Each day the world market is becoming increasingly competitive and volatile for one reason or the other. These fluctuations have become the new normal of the 2020s. Consequently, survival for many businesses is at stake, and even high-performing companies are finding it hard to protect their profitability and achieve sustainable growth.
In such an environment, companies must prioritize managing resources most efficiently as they are the biggest investment of almost all businesses.
This can be made possible only by having an efficient resource scheduling and management system. Such a system can reduce resourcing costs significantly, improve profitability, and help you overcome market volatility.
This blog sheds light on the business benefits of leveraging a comprehensive resource management system to boost ROI and maintain a balanced resource health index.
But first, let’s understand the resource management definition and concepts.
1. What is a resource management system?
Resource management is the process of utilizing various types of business resources effectively and efficiently across the enterprise. Enterprise resources include workforce, assets, facilities, equipment, etc.
The most important part of a resource management system is resource scheduling. It is the process of identifying and allocating resources to various types of activities. They are related to project work or non-project work like BAU, support, admin, operation, etc.
When scheduling is focused only on the workforce, it is called workforce scheduling. In short, workforce scheduling is the process of identifying and allocating employees to projects at a high level.
Resource allocation is an alternate word for resource scheduling. Likewise, resource allocation is the process of identifying and allocating resources to projects at a high level.
Resource management centralizes information from various systems. They are human resources, skills, current projects, future pipeline projects, resource demand/ allocation, vacations, non-project activities, etc.
This establishes a single source of truth for resource demand across the enterprise. It facilitates real-time forecasting and early warning about resource shortages/ excesses, utilization, project vacancies, people on the bench, revenue, margins, etc., so that the business can take corrective actions ahead of time.
With an understanding of resource management in project management and the various elements of the system, let’s learn about its importance in a business environment.
2. Importance of resource management solution
Over the last decade, resource management concepts and techniques have become a crucial part of high-performing businesses around the world. Here are the top ten reasons why these businesses have adopted this solution:
A. Eliminate silos of spreadsheet based schedules
Spreadsheets for resource allocations are cumbersome, very limiting, and hard to maintain. So, with the help of effective resource scheduling solutions, organizations can establish a unified source of truth.
It can eliminate silos of resource allocation spreadsheets with a single enterprise-wide resource schedule. It will keep the concerned manager informed of all resource allocations and availability. This helps your business go much beyond the basic scheduling and allocation of resources.
B. Build enterprise-wide visibility
An efficient business must build a bird’s eye view of all enterprise resource capacity and competencies. It also must capture every type of work activity performed by these resources. Activities can be project-related or non-project related, i.e., BAU, administrative, support, operational, vacations, etc.
Complete visibility of resources and work is the stepping stone toward efficient resource utilization.
Enterprise-wide visibility provides a comprehensive overview of key resource metrics such as demand, capacity, availability, and utilization, allowing organizations to make informed business decisions. Moreover, it facilitates the allocation of best-fit resources instead of the first available ones.
C. Deploy competent resources
Scheduling the right person with the right skills is crucial for a project to finish within budgeted time and cost. Skills mismatch, wherein a highly skilled project resource is assigned to a low-priority work or vice versa, can result in poor quality of deliverables and even project delays. To prevent this, organizations need robust resource management solutions.
An efficient resource management methodology can help resource managers identify and instantly allocate competent resources. It will be based on resource availability, skills, experience, qualifications, location, team, cost rate, and any other criteria the project requires.
D. Maximize billable & strategic utilization
Nowadays, most businesses have their employees working more than the standard hours. It doesn’t necessarily translate into improved business performance due to the employees wasting their valuable time on non-billable activities. They also could be working on non-strategic or low-priority projects.
However, an effective resource capacity planning system can help you forecast billable and strategic utilization of resources ahead of time. Accordingly, the resource manager can mobilize costly, niche-skilled resources from non-billable or low-priority work to billable or high-priority projects, maximizing the profitable utilization of the workforce.
E. Forecast shortfall and excess of resources
Forecasting overall resource requirements related to the project and non-project work is a critical part of capacity planning in resource management. It provides foresight into future shortages or excesses of resources across the organization.
Robust resource management can help businesses perform capacity planning and address demand gaps with appropriate resourcing treatments. As per requirement, managers can adjust project timelines, retrain current employees, or hire a contingent workforce ahead of time.
F. Resolve challenges of matrix management
Most businesses worldwide have adopted a matrix organization structure to utilize the resource pool efficiently and maximize profitability. This structure brings its own set of logistic and management challenges with the potential to create business chaos.
Efficient resource management tools provide the right visibility to the right stakeholders. It helps them manage resources efficiently based on the dimensions managed in a matrixed organization structure. As a result, this helps streamline operations and overcome the challenges associated with matrix management.
G. Reduce resourcing cost
Managing and controlling project resourcing costs is vital to maintain ROI and profitability. Enterprise-grade resource management system enables managers to ensure the skill-based allocation of resources, thus preventing the allocation of under/over-skilled resources to projects.
Additionally, it provides visibility into pipeline projects and enables them to perform capacity planning. This helps reduce costly last-minute hiring/firing cycles. Besides that, it allows firms to leverage a low-cost, global workforce. Additionally, it helps maintain the right band mix of resources for every project. These techniques help reduce project resource costs and maximize profitability.
H. Improve project delivery time & cost
A resource management solution enables managers to forward plan and schedule resources with the right competencies for various projects. It prevents the allocation of over or under-skilled resources and minimizes the risk of budget and project overruns, thus guaranteeing a higher quality of deliverables.
Moreover, it helps forecast and track various key performance indicators (KPIs) related to the resources and projects. This can help the business take corrective action proactively and control project delivery time and costs.
I. Build an optimized workforce
Building an optimized workforce is a critical aspect of project resource management, and capacity planning plays a key role in achieving this objective. Effective capacity planning in resource planning helps you forecast the gap between workforce capacity against volatile demand.
Proactive resourcing treatment can be applied ahead of time to ensure that the workforce has the right capacity to meet the demand. It includes strategies such as retraining/upskilling existing resources or resorting to planned hiring. Therefore, it helps businesses avoid costly last-minute hiring or firing decisions and maintain operational workflow.
J. Gain real-time business intelligence
Resource scheduling is influenced by rapidly changing business dynamics, including shifting project priorities and resourcing volatilities. These dynamics create the need for real-time reports and insights. An effective resource scheduling and management software can provide real-time business intelligence with reports, analytics, and dashboards.
These reports allow management to monitor organizational resource schedules, identify over/under allocations, and make timely adjustments to optimize their utilization. Moreover, businesses can monitor key performance indicators (KPIs), such as resource utilization rates, project progress, project financials, etc., in real time. Therefore, BI reports can facilitate data-driven decision-making.
3. Wrapping Up
A resource management plan plays a crucial role in organizational success as it helps businesses manage their most valuable asset- the resources. The ten reasons discussed in this blog highlight the significance of eliminating silos of spreadsheet-based schedules and building enterprise-wide visibility with a complete resource management system. By adopting effective resource management techniques and utilizing the right tools, firms can optimize their project resource allocation, enhance operational efficiency, and make better business decisions.
Unlock the true potential of your workforce and redefine business efficiency with Saviom!
4. The Glossary
5. The SAVIOM Solution
SAVIOM is the market leader in providing a futuristic solution for the effective management of resources. It has more than 20 years of experience working with high valued global companies around the world. SAVIOM also provides tools for project portfolio management, professional service automation, and efficient workforce planning. So, SAVIOM can help your business to establish an efficient system geared towards your specific business challenges.