RTM Consulting introduced Just-in-Time Resourcing® solutions to help companies with the complex task of getting the right person with the right skills in the right place at the right time. Just-in-Time Resourcing® helps build the right set of capabilities to accomplish the most efficient use of human capital for professional, consulting and shared services (e.g. internal IT) operations.
Roughly thirty years ago the manufacturing industry embarked on a journey to transform itself from a carryover of the industrial revolution to more efficient ways of creating products using modern technology. This included the introduction of robotic gear to replace manual labor tasks with technology that could perform the same work at a lower cost, and with higher and more predictable quality. The industry also began to understand that it needed to find ways to eliminate the cost associated with idle inventory, and lower lost opportunity costs due to short supply of parts when a peak in demand occurred. This was the beginning of what became known as just-in-time manufacturing, whereby parts are predictably supplied at precisely the time needed and timed to always changing demand forecasts.
Consulting, professional services, internal IT operations and other shared service industries remarkably are in a similar state as the manufacturing industry was in forty years ago. Simply said, processes, methods and tools have failed to keep pace with the large disruptions in traditional labor sourcing and management methods. Off-shoring, near-shoring, globalization, price pressures, increasing competition – all things we read about and deal with every day have changed the way we manage labor. Recent industry research clearly shows project failures for internal IT operations exceeding 35 – 40% are common. Professional and consulting services teams have similar project performance issues, and billable utilization well under best practice standards.
Unfortunately too many companies have responded with stop gap and tactical measures, in many cases compounding the problem or delaying the inevitable need for real process change. Automation tools for managing human capital utilization (better supply and demand balancing) has improved vastly, but the effectiveness of these tools is limited by the building of appropriate business processes necessary to take advantage of automation.
The Business Imperative for Highly Effective Resource Management
Over the next decade growing competition and marketplace change will continue putting unprecedented pressure on all human capital intensive service providers to rapidly adapt and innovate in every facet of service delivery. Especially vulnerable are project based operations like consulting, professional services or internal IT operations. Effectively and efficiently planning, sourcing, deploying and managing resources will be the new high water mark for the industry. Similar to how manufacturers learned through advanced inventory planning techniques to have the right parts available at just the right time, services providers (internal and external services) are now challenged to provide the right resources with the right skills at the right place just-in-time.
Interestingly, most services providers today are struggling with utilization (labor supply and demand balancing) problems, project performance problems, or both and the resulting high labor and overall project costs, have largely reacted in tactical ways such as pushing labor off-shore to lower average hourly labor costs. While off-shoring is certainly a desirable and necessary part of the strategic labor equation, implementing better resource supply and demand planning techniques are necessary to address the strategic need for sustainable business transformation.
Analogous to targeting near zero inventory for a manufacturer, services providers should target a constant just-in-time approach for supply and demand balancing of human capital. The following table illustrates the economic value of efficient management of utilization for a billable services operation such as professional or consulting services.
|# of Billable resources at $150/Hr.||Annual Revenue ($) from 1% Increase in Utilization||Annual Revenue ($) from 7.5% Increase in Utilization||Annual Revenue($) from 15% Increase in Utilization|
- Since idle resources are a sunk cost, the revenue amounts in the table drop straight to the bottom line as profit.
- For the internal IT operation or other shared services teams, economic benefits can be accrued by reducing project failures and costs associated with those failures, or improving utilization of invested human capital to avoid unnecessary hiring of under-utilized labor.
- For either internal or externally focused services, the upside opportunity to improve customer service is enormous.