensive manual work
  • Zero faster-time-to-value
  • Poor billing with no agility
  • Delayed quote-to-invoice process

One of the biggest challenges to improve resource utilization is getting a centralized, organization-wide view of employee time. Filling project timesheets manually leads to inaccurate information. Moreover, time data is often captured and stored across multiple enterprise systems and solutions, making it difficult to access and use. Inaccurate time data and a lack of transparency lead to miscalculations in project costs and delayed billing cycles.

Professional service firms need to focus more on secure outcome-based engagements that provide 100% accurate real-time data to win the battle of project bids. This can be achieved when you eliminate your fragmented ecosystem that consists of multiple siloed systems like time tracking with no real-time visibility and inefficient resource utilization. Large services organizations can create more efficiency if they design a hybrid workplace for better employee experience, such as flexibility, configurability, and leveraging emerging technologies like artificial intelligence, real-time solutions, and automated processes. These can increase employee productivity that will further drive higher profitability for the organization.

As these large service firms need to choose to use a solution that can improve their processes, achieve healthier resources and billable utilization on all their projects, be it small or large.

How A Modern-Time Intelligent Solution Will Improve Resource Utilization?

Timely resource allocation minimizes delays in starting a project, and balancing resources upfront is critical to productivity. As per Aberdeen, with the project management pressures professional services firms face, these firms need to manage their resources effectively to maximize resource utilization. The data that you need for accurate resource allocation comes from your project time tracking systems. You have an incoming pipeline of chargeable work, your resource availability and skills profiles, and employee timesheets. This all gives you a rich stream of data from which to draw information for decision-making.

Moving from manual timesheets and disparate solutions to a single intelligent time tracking platform will not help you consolidate disparate sources of information but will dramatically increase your billable utilization and drive a higher annual revenue per employee. Even a half of one percent (0.5%) change in resource utilization can improve your project revenue by $20,000-$30,000 per employee (Source: Replicon). Just imagine how an incremental $20,000-$30,000 per billable employee would impact your business! Massive, right?

Whether you are an organization with 5,000 employees (equating to over 10 million project hours per year) or 50,000 employees (equating to a massive 104 million project hours), this added annual project revenue as a direct result of better resource utilization will undoubtedly have a significant positive impact on your profitability and bill rates.

As per SPI, the best resource utilization rate is around 83% to 85%. The productivity will drop immediately if you can cross this threshold. Remember, a minor increase in utilization can drastically improve your project profitability, but it needs to be done carefully to ensure that it is always in the perfect range. Here are some ways how a modern-time intelligent platform can improve resource utilization and drive higher profit margins:

  • Improves Overall Visibility: One project can affect the other, even if it is planned and delivered separately. The case can be that a single resource is allocated to multiple projects. Therefore, a lack of visibility into project details can lead to allocation hurdles and time loss. Leaders need to track and assign the right resources to different projects to optimize resources, keep projects on track, and manage margins within the desired budgets. And this requires leaders to have correct and real-time data.

    A time tracking with the power of seamless integration with your current ecosystem will not only enhance the project resource allocation, but it will also help you determine idle resources that can be reallocated to other projects.

  • Aids Project Planning: Planning projects as per their priorities is an essential part of managing resources. Breaking down the complete work structure into tasks and subtasks will help you quantify the nature of work and assign resources accordingly. Having a clear picture of tasks to be accomplished will increase employee efficiency and productivity.

    Another critical aspect related to project planning is capacity and demand planning. A connected, flexible, configurable, and mobile-ready solution will ensure improved communication, faster project delivery, eliminate double allocation, minimize employee burnout, and maximize profits.

  • Offers real-time analytics: If you think using spreadsheets and disconnected systems is the worst thing, you are wrong. The decisions made using stale data can quickly turn the project upside down, and leaders may get stuck while juggling schedules and costs. If a project is not tracked correctly, the scope can instantly overturn a project into a failure. However, with a proper tool in place that can accurately track time and resources, constantly manage and monitor project status, and give you a consolidated view of issues resulting in a project failure, you can plan and correctly forecast the future requirements and availability.

Maximize Utilization For Greater Project Profitability

Just tracking work hours is not a good idea for the success of your professional firm. Projects need to be unified through a project time tracking solution as, without a built-in centralized approach to the processes, it will be challenging for you to measure utilization. Every professional service firm has multiple departments and teams, which, in turn, have their own processes, methodology, and ways to measure utilization. This will undoubtedly get complicated and unmanageable as teams and processes increase. Resources will start moving from one project to another, quickly changing schedules, leading to 0% real-time visibility into their time.

Aberdeen, in its latest report, says, “Modern companies need modern tools to compete effectively, and professional service organizations must upgrade and invest in technology to keep their employees on top of the latest innovations. Time tracking is the data backbone for many of the critical processes that drive the success and profitability for professional service organizations.”

It further adds, “Utilization is directly related to time tracking capabilities.” Automating the data will allow you to better manage resources, costs, billing rates, time, and revenue. You can effectively monitor profitability so that your company can be more viable in growing and gaining an edge against other competitive professional services industries. The preferred choice today is the adoption of modern cloud technology that will add life to your current system and upgrade it when necessary.

Do you want to understand more on how you can drive higher project profitability for your organization? Download the latest Aberdeen report and learn how other large services organizations are gaining a competitive advantage with a project time tracking platform.

Featured Resource

Time Tracking: The Backbone For Driving Higher Profitability In Professional Services Companies

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Shivani Bajaj


Shivani Bajaj

Shivani is an Director - Product Marketing at Deltek | Replicon. She is a technology enthusiast who loves tinkering with technology products. Deltek | Replicon provides award-winning products that make it easy to manage your workforce. With complete solution sets for client billing, project costing, and time and attendance management, Deltek | Replicon enables the capture, administration, and optimization of your most underutilized and important asset: time.


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