Techniques To Help You Manage Utilization in OpenAir

Utilization is one of the most crucial metrics a professional services organization (PSO) has available. It’s a KPI that can help you understand past performance. Importantly, it’s also a measure that, when used correctly, opens opportunities for forecasting future needs and informing decisions from sales to resourcing.

Oracle NetSuite’s OpenAir offers a number of out-of-the-box utilization reports. However, most professional service organizations are unique in what they want and need to see and how they want to measure utilization. We’ve rarely seen a PSO that effectively uses the standard reports.

Of course, Oracle NetSuite recognizes the need to be able to customize a professional services automation (PSA) platform. That’s why OpenAir is as flexible as it is. The ability to create custom calculations and develop reports specific to your organization’s needs makes the platform a powerful tool for utilization measurement, looking backward and forwards. It makes it possible to configure highly useful, single-click utilization reports driving business efficiency, growth, and profitability.

Understanding the Utilization Calculation

The utilization calculation is really a ratio of hours spent on the tasks you’ve defined as important to measure over possible hours for a time period. Not only is that a much more complicated relationship than it seems at first glance, but it’s also rarely a single calculation.

For many organizations, utilization can include or exclude any number of tasks, hours, days, and so on. In fact, it may not even be a standard set of calculations across your entire organization. If you’re a global company, it’s highly likely that how you calculate the parts of your utilization ratio varies from country to country and even from office to office.

Getting to the right metric requires first understanding how you’ll define the two parts of the ratio that will calculate that KPI.

The Utilization Denominator

Starting from the bottom and going up, let’s first look at the denominator for utilization. This denominator defines your baseline that you’ll measure actual and forecasted time against.

There are multiple ways to define this number, and it’s possible that you’ll use more than one method. For many organizations, this number starts with either the work schedule or the base work schedule.

The work schedule includes the number of hours resources are expected to work each day or week. Within this number, you can account for things like company holidays. In fact, holidays are one of the key differences between work schedules and base work schedules.

So, for instance, a company may normally have a 40-hour work week, but because of an upcoming company holiday, the work schedule for next week is actually 32 hours. The base work schedule, however, would remain 40 hours.

That’s not to say that you can’t define both work schedule and base work schedule in various ways. How you define the base work schedule may be to exclude PTO. Or, you might have different work schedules for different offices that have different holidays. How you define these measurements will depend on your business needs and even the purpose of the utilization measurement.

Will you be using this measurement for bonuses? Do you need a metric to see what resources are over or underutilized? Your answer may be “both,” or it may be some other scenario, but the need will drive the denominator you use.

Beyond setting up work schedules and base work schedules, your denominator calculation may also dynamically include other factors. Using tags inside OpenAir, you can combine PTO hours or other tasks or time categories that you don’t want to be included and subtract those from your denominator number.

The Utilization Numerator

The other number in the utilization ratio is the numerator. The values you use to calculate this number will depend on what you’re using it for – or in which direction you’re looking.

When looking at historical reporting of utilization – looking backward – you’ll primarily be using timesheet information. Leveraging time types or task types makes this calculation easier to configure for your various reporting needs.

Billable utilization is a crucial measurement for a PSO. But that doesn’t mean it’s the only important metric. You may want to view how much time your team spends traveling or how much time engineers spend in sales calls in relation to their possible utilization. We discuss the options for historical numeration calculations more in our webinar, Techniques for Forecasting: Utilization and Reporting in OpenAir.

One of the most powerful aspects of utilization reporting is the ability to look forward and forecast what the business will look like in the near future. Using booked or signed work, assigned tasks, or even booking projections, you can get an idea of team availability in the coming weeks and months. It’s possible to view this at several levels, including:

• Individual resource
• Groups
• Job codes

Defining Target Utilization

It’s common for organizations to set an expected billable utilization rate well below 100%, even for consultants who are primarily billing clients. That’s why setting up a target utilization rate is recommended.

A target utilization rate allows you to consider things like internal meetings, training time, and so forth. Target utilization is highly customizable – your targets may differ for client-facing consultants, project managers, or engineers. Tagging, time, and task types make target utilization reporting straightforward and accurate while also being unique to your business.

Using Utilization Reporting in Forecasting and Management

Defining how you’ll use these metrics is as vital to determining them as setting up the reports themselves. Forecasting is a compelling reason to create tailored utilization reports.

Forward-looking utilization reporting gives you the capacity to plan, organize, and even manage resourcing.

Over/under-booked: Utilization gives you a view into which resources are over or under-booked at the individual level or even the job category level. Constantly over-utilizing resources can lead to burnout, while underutilization may cost the business money or cause team members to be concerned about their job security.

Hiring: Forecast utilization reporting can be a bellwether for hiring. Are all of your PMs at maximum utilization for the next six months? If so, you may be looking at the need to hire another PM or at least consider bringing in a contractor.

Sales: If every developer you have is near max utilization going forward, it will be impossible for you to deliver on your customer expectations or meet the needs of new prospects. Sales need to know about potential resourcing challenges or even be made aware of opportunities – they may be able to accelerate a deal in the pipeline to bring up utilization for a particular group.

Are all of your PMs at capacity for the next six months?

Conclusion

Utilization is a key metric for PSOs, and with good reason. It can help you look back to analyze performance and make corrections, enabling you to forecast what the business needs going forward. It can make you a better resource manager and can even provide a better customer experience by ensuring teams are available for work and not burnt out. For more information on this topic, check out our webinar, Techniques for Forecasting: Utilization and Reporting in OpenAir.

The faster you can access timely and accurate utilization reporting, the larger the benefit to your business. Top Step can make customized one-click utilization reporting a reality. Contact us to discuss your OpenAir needs and let us partner with you to grow your business.