Digitalization & globalization calls for efficient resource management
It is truly amazing to witness digitalization and globalization as it’s happening right now, and how it impacts our world. Without doubt, digitalization forces business agility and globalization intensifies business competition as resources are not kept local any more but are accessible for companies from all around the world. Companies are requested into a transformation phase to win the resource rivalry – to do so, businesses must maximize capacity utilization to improve project delivery.
Resource management is all about managing the ongoing allocation of resources. Business operation, resource management and project delivery are closely associated – a lean operation and efficient resource allocation and utilization can largely reduce resource waste in the processes of delivering projects on time, on budget, and on value. For any business that competes on limited resources, no matter whether it’s staffing, time, or facilities, efficient resource management is a key component to improve project delivery. On the contrary, a poor arrangement of organizational resources can jeopardize the business by failing to control, plan and forecast capacity demand and supply.
Resource management: creating a handshake between Project Manager and Line manager
What’s the currency of the future? My answer is time – for any businessman that combats in the global market, time is what they are constantly competing over. Time is the most limited resource for anyone, and available hours is the most precious resource that any organization needs to manage. Producing more value with fewer available hours and less capacity consumed is the productivity dream for any company. The core of resource management is to manage people and time - optimizing employees’ time utilization to get the most value out of available resources is the answer to solve the productivity mystery.
Talking about resource optimization, how much impact can we get out of it? In other words, how much more effective can an organization become from optimizing resource allocation and utilization? Take an organization with 500 employees as an example, let’s say the managers can manage to increase the resource utilization by merely 2% out of the whole organization, it will end up giving back 10 FTEs instead of new hires. If you’re a project manager or line manager, try to do the math with your own team, how many FTEs can you get by increasing resource utilization by only 2%? And how many new hires can you avoid with the FTEs saved?
Resource efficiency is the critical topic for many organizations: the lack of resource load visibility leads to over-allocation and inefficient project execution, or decentralized resource requests leads to scheduling conflicts and confusion, or actual resource availability conflicts with unrealistic capacity expectation. Unclear and non-transparent capacity allocation and scheduling can quickly create confusion across the team, hurting team productivity that eventually could fail project deliveries. To avoid struggling in these messy situations, creating an alignment between Project Manager and Line Manager is extremely important: when resource requests fit the capacity availability at the right amount, on the right time, and at the position, resources can then be allocated appropriately and accurately.
The alignment can be understood as a handshake between Project Managers and Line Managers: the Project Manager is provided with the full overview of cross-functional and cross-department resources and their availabilities, he can then request available resources to his projects within a specific project time period when they’re accessible; while the Line Manager can view and track his resource allocation and availability from his end. This solution increases resource transparency and planning visibility, allows for control and top-down planning on decentralized resources, and ideally secures that the right resources are assigned to the right projects at the right timing. Also, financial tracking can be easily taken care of in this process as all resource-related information is centralized and displayed.
Resource management on a strategic level: The C-suite executives and PMO
As digitalization is shaping the landscape of business, it also impacts resource management. The evolution of organization theory preciously set the focus on “you do business to earn money”, while the newer theory states that “you do business to create value for your customers”. In the age of digitalization, the newest theory pushes the agenda of business agility and suggests that you do business to bring new value to your customers. The consequence of this evolution forces companies to have an agile perspective on the way they operate the business from a strategic and resource-efficient perspective.
Globalized economic rivalries have largely pushed businesses’ ability to gain a competitive edge. Again, it’s all about efficiency – how to deliver more value with fewer resources is the core competition among businesses, and that is exactly where efficient resource management can help step up your game.
To make the organization as efficient as possible, C-suite executives are accountable for doing business planning to set up strategic goals and objectives. Resource management is for planning and executing on business strategies on a very high level by controlling and delivering organizational resources to projects that aim to deliver on business planning, strategy deployment and execution of the business plan.
For C-suite executives and PMOs, a high-level control, monitor and plan are needed through resource management. They need a thorough and clear overview of organizational resources, as well as their availabilities and capabilities, to better capture organization capacity utilization and make accurate hire/fire decisions. To best plan strategic goals and objectives that empower the entire organization, the management team should be provided with good insights into the resource allocation, utilization and performance sustainability of the resource arrangement.
But how can efficient resource management be achieved? Even though there isn’t a success formula for efficient resource deployment, there are certain solutions that are best suitable for particular problems. Creating a handshake between the line organization and the project organization is always a good starting point to leverage resource optimization. From a planning perspective, continuously push capacity planning to a macro level instead of a micro level – by managing resource utilization by hours or FTEs per role per month from a macro level gives the PMOs full transparency and manageability, especially in a decentralized and cross-functional organization. Building even 2% more available hours out of current capacity would largely increase the capacity utilization rate, and a role-based utilization makes sure that the right resource is allocated to the right project based on capabilities and knowledge, which promotes a more performance-sustaining project organization.
After all, efficient resource management is organizations’ ability to outrun time with limited materials, staff, and facilities, to generate as much productivity as possible. Efficient resource management improves project deliveries by enabling a resource-efficient, impact-optimized and performance-sustaining project organization, which helps your organization deliver the expected project outcome on time, on budget, and on value.