The business case for using scheduling software.
A business lead recently asked me if I could help forming the business case for purchasing Timewax. Although he saw the value in it, he needed outside input to “sell” it internally. Management asked for a business case with hard data, as in, how would they be better off using it? It’s a legitimate question. In this blog entry, we will focus on three key benefits to using a project planning tool and we will try to quantify them as well.
We will mainly focus on the following benefits:
- Time savings
- More streamlined projects
- Increased productivity
Before I delve a bit deeper, first things first: “A fool with a tool is still a fool”. The failure or success of the tool will depend on how well organized you are. In other words: you need good planning processes on one hand and skilled planners and project managers on the other hand. In this blog entry, we operate under the assumption that you already have both.
1. Time savings
In the past, most Timewax customers did scheduling in a spreadsheet. That’s fine if you only have a small work-crew, say, five-deep, and a schedule that doesn’t fluctuate all too often. However, on a larger scale, with constantly changing schedules, planners tend to spend a lot of time updating the schedule, particularly for gaining insight and for communication purposes.
A spreadsheet is rather one-dimensional. Usually, the schedule is displayed by person. Project managers, however, like viewing schedules by the project. They often keep tabs on projects in separate spreadsheets in order to visualize the project schedule and the available resources. It takes time for planners and project managers to sync up those spreadsheets, not to mention the time it takes to draw up any reports you might need to, for example, compare the budget against actual spent hours.
Employees are often notified about the schedule in an email or a phone call from the planner. That would eat up a lot of time if you had to notify each and every person individually, especially if you regularly have schedule changes. There will also be times when you witness the spreadsheet of the full schedule being sent out to everyone. That forces employees to actively check into their own personal schedules. Something they can easily forget when they are faced with the issues of the day, with misinformed employees as a result.
Making better use of your time
A scheduling system that offers various insights, and automates communication, ends up saving time, especially for planners and project managers. How much time, though? It’s hard to make any generalizations. I often hear people saying it saves a few hours a week per planner or per project manager. Each organization, however, can determine the total hours they spend each week on scheduling and then estimate how much time they can save.
So, does that necessarily mean they are gaining any time and achieving bona fide (monetary) savings? Perhaps not, if you ask me. At least not in the same sense of a whole FTE, for example. Rather, the time they gain can be put to better use: tending more to analyses and tactical decision-making processes related to planning.
2. More streamlined projects
When it comes to project planning, resource planning is often the Achilles heel. If you don’t get the right people on board at the right time, then your project planning efforts will fall like a house of cards. In a multi-project organization, staff scheduling is even more important. Employees float in and out of projects. When scheduling employees, poor timing or lack of diligence can have a domino effect, causing delays in multiple projects.
Flow boosts speed
A good flow can help speed projects along. Flow describes the state of mind you have when the challenge you are facing is relatively equal in proportion to your ability to handle it. You can take this into account when you assign people to work on projects. You know which skills are required, which skills each employee has and you can focus on the composition of a team. You can decide which employees complement each other best and which ones, perhaps, may not work together as well.
A planning tool can help you with this. Most planning tools allow you to search for suitable employees based on the skills needed, and they also give you the ability to pair up people, such as a mentor and a student. This helps you form efficient teams and plan projects more effectively. In essence, it helps you streamline the projects.
Ending on time helps with streamlining
You can also better streamline projects by stopping them on time. I know of many cases where the project deliverables were finished early or, at least, were good enough in quality. However, the projects were not deemed “complete” sooner, and people rode it out until the end. That is somewhat of a cultural phenomenon, because rarely are we ever rewarded for delivering end results sooner. See Parkinson’s Law in the blog entry 4 time wasters in project planning.
A planning tool that allows you to track progress can provide good insight to planners and project managers. The last thing you’d want is to leave it up to perfectionists, because they will fiddle around with the end results to no end. Projects that end more quickly free up employees to work on other projects sooner. That said, stopping on time helps streamline all projects with respect to the inflow and outflow of employees.
Improvements are mainly qualitative
So, how exactly do we quantify the efficacy of project-streamlining? Hard to say. You might be able to use empirical data to conclude something about this afterwards. Beforehand, however, you’d be hard pressed to quantitatively define the efficacy of any planning tool. We maintain our focus on qualitative improvement.
If projects go well, then everyone is happier and better off in the end. Employees are happy because they are engaged in work that suits them, i.e., work that is challenging. That motivates them and leads to good project results. A happy project team will deliver good, timely project results. In best case scenarios, these results are often above average in quality and are delivered well before the deadline. This pleases customers; and, of course, a satisfied customer usually means repeat business. This reflects well on your company.
3. Increased productivity
By increased productivity, I mean cases where the same group of employees can do more work within the same span of time. This can potentially be of great benefit to service provider who bill their customers by the hour. The more billable hours you have, the higher the boost in sales and profits. It also lets them easily quantify things in terms of money. See the sample calculation below, for example.
A rule of thumb (in the Netherlands) is that a salaried employee works approximately 1650 hours a year, on average, based on a 40-hour workweek . A salaried employee has, on average, 52 off-days a year. These 52 off-days include five public holidays, 25 vacation days, 5 professional development days, 13 days of bonus leave, and an average of 4 sick days. This means an employee can work up to 137.5 hours per month.
Suppose we consider an IT company that employs 40 people, who have a commercial rate of 80 euros per hour. Average productivity on projects for customers is 85%. This is what we call “billable” hours. More specifically, this means the time spent on projects that earn money.
Now, suppose we estimate that a tighter planning process, supported by a planning tool, increases the billable hours by 1%. One percent is a very conservative estimate. Nonetheless, this would mean that each employee effectively has 1.375 more billable hours per month (i.e. 0.01 x 137.5 hours/month). This equates to 110 euros in extra revenue per employee each month (i.e. 1.375 x 80 euros/employee). Considering there are 40 employees, 40 x 110 euros is 4,400 more euros of revenue per month and 52,800 euros for the year.
How do you estimate the increase?
The big question, of course, is: how do you estimate the expected percent increase in productivity? You can perform an analysis of the time people spend being unproductive. Unproductive time can include anything from downtime between activities and projects to time spent on other menial in-house tasks. Based on this analysis, you could then look into ways to reduce these time gaps through better planning. Furthermore, you’d also need to assess whether any of that time could be spent on billable projects. Those types of projects need to be ready and waiting, of course.
As we can see, time savings are easy to quantify. We’ve also determined that time savings may not lead to bona fide monetary savings. What it does do, however, is allow you to put your time to better use. This is a qualitative improvement, but it is hard to quantify. Therefore, a business case based purely on time savings is relatively weak.
Streamlining projects is actually unquantifiable. How receptive one is to these qualitative benefits mainly depends on how much business pain the organization is experiencing in the situation at hand. For example, are there many cases of dissatisfied customers and employees due to poor planning? If so, these qualitative benefits might be perceived more favourably. Otherwise, if you already feel like your planning efforts are reasonably on track, then this benefit won’t be as strong a selling point.
As for substantiating a business case on whether to buy a project planning tool, we look primarily to increased productivity as a good indicator. It’s one of the factors that can be expressed concretely in terms of money. Estimating percent improvement, however, would require a thorough analysis and good analytical skills.
To finalize calculations on the business case above: remember, we estimated the increase in productivity on billable projects at 1%. Imagine if that IT company invested in Timewax and paid 320 euros a month for it. The 4,400 extra euros each month would more than cover the cost of the product. The return on investment would be incredibly high. Even if the billable hours only improved by 0.1%, it would still be a worthy investment! If you ask me, I need to raise our prices…