The Complete Resource Management Software Guide

Resource Management Software enables organizations to maximize the productivity and strategic deployment of high-value employees.

Every operating organization, large or small, faces the same fundamental question each business cycle: How do we get the most value out of our people and skills?

Resource Management Software helps in a few areas: 

Creates Visibility – Most resource planning problems can be avoided if they are addressed early enough in the planning cycle. Resource Management Software is designed to look ahead and identify problem areas before they become big issues.

Highlights Work Feasibility – Too many organizations get themselves in trouble by taking on too much work. This usually happens because managers tend to approve and start projects without a staffing plan that allows for on-time completion. Adding feasibility analysis to the project intake process provides managers with the capability to fund only initiatives that can be started and completed successfully.

Builds Data Credibility – Resource Management Software will not be successful unless everyone in the decision-making process has confidence in the data. The easiest way to gain agreement is to make stakeholders part of the update process. When everyone has a chance to fingerprint the numbers, they will ultimately feel good about the final results.

Delivers Reporting Transparency – Resource Management Software provides decision-making data to managers at every level.  Everyone in that decision-making process needs to have access to the same data. They also need to be quickly alerted to the problem or high-risk areas that need a response. Resource Management Software can use alerts, views and online reports or dashboards to achieve this.

Where do companies typically fail in selecting and implementing Resource Management Software?

After many years of experience and many sales cycles, there are a few things we have learned:

When selecting a Resource Management Software, an organization should ultimately acquire a specialized system that allows for high-level effort forecasting, addresses resource shortages, and identifies the impact of shifting priorities. Acquiring other types of project management software, that also have some resource planning as secondary functionality, usually does not get it done.

Resource planning should be a foundational PMO (Project Management Office) discipline. If an organization fails at resource planning, it is only a matter of time before other failures occur, including late projects, missed timelines, and organizational chaos. Make sure your approach addresses the resource planning problem first.

It does not matter whether your organization manages via Waterfall or Agile methods, or by teams or individuals; Resource Planning is still a challenge. Employees come and go; they move between divisions; they miss work for vacations and sickness; they have strengths and weaknesses; they occasionally get called back to their old work to fix things that are broken; and they have limited capacity.

In some cases, the use of Resource Management Software is centralized, but it is not a standalone discipline. Resource Management Software always interrelates with other processes and other technology systems including HRIS, ERP Supply Chain, Project Management, Program Management, Strategy Execution, and Agile Work Management. These integrations should be planned up front, even if their deployment is not until further down the road.

The Key Components of Resource Management Software and Processes:

Resource Capacity Planning

The use of Resource Management Software begins with Capacity Planning. Capacity Planning is critical to the overall management process because it includes an understanding of actual headcount and the true cost of doing business, since employees and consultants actually get paid. In a large organization, understanding headcount by operational unit, skill area and cost center is not always a simple exercise. However, getting these numbers right is important to maintaining decision-making credibility going forward.

Ultimately, capacity becomes the foundation of all forecasting data. At each level in the planning process, resource assignment data is compared to capacity to validate its reasonableness. As a company looks toward future initiatives, resource capacity may fall short in certain skill areas, so the software needs to analyze the gaps and identify the areas where additional headcount can make an impact. Skilled resource bottlenecks are a constant source of completion delays… sometimes big multi-initiative delays. In addition, overutilization of a constrained workforce causes a dramatic decline in productivity over time (bottlenecks + decline in velocity).

One thing we have learned from observing organizations work is, if you put skilled people in the right jobs, work will get done. By contrast, project plans without available resources are relatively useless.

Strategic Resource Allocation

Gaining visibility into resource and skill demand is usually one of the primary drivers for implementing Resource Management Software. For a number of reasons, this objective, which seems simple to accomplish, is actually somewhat difficult to set up and maintain in real world situations. For starters, both the software and the process need to address that schedules, priorities and staff are always changing. This requires a real-time analysis to alert planners when a change has taken place that affects the viability of the resource plan. 

With that said, it takes many people with separate areas of responsibility to complete the forecast accurately. Passing around a giant spreadsheet is not practical over a long period of time and supporting individually-owned spreadsheets of work items creates a huge reconciliation problem. In both situations, decision-makers tend to lose confidence in the data over time and the organization eventually moves toward Resource Management Software.

Resource Allocation is linked to project intake and to strategic planning. This is because at some point, in aggregate, resource assignments will exceed staff capacity and there are investment choices to make. An operating unit may choose to fund some projects over others in order to support a specific business objective or strategy.

With a good understanding of skill-based capacity (supply), Demand, and a Prioritized List (rank order) of initiatives, organizations can visualize relative feasibility. Resource Management Software usually accomplishes this via some sort of heat map that can display results at each level of planning. 

With the influence of Agile processes into organizations, not all allocation planning is done by named resource anymore. Many organizations plan by Dynamic Team, Functional Area or Operational Unit, usually aligning their analysis to whatever the budgetary unit is. Resource Management Software allows both team based and hybrid planning to accommodate the situation at hand.

Project Accounting and Financials

In many organizations, the need for Resource Management Software is driven by Corporate Finance. Resource Allocation and Actuals Tracking can help an organization to determine which Cost Centers will take on labor burden. This includes the comparison between currently forecasted costs and budgeted values. Resource Management Software also provides visibility into the percentage of work (or time) going toward project and non-project cost categories, and allows organizations maximize R&D tax credits by identifying labor that contributes to capital assets and labor which must be expensed. 

Because forecasted values are always changing, there are times when Resource Management Software has more accurate numbers than other major financial systems. These gaps are usually reconciled at the end of each quarter or year.

Scenario Planning

Resource forecasting is not an exact science. The process is tied to business assumptions that may or may not be true at the time of execution. To provide visibility into all possible outcomes, Resource Management Software uses scenario planning and variance analysis techniques, Scenario Planning usually involves having multiple versions of a resource allocation plan to evaluate. Once a scenario is chosen, the original forecast is either appended or replaced, depending on which technique is used. Creating private scenarios is also a good approach to solving resource problems with a small group of managers before publishing to the masses. 

Some of the common ways Resource Management Software uses Scenario Planning include:

  • Measuring the staffing impact and cost impact of alternative Strategic Planning or AOP (Annual Operating Plan) options
  • Testing feasibility analysis of pipeline alternatives prior to funding
  • Reviewing alternative assignment options and their costs (insource vs. outsource, employee vs. contractor, others).

PMO (Project Management Office)

While the primary objective of most PMO operating units is project delivery, in many organizations the PMO has also become the de facto owner of the resource planning process. As it turns out, Resource Management is the primary lever that PMO Managers use to make adjustments when schedules, priorities and staff personnel change. 

For many initiatives, the assigned people and their skills make up the majority of the cost managed and the largest risk area.  As a result, when creating a new PMO, it is usually best to start with Resource Management Software and Processes and layer in other processes afterwards. Setting a foundation of Resource Management solves the toughest problem, while making other disciplines (project management, risk management, project accounting, etc. easier to perform and implement. 

For larger organizations, Resource Management provides a rational approach to supporting multiple Portfolios and Divisions (Operating Units), while creating a Culture of Feasibility and Efficiency. In mature Resource Management driven organizations, initiatives do not get funded or scheduled unless there is a resource plan for completion. These organizations tend to have fewer initiatives in their portfolio over time and a higher rate of successful completion. 

Agile Resource Management

Agile purists suggest that Resource Management is not needed when Agile processes are working because team allocation is always at 100%. Unfortunately for most organizations, the work environment is not Agile-pure across all operating units. Our experience suggests most organizations execute multiple kinds of work across divisions, experience constantly changing priorities, and the workforce is not stable from quarter to quarter. In addition, these organizations are not exempt from reporting capital vs. expense for labor, cross charging against individual cost centers and, in some cases, reporting actual labor hours to comply with billing standards. 

Resource Management Software, by nature, is agnostic to work type, and supports both team-based planning as well as named-resource planning.  At the moment, many organizations have moved to team-based planning. This reflects the way modern organizations think about staffing initiatives and planning for growth; however, there are times when the best approach is to assign an individual to a piece of work. Resource Management software needs to support both methods, separately and at the same time.

On the supply side, skilled employees are limited for most organizations and skill sets are not always fungible. Whether measured by velocity or capacity, operating unit headcount still needs to be managed to provide maximum value. Resource Management Software addresses the reality of modern organizations: people tend to transition between companies, operating units and agile teams. Workforce stability is not a common trait of the current business environment.

Systems Integration

For most organizations, Resource Management Software is deployed to fill the informational needs related to the dynamic changes that occur in staff composition, project schedules, strategic objectives and management priorities. With that said, most of the time, the Resource Management Software does not own all of the source data it needs to analyze resources and initiatives. There are also cases where some of the data entry required is already being keyed into another system by the same users. Users of management systems never want to enter the same data into two different systems. It is a morale killer. 

As a result, the deployment of Resource Management Software usually calls for a single point of entry and ownership for each data type (no duplicate entry). This means that Resource Management Software needs to be open and have the ability to integrate with other management applications. The most obvious integrations include the HRIS system, like Workday or SAP Success Factors, which typically owns the official employee list.  Other common integrations include Time Tracking systems, Supply Chain / ERP systems, Project Accounting systems, BI Reporting Systems and Data Warehouses. Depending on the ownership model, the data flow may go one direction or another. To accommodate these data relationships, Resource Management Software uses unique identifiers that finance understands (Employee ID, Project Codes [WBS ID], Cost Centers, Financial Billing Categories, Capital/Expense Designations) so data can be easily updated across systems. These is another added benefit, which is that through integration, Resource Management Software becomes part of the operational backbone for executive decision-making, which helps deployment speed and data credibility. 

Phil Wolf

Phil Wolf

Phil is SVP, Products & Sales

Connect with Phil:
Phone: +1 978-897-0033

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