The billable utilisation of staff in an audit and accounting firm is the key to profitability and business sustainability. It is a no brainer that every audit and accounting firm endeavours to maximise the billable utilisation of their resources, the biggest investment of most of the businesses.
This article would help you understand the limitations of legacy systems used for the improvement of billable utilisation and how modern resource management solution will assist your business move resources proactively from non-billable to billable work and maximise overall billable utilisation
1.Legacy systems currently used by audit and accounting firms
Most of the audit and accounting firms are fighting against the challenges of the 2020s with the systems developed in the 1990s. It is a bitter fact irrespective of the market size, share, or reputation of these businesses. Some Examples of the legacy systems are:
- Silos of spreadsheets built with macros
- Home-grown half-baked systems
- Windows-based systems of the 1990s
- Entry-level resource scheduling software
These are either outdated or simplistic solutions not designed to address the modern-day challenges of a business.
2.How legacy systems fail to improve billable resource utilisation?
Following are the limitations of legacy systems that are stopping organisations from optimising their billable utilisation:
- Unable to provide visibility of enterprise-wide resource demand
- Unable to address complexities of matrix organisation structure
- Unable to provide resource forecasting and capacity planning
- Unable to provide multi-dimensional forecasting of profitable utilisation
3.How can a modern resource management technique help you to maximise billable utilisation?
Improving billable resource utilisation requires foresight into the overall utilisation of resources. So that corrective actions can be taken ahead of time. But, forecasting resource utilisation is a daunting task, especially in a matrix organisation with constantly changing resource demand.
The following steps are required to forecast profitable utilisation and proactively take corrective actions to improvise it.
- Forecast resource demand
- Forecast resource capacity
- Forecast profitable and overall utilisation
- Move resources from non-profitable work to profitable
- Market and sell excess capacity ahead of time
- Build On-Demand Workforce
- Analysing Forecasted vs Actual Profitable Utilisation
The above processes are quite involved and complex. Modern resource management software can automate these processes and provide you with real-time information to improve profitable utilisation.
1. Forecast resource demand
It is critical for a business to track all types of resource demand created by current work or future pipeline work. It includes resource demand coming from the following sources
- Current projects under progress and past projects on hold
- Non-project activities like BAU, support, admin, operational, etc.
- Future projects in the sales opportunity pipeline
- Future internal projects in the approval pipeline
- Future vacations, training, holidays, etc.
2. Forecast resource capacity
Forecasting resource capacity means calculating the total number of standard hours an individual is available to work in the future. As per employers, arrangement Resource capacity calculation needs to account for:
- Every type of employee, i.e., full time permanent, contractors, casuals, part-timers, etc.
- Employees leaving in future due to contract completion or resignation
- Employees planned to join as new recruitment
3. Forecast overall and billable resource utilisation
Forecasting overall resource utilisation is the ratio between the total demand forecast and total resource capacity. Similarly, forecasting billable resource utilisation is the ratio between billable demand forecast and total resource capacity. These utilisations are mostly measured in percentages.
4. Corrective Actions: Move resources from non-billable work to billable
Once there is foresight into overall utilisation, it is only a matter of mobilising resources from non-billable or low-priority projects to the billable or high-priority projects by resource managers.
5. Corrective Actions: Market and sell excess capacity ahead of time
Similarly, forecasting capacity vs billable demand provides foresight into the excess available resources that can potentially go wasted. This wastage can be avoided by
- Bringing forward future billable projects
- Selling resource time aggressively
- Restructuring capacity in different areas
6. Corrective Actions: Build On-Demand Workforce
Nowadays, it is critical for a business to have an on-demand workforce consisting of contractors, casuals, part-timers, freelancers, etc.
This type of workforce helps in meeting the temporary shortage of resources without any permanent overhead cost or hiring/firing costs.
7. Analysing Forecasted vs Actual Billable Utilization
It is critical to compare actual billable utilisation against the forecast regularly. It helps in identifying the gap and the reasons behind it so that the overall forecasting process can be improved to achieve a higher degree of accuracy in estimation.
The SAVIOM Solution
SAVIOM is the market leader in providing an Enterprise Resource Capacity Planning solution. 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 workforce planning software. So, SAVIOM can help your business to establish an efficient system geared towards your specific business challenges.