How Demand Management Can Improve Your Resource Forecast

Demand management starts with aligning the available capacity of resources to the amount of incoming work. This process requires organizations to first identify the initiatives that require resources, prioritize those requests and then match the resources with the required skills. It also takes scheduling, assigning, and evaluating to ensure the resources assigned to specific projects are indeed the best suited for the task.  Finally, it is important to audit this process to continually optimize and deliver on the value promised. In doing this, a critical step is the ability to accurately forecast the needed labor and resources for projects.

In partnership with the Resource Management Institute (RMI), we have identified four areas to evaluate in the resource forecasting process to be prepared for any output level you face. As outlined in the recent RMI Power UP Session – Getting the Forecast Right: Best Practices in Accurate Forecasting for Delivery Resources and Utilization these steps include data, accountability, interlock and analysis. Let’s take a look at each one.

Sales data, resource data and more

Demand management must start with data. Your data is what shows how many resources you used on past projects, and it will help indicate the amount of time and resources you’ll need on a future project. Sales data will allow you to know approximately how many projects to expect so you can prepare the needed resources.

Often times, the information about your sales pipeline may be inaccurate or incomplete, reducing confidence in the data. However, you don’t need perfect sales data to get an accurate forecast. This myth of the “perfect sales forecast” should be discounted because when doing demand forecasting, the majority of your data, approximately 80%, is coming from a backlog of work and not from future sales in the pipeline. In other words, this is work that you already have, and is not speculative. While future sales data in the pipeline is still important, it is not the biggest piece of forecasting.

One of the biggest issues with data is that it often isn’t in a usable format. For example, sales teams will give future sales opportunities in dollar amounts without indicating the time or resource requirements. It’s necessary to identify WHO should define the resource requirements, HOW they will do it, and WHEN they will inform RMO for action.

When an organization defines the data they need, they can get usable and actionable information to help them know what kind of time and resources they’ll need on a given project.

These mechanisms for defining data collection need to be put in place before gathering data. This is where project portfolio management software is essential to distribute tasks and keep data organized.

Accountability for the data

When we talk about accountability, we are referring to the people who own and are responsible for data. When accountability is not defined, we often see the wrong people trying to piece the data together which results in inaccurate forecasts.  The demand facing organizations, such as your sales team, should be accountable for data collection because they have the most client-facing insights.

In addition to defining who should compile the data, there needs to be processes for reporting the data. We want to avoid “hallway talk” where data is shared casually and speculatively. It’s important for stakeholders to have more formal meetings when discussing data, and to ask questions to get a clear picture of what is a realistic expectation of work coming out of the sales pipeline.

When stakeholders meet, it is important to demonstrate the cause and effect that the proposed demand will have on each stakeholder. In other words, go over the implications of your salesperson’s success with them in order to assess the real demand and make the resource preparations that are necessary. Often times, the data is overly optimistic. By demonstrating the business implications to the sales team, you can discuss the numbers and determine an accurate amount of demand to expect.

When you find the true demand, you should be solution oriented. Rather than fighting your sales teams about the numbers, be proactive in finding a solution, and maintain good contact with those teams.

Interlock

Interlock is the process where data and accountability meet and where stakeholders come together to discuss the data, and its implications for your operations. This process provides the opportunity to glean insights from the data and make the proper assignments and necessary next steps. This should happen on multiple levels of the organization and meetings should be held frequently (weekly or monthly), depending on the organization’s needs. Remember to:

  • Keep data simple
  • Distribute data in advance
  • Make the data future-looking and action oriented

Analysis

Analysis is one of the main parts of your interlock process and it’s essential to ensure that your organization understands what the data is and what it means for each group.

These steps include asking the following:

When you ask these questions, you will have a clear picture of the steps that need to be taken by your organization and who is responsible. By breaking down the data, you’ll know how much capacity you have, know if you will need to bring in additional staff, and how long it will take to complete projects.

Conclusion

The reality is that you will never have perfect data, so it is imperative to utilize what you have in the best way possible. Interlock is the key to ensure accountability for data, and that the forward facing groups are providing the right data. Finally, you need to assign next steps and tasks to ensure the work gets done to continue to improve the forecasting process.  It takes a lot of work to bring all the moving parts together, but the right project portfolio management software will help you automate many of those steps, particularly if the system is integrated with CRM software or some other customer system of record.  With your data organized,you can plan for and utilize your resources wisely.

 

Lauri Klaus

Lauri Klaus

Lauri Klaus is the CEO and Cofounder of KeyedIn, a Minneapolis-based company that helps organizations simplify business processes, improve performance and drive results through its innovative SaaS-based PPM, PSA and ERP business solutions.

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