4 Ways to Improve Billable Utilization
Having worked in the professional services industry for many years, I am surprised at how many organizations still struggle with resource management and fail to optimize billable utilization. I’ve also had the privilege of working with organizations that got it right! In this blog, I share some recommendations and tips that you can use to improve.
- Get visibility into both the backlog of projects and demand. Knowing what work still needs to be delivered as well as those opportunities that are almost won is critical. You need to get this visibility to have an accurate revenue forecast and the ability to plan and assign resources to the right project. Don’t let your resource management approach be influenced by sales people (they may try to insist a specific person for the job) and reactive resource planning will undoubtedly cause slower deployment on new projects. Professional services organizations that have good visibility into demand often start 5 days faster on a new project – giving them a competitive advantage in the market and with the customer.
- Get a centralized view of resources. The most successful professional services organizations have centralized resource management function – but that model may not work for every business. If your resources are geographically dispersed and have a broad range of services and skills you should try to avoid a silo mentality. While department management relationships should continue to help manage employee career development, set goals, performance reviews, etc., resources should be assets for the business, not a just particular department. This is even more important in a more global business world where remote delivery is becoming more prevalent.
- Monitor those non-billable time buckets. If billable utilization rates are not meeting targets, then what else are your resources working on? Are your specialty resources getting too involved in winning the work? Try to free up more time for those resources on billable work, and reduce administration other non-billable effort. Your time capture and approval process must be efficient. People must be encouraged to get their timesheets in on time, and accurately, and approval must be done quickly but efficiently. Cash flow can be significantly impacted if clients are challenging invoices and delaying payment. Avoid revenue leakage caused by people booking to the wrong projects or not booking it at all.
- Use the right tools to run your services delivery organization. If your resource management process is not linked to project planning, then how can it be up to date? How do you know if a project is slipping, or getting finished early? You need visibility into the demand pipeline, and then align capacity. Make sure your timesheet system is linked to your resource management system so you can ensure that people are booking time to the projects that they are assigned to. Have easy access to analytics and performance metrics and get portfolio level views and accurate consolidated information on a daily basis. The days of managing a business using spreadsheets should be long gone.
The top performing PSOs are generating more revenue per billable employee, higher levels of utilization, better project margins and increased EBITDA. The incentive to improve your resource management processes and achieve sustainably higher utilization is clear. There is no better time to start! What methods are you taking to improve billing utilization? Share by leaving a comment below.