You may have sensed it among your customers, or even within your own consultancy firm, that winter is continuing in many markets. The technology sector, for example, has lost $7.4 trillion in valuation in just one year.
And as with every market contraction, we judge each of our actions in the light of the fundamental value of any business: ROI(return on investment ).
Resource management is no exception. If you're thinking about implementing resource management software or improving existing processes, it's a good idea to ask yourself what ROI you're going to get out of it, because such a decision doesn't come without an investment on your part - financial, of course, but also, and above all, human.
This is the approach Napta teams adopt teams adopt when presenting our assignment software to consulting firms and IT services companies , as well as when assessing the use of Napta, both before and after its implementation.
That's why we're particularly well placed to talk to you about the indicators you need to use to measure the ROI of your resource management. Our team has selected three. Let's take a look!
First of all, you'll notice in this article that we're always talking about evolution, because "measurement" means "comparison", and an absolute value doesn't mean much on its own.
Let's get back to business.
What is the assignment rate, also known as the activity rate excluding vacations (TACE), and why do we think it should be your main ROI indicator?
The assignment rate lets you see at a glance what percentage of your employee's time was actually used to generate business for your firm.
To calculate it, use the following formula:
Number of days on billable services / (Potential number of days for your employee - Number of vacation days).
Logically, the higher your TACE, the higher your ROI. That's your objective.
Whether your company operates on a fixed-price or time-and-a-half basis, it's crucial to identify the delta between time and attendance and time spent on billable assignments.
How can resource management help you achieve this goal?
If you use a tool from assignment and it collects leave and all the unforeseen events that punctuate an employee's day-to-day life (delays, personal emergencies, etc.), as well as the time spent on customer assignments, you'll have a clear view of your TACE.
If there's one constant among companies implementing an optimized resource management process, it's the obvious time savings it generates. And that's where your sales potential lies.
Let's look at 2 clear examples of how you can save time and generate more income.
Feedback (often abbreviated to REX) is essential to learn from each project and each assignment. That's why they are mandatory in most firms.
So how much time do you think your managers and consultants devote to this activity every month?
1 day? 2 days? More days?
And now imagine this time divided by 2 or 3 thanks to all the automation and simplification provided by your assignment tool.
The time freed up can now be spent on other billable projects, literally increasing your income.
Equally important is the indicator we call the Lead time to assignment. This KPI(key performance indicator) enables you to determine your level of ROI by measuring the time elapsed between a resource request, issued for example on your assignment software by a manager, and the actual assignment (or the sales proposal sent to the customer) decided by the assignment manager.
Experience shows that the more responsive you are in sending your propale, the greater your chances of converting the prospect.
The term turnover in your firm includes both people leaving your company and those arriving. And the resource management works both ways.
As far as departures are concerned, the fact that we can limit both underassignment, by restricting inter-contract periods, and overassignment , thanks to optimized resource management, has a considerable impact on employees' day-to-day lives, and therefore on their desire to stay with the company.
In terms of arrival, your assignment tool, which brings together requests for resources on the one hand and skills gaps on the other, enables you to anticipate your recruitment needs, thus limiting the risk of casting errors.
When you consider that the average cost ofa recruitment error corresponds to less than 30% of the employee's salary, it's easy to imagine the financial gains for your company.
But this ROI cannot be measured solely in terms of changes in TACE, sales or margins. You also need to take into account the positive impact of optimized resource management on your employees and their day-to-day peace of mind, to get a complete picture of what this practice brings to your consulting firm or IT services companies.
Would you like to find out more? We've got plenty of resources to help you go further.
To complement this topic, read the white paper "Which metrics should you follow to manage your assignment and improve your decision-making?
See also our guides, templates and checklists in the Resources tab.
See you soon at Napta!