Capacity Planning for Professional Services Firms

Capacity planning ensures a professional services firm has the supply it needs to achieve critical objectives.

Table of Content

    In the context of project-based work, capacity describes the maximum amount of work you can take on and complete within a specific time-frame. Capacity planning is used to determine whether you have the resources and skills available to do said work.

    In other words, it’s about looking ahead to ensure that your firm has the supply it needs, not to only match customer demand, but achieve critical objectives.

    Capacity planning is absolutely crucial for aligning sales and delivery, avoiding peaks and valleys, and making plans for the future – whether you’re making decisions about strategic investments, hiring, or taking on new projects.

    Capacity planning also represents a significant challenge for professional services firms. There are simply way too many variables that directly influence future capacity — many of which are incredibly hard to anticipate, let alone control. And — if even if just one of those variables deviates from the game plan, there’s a good chance it’ll trigger a domino effect across the entire portfolio.

    Essential Guide for the Modern Professional Services FirmEssential Guide for the Modern Professional Services Firm

    The point is, unpredictability comes with the territory — but it doesn’t mean you’re powerless.

    With real-time insights, the right set of tools, and a flexible, data-driven mindset, professional service firms can gain control of their workloads, cash flow, and the bottom line – in spite of the inherent chaos. Read on to find out how.

    Microsoft Dynamics 365 Buyer's Guide for Professional Services

    This guide will provide an overview of the entire platform and answer questions about features, selection, purchasing, implementation and support of the Dynamics 365 suite of solutions.

    Capacity Planning = Predictability, Profitability, Longevity

    Like resource planning and utilization, capacity planning falls under the resource management umbrella. Which means that, again, unity and visibility are everything.

    Poor visibility means project managers make decisions based on false narratives – shaped by old, incomplete, or inaccurate financial data. There’s no way of knowing whether projects are hitting targets, what resources are available, or how many hours were billed that month.

    It’s also extremely difficult to plan ahead without a clear picture of the current backlog, upcoming projects, client demand, available resources and skills, the health of the sales pipeline, etc. — and the big-picture context needed to support key decisions.

    Another thing that makes capacity planning uniquely challenging is that every project is tailored around the client’s needs, pain points, and goals – thus making it harder to use historical data to
    predict future outcomes.

    It also means that many existing tools can’t deliver specialized solutions on-demand.

    For example, process automation tools that perform repetitive tasks at speed and scale – and ensure consistent results – allow companies to ramp up production without undermining quality.

    This is great for manufacturing, quality control, security, etc. But not so great for knowledge work (or, really any business function built on 1:1 relationships, personalized insights, or complex problem-solving – you know, the kinds of things humans are good at).

    To cope with the challenge of balancing capacity against demand, firms must be able to think end-to-end in order to adapt to changes in supply and demand and optimize the value stream – even in the face of relentless uncertainty.

    Meaning – you’ll need a unified ERP system, on-demand access to insights from a wide range of data sources, and plenty of AI-driven support to make sense of it all.

    Once you’ve got that foundation in place, you can address the barriers standing in the way of effective capacity planning. For example, you might work on fixing inconsistent sales pipelines, which make it difficult to forecast resources. Often, employees end up in a feast or famine cycle where they’re either completely maxed-out or sitting on the bench waiting for something to do.

    So, there, you’d want to look at the committed projects in your backlog, the deals most likely to close in the near-term – and weigh those factors against strategic objectives.

    That might mean creating custom reports in Power BI that track pipeline opportunities and backlogged projects in one place. This will help you understand how to allocate resources based on projected demand.

    Perhaps you notice there aren’t enough incoming leads to replace the deals that are about to close. In that case, you might focus on attracting new leads – investing in new content and a few choice campaigns.

    Or – if you’re concerned about future unknowns, predictive modeling can help you figure out how to respond to emerging threats and opportunities, economic booms and busts, pandemics, disasters, and more.

    This gives you time to decide how to allocate resources, set budgets, and drive outcomes under countless hypothetical scenarios. While technology can’t predict the future, it can help you prepare for whatever it has in store.

    Final Thoughts

    When there aren’t enough resources, projects get delayed, quality drops, and clients get upset. When there’s not enough work, you’re not only wasting money on unnecessary labor costs, you miss out on opportunities to generate revenue. The point is, capacity planning is a big deal.

    Business Leaders Guide to Dynamics 365Business Leaders Guide to Dynamics 365

    Velosio is a certified Microsoft Partner with a long history of working with professional services firms. Our experts work with you to build a comprehensive solution offering the end-to-end visibility, real-time insights, and collaboration tools you need to maximize productivity and profits – and plan for the future. Get in touch to learn more about your options.

    Business Leaders Guide to the New Digital AgeBusiness Leaders Guide to the New Digital Age