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Resource Planning and Return on Investment

08 May 2017

There are a number of reasons why a firm would invest in a resource planning platform. Some firms are tired of the manual methods of planning using Excel spreadsheets. Others are looking at the more defined approach: improving efficiencies in building and managing client teams; breaking down of silos; project staffing predictability; assigning staff to projects based on skills.

One client of Retain decided to take this further creating their very own return on investment calculator. For many organisations, especially within the consultancy sector, staff are billed. This brings with it implications around both a cost rate and a revenue rate. Beginning with the cost rate, the client calculated that based on output and other metrics prior to the implementation of Retain, a 2.5% improvement in efficiency had been achieved. This might seem fairly nominal until you consider the impact across the entire workforce over a year.

Across a staff base of 450, with an average of salary of £70,000, the combined annual salary across the resource pool was £31.5 million. If we add in a 2.5% efficiency improvement from there, this would equate to £787,500 – marginal gains at their very best.

Moving on to chargeability. Let’s assume that a resource has 1,100 chargeable hours per year with a standard charge out rate of £250 per hour. That would be optimum billable revenue of £275,000. Taking 2.5% of this would equal £6,875 per year in additional chargeable opportunity. But of course we now need to multiply this by 450 to give the value across the workforce. A calculation of this would be an additional £3 million plus in potential chargeable revenue.

Resource planning is therefore not just about visibility, skill tracking and forecast of supply and demand. More than this, there is also a real tangible, financial benefit to be gained.

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