Addressing Low Billable Utilisation in Consulting Organisations
Kimble’s New GM Breaks Down Causes and Solutions
By Steve Litsos, General Manager, Australia and New Zealand Region
Since becoming Kimble general manager for ANZ, I have been meeting with people from a range of professional services organisations, discussing the day to day challenges they face and their ambitions for the future.
Having worked for many years in consulting organisations myself, I can identify with the pain points and understand the possibilities for doing things better. It is exciting to see on the ground the ways that Professional Services Automation can support increased success.
In this blog, I take at look a topic I heard about a lot in my meetings – low billable utilisation – and how PSA can help tackle it.
Problem – Low billable utilisation
Executives and senior managers I spoke to at several professional services organisations voiced concerns that they are not managing to make the best use of resource time. Although their highly-skilled employees put in full-time hours, not enough of these are chargeable to customers. This has an effect on the bottom line and also on the business’s ability to grow and scale. It doesn’t help with recruitment and retention either – ambitious people want to be assigned to customer-facing projects that will allow them to develop their skills and experience.
1. A more accurate measurement reveals underlying issues.
Some organisations tell me that, before adopting PSA, they thought employee utilisation was about right. But, when they got a more accurate assessment, they discovered that they had misunderstood how much time was being absorbed by internal-facing work. With greater visibility they can see that consultants are overburdened with long meetings, administrative tasks and so on – and the business is not focused sharply enough on helping customers.
2. Difficulty in resourcing shorter tasks effectively.
Another issue is that as well as long-term projects which employ resources full-time for several weeks, many organisations have to assign resources to shorter tasks which take up less than a full day, perhaps two hours or half a day. Managing the pockets of time that result from this is complex. Without the necessary visibility, this often creates wasted hours and revenue leakage.
3. Slippage in forward planning.
A third cause of the utilisation problem is the frequent slippage of project start dates. This means that the resourcing plan too often ends up being torn up at the last minute. This results in valuable resources being under-utilised and sitting idle on the bench – or conversely they are double-booked and the company has to go out and find expensive contractors at the last minute, or they end up sending a team who don’t have an appropriate mix of skills and experience. That can affect customer satisfaction and also the profit margin.
Here are some of the ways services organizations can use PSA to help improve billable utilisation.
1. Better visibility of resource availability
Having an accurate record of who is available when, across the entire resource pool enables resource managers to allocate this time effectively and carefully manage supply and demand. Resource management can no longer be siloed within teams and departments.
2. Transparency and accountability
Critical resource information should be transparent and shared with consultants themselves. Where resources can see at a glance what their own billable utilization is against the target they can flag up any issues. Enabling them to see and affect what projects they are assigned to going forward increases employee engagement and satisfaction. It also empowers each user to make impactful business decisions, something that is discussed in our blog entitled “Three Ways to Pave the Way for Employee Adoption of PSA.“
3. Accurate forecasts
Thirdly, forthcoming projects need to be logged into the system at an early stage so that resource managers can see what is coming down the road. Close dates cannot be allowed to slip and customers need to be tied into firm start dates. Where customers have a close relationship with the services organisation and open access to information about the project, they will be able to see the impact of changing date as the team assigned to them may not be available if it is moved.
From my previous experience as a professional services manager, I know how complex a task it is to match up supply and demand and I am familiar with the issues that arise. I look forward to working with both existing and new customer organisations to help them to improve in this important area.
For more insights into how to put project managers in the driver’s seat and create a forward looking, predictable services organisation download our ebook “The Adoption Problem.”