The best capacity planning tools for professional services firms

written by
Tom Purves
Feb 3, 2023
number
minutes read

For professional services firms, your people are the fundamental building blocks of your business. Acquiring the best talent, and keeping them dedicated to the business and engaged in their roles, are essential drivers for the business development and growth of professional services firms. 

However, while attracting and retaining the best talent is essential, an equally critical aspect is meticulous resource capacity planning. This means carefully understanding the current and future available capacity of your employees and determining when and what resources will be necessary for the demands of live and pipeline projects. 

In this article, we’ll explore why effective capacity planning is vital for the success of professional services firms and explore the capacity planning tools available to streamline and optimize your project & resource management.  

 

Why is capacity planning important?  

In today's fast-paced business environment, resource capacity planning is essential for professional services firms. Understanding which members of the team are available, and the unique skills that are required for each project, enhances a professional services firm's ability to deliver client projects efficiently and plan for future growth effectively.  

Let’s dive deeper into the key benefits of resource capacity planning: 

Reduces risks and keep your clients happy  

Through effective capacity planning, organizations can proactively identify possible resource bottlenecks or challenges in live and pipeline projects. The insight provided by capacity planning empowers firms to address any issues by taking corrective, data-led actions ahead of time; they can hire additional stuff, use additional associates, extend project timelines, or reallocate resources strategically to minimize risks and prevent project failures. This proactive approach reduces the chances of delays, quality issues, or client dissatisfaction caused by resource shortages… and there’s nothing more important than keeping your clients happy. 

Increases utilization and profitability

Resource utilization is the measure of how much of your available resources you are currently using. This metric helps project managers and business leaders gain insight into how effectively and efficiently your resources are being used over a period of time by comparing hours spent on billable client work vs. non-billable work and time on the bench. Moreover, utilization serves as the lifeblood of professional services firms, as only billable work will contribute to the firm’s bottom line. 

By accurately predicting current and future demand through capacity planning, firms can cultivate a higher utilization rate, and therefore improved profit margins.  

Enhances strategic decision-making 

With effective capacity planning, professional services firms gain a deep understanding of their current capabilities and limitations. This understanding allows them to evaluate their strengths, weaknesses, and areas where improvements can be made to improve their ability to meet future demand or pursue new opportunities. 

Moreover, capacity planning plays a vital role in guiding investment decisions and business development objectives. By assessing future demands and growth opportunities, firms can identify areas where investments are needed to enhance their capacity in order to meet their future demands. This may include investments in technology upgrades, infrastructure development, talent acquisition, or skill development programs. Capacity planning ensures that investments are made strategically, aligning with the firm’s long-term goals, growth strategy and potential exit.

What are capacity planning tools? 

Predicting future resource demand and capacity is without doubt one of the most difficult tasks for professional services firms, and it only becomes more challenging as a firm grows. Effectively planning resource capacity without a dedicated system may be manageable with a firm of five, but as their employee count grows to double digits and beyond, a dedicated capacity planning tool is essential for ensuring successful resource management, project management, and planning future growth. 

A capacity planning tool is a software application or system used to streamline, optimize & automate resource management and staff planning processes. Capacity planning tools generally provide a range of features designed to assist professional services firms with the analysis, forecasting, and reporting of resources based on anticipated demand and workload.  

Furthermore, capacity planning tools may offer additional functionality or integrations with existing applications for project management, financial management, resource management, resource allocation, customer relationship management, and more. In summary, capacity planning tools support and assist a professional services firms’ ability to meet client demands while maintaining operational efficiency and profitability. 

Before we discuss the types of capacity planning tools that are available, let’s briefly detail the key features and functionalities that professional services firms should be looking for in a resource management tool and capacity planning software solution. 

Resource management and resource allocation 

The primary feature of any capacity planning software for professional services firms lies in providing robust and comprehensive resource scheduling and resource planning functionality. A high-quality capacity planning tool provides a centralized platform where project managers and business leaders can access real-time information about their capacity management, resource availability and utilization across their projects.  

With this functionality, they can meticulously track and monitor the status of resources, their skill sets, and any ongoing or upcoming commitments, which aids in making data-led decisions when allocating resources to projects and ensures that the correct skill sets are matched with the project requirements. Furthermore, this level of insight helps with the identification of any resource gaps or challenges ahead of time, ensuring that your projects are effectively managed and delivered to schedule. 

Demand forecasting 

Accurate demand forecasting is a vital component of capacity planning software for professional services firms. This demand forecasting functionality enables firms to predict future demand by factoring in commitments across both live and pipeline projects, at the project level and also by grade and skill. By leveraging these insights, firms can gain a comprehensive understanding of the anticipated workload holistically, in addition to identifying patterns and anticipating fluctuations in demand. With all this insight available through one system, your project managers are supported in driving increases in utilization rate, project success rate, and most-importantly, profitability for your firm. 

Analytics, data-visualization and reporting 

How valuable is data without the context, means and time to interpret it? Simply storing any data in a single database isn’t going to provide you the insights you need without the reporting to drive actionable insights. Firms looking to invest in resource management and capacity planning software need to ensure it provides detailed analytics tools, reporting dashboards and visualization capabilities to unlock the true power of your data. 

This functionality offers visual analysis of a firm’s key data points, metrics, and indicators, along with dedicated reports and dashboards that help reduce the time spent understanding data, and empowers project managers with the right information, at the right time, to make the right decisions. 

Scalability 

For professional services firms looking for a solution to their capacity planning and resource management, there’s often a need for a solution that can scale with your firm as it grows. Where possible, any capacity planning tool implemented by professional services firms should provide the same level of insight and performance available regardless of your size. Whether you’re a firm of 3, 30 or 300 employees, your selected solution needs to grow with you.  

Ease of use & onboarding 

It can be challenging to successfully implement any new software solution into a business. Employees may be hesitant to change their methods and routines to a potentially intimidating new system – even if it promises to positively change the way they work. Ensuring any new capacity planning tool offers a modern, intuitive, and user-friendly interface can help ease your employees into their new system. Furthermore, combining the easy-to-use modern user-interface with an experienced onboarding process can help to guide firms through every step of the implementation and greatly improve the utilization rate of new systems.  

Types of capacity planning tools 

Now we’ve explored a wide variety of key features and functionalities required for an effective capacity planning tool, let’s look at the types of tools that professional services organizations can use to improve their resource management and capacity planning.

Spreadsheets    

An example of a capacity planning spreadsheets

It comes as no surprise that recent research conducted in partnership with Consultancy BenchPress found that over 80% of consulting firms manage their organization with spreadsheets. For many firms, spreadsheets provide a low-cost solution to capacity planning. It’s a solution that most people are familiar with, making it affordable and easy for teams to collaborate and update their capacity planning data. 

However, while spreadsheets can be a practical solution for smaller organizations with relatively simple capacity management requirements, specialized capacity planning software becomes a more efficient and reliable choice as the complexity and scale of the business grows.  

For instance, spreadsheets are highly susceptible to user-errors and often struggle to handle large datasets and complex calculations. Furthermore, spreadsheets lack the advanced features and functionality found in purpose-built solutions such as streamlined analytics, reporting and dashboards. These limitations may lead to performance bottlenecks, incorrect data, and inefficient capacity management processes.  

Standalone resource or project management systems 

Standalone resource or project management systems are a step-up from the spreadsheet software most professional services organizations are currently utilizing. Unlike spreadsheets, these systems are created specifically to support organizations in their capacity planning and project management processes. They provide a wide range of features that may include functionality for daily task & team management, resource allocation, project tracking, and capacity & demand planning. 

Organizations using stand-alone resource or project management systems can streamline and improve their capacity management and planning processes, leading to a rise in productivity and utilization rates—but these tools aren’t without their limitations.  

As these tools are designed primarily for their primary functionality of resource or project management, they are unlikely to offer robust functionality outside of this or have valuable integration with any pre-existing systems.  

A common shortcoming with a stand-alone resource management system is a lack of CRM or CRM integrations, which means that only live projects are factored into capacity planning, giving limited visibility into true future demand. Similarly, without an integrated timesheet system it’s impossible to track the ‘budget’ (from resourcing) with the ‘actual’ (from timesheets) and ensure everyone is on track. 

Professional services automation (PSA) solutions

An example of a PSA solution (CMap)

Professional services automation tools provide organizations with the systems required to escape the fog of retrospective, low quality data from painfully reconciled spreadsheets and standalone tools with an all-in-one project management solution. PSA solutions were specifically developed for the professional services sector to manage key operational and financial processes, and provide a single source of insight for their key performance metrics including resource capacity, utilization rates, project success, profit margins and revenue. 

PSA solutions offer a comprehensive range of functionality and features, which typically include:  

  • Capacity management and planning 
  • Demand forecasting 
  • Resource management 
  • Project financial management 
  • Timesheet & expenses 
  • Data analytics, visualization, and reporting 
  • Sometimes Customer Relationship Management (CRM) 
  • Integrations with existing systems 

As PSA solutions have been built with professional services organizations in mind, they’re largely considered the best-in-class system for managing any business in this sector. With PSA solutions, and a single end-to-end operational platform, organizations can utilize real-time data to generate highly valuable insights to help them to see their future more clearly, all in one place.   

This enables them to streamline their resource and capacity planning processes, ensure that the right people are allocated to their projects, and boost the profitability & success rates of these projects. Furthermore, PSA solutions can effectively scale with organizations, making sure that they are able to grow as they do.  

While PSA solutions are undoubtedly an incredible tool for professional services organizations looking to uncover the hidden value of their data, there are challenges to their implementation. The primary challenge for many people is simply learning how to use the new system, as working with PSA software could be an entirely new experience for them.  

The use of PSA software may require specific training to ensure that teams can effectively navigate and utilize all features and functionality, relevant to their roles. However, this risk of failure can be addressed by ensuring that the solution you’re implementing offers a robust on-boarding process along with detailed user guides and support capabilities.  

CMap is one of the best examples of a PSA solution due to its combination of functional breadth, powerful tools and ease of use, making it the top choice for professional services firms looking to get set up fast and start growing. You can get a tailored, 1-1 CMap demo here

 

Final thoughts 

To summarize, we’ve covered why capacity planning tools are essential for professional services organizations to grow and succeed. Capacity planning tools enable firms to take control of their resource management, accurately plan their capacity requirements, and allocate resources efficiently.  

We’ve also established some of the key differences between the three most common types of capacity planning tools. This should give you a steer on choosing the right fit for your firm and its future, so you can start making the right resourcing decisions today. Happy capacity planning! 

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