Discover the benefits of centralized resource management, build your business case, and follow our expert step-by-step guide to implement it.
If you’re a project-based business or professional services firm, you might wonder whether it’ll be more efficient and cost-effective to centralize your resource management. There are certainly plenty of benefits - from optimizing utilization to reducing resource risk.
But there are also costs and further questions associated with resource centralization. Like should you create a Resource Management Office? Will you get ROI from a centralized resource management platform? And even if it will affect staff morale?
We’ve got answers to these and more to help you decide whether resource centralization is right for your company, what level of centralization will work best, and how to implement it in your business.
Centralized resource management is when an organization manages all its resources from a single, central place. Typically using a single, organization-wide resource management system to increase visibility into resource availability, allocations, and utilization.
Centralized resource management aims to standardize and optimize resource allocation efficiency, provide frameworks for project prioritization and conflict resolution, and improve strategic alignment and decision-making.
As you might guess, the flipside of this is decentralized resource management, where resource management activities are distributed throughout an organization, with no central control. Individual teams or units have autonomy to allocate their resources in their own way.
Of course, it isn’t as binary as either/or. Organizations can be anywhere on a spectrum between highly centralized and fully autonomous. And there are pros and cons to each.
In a highly centralized resource management approach, all decision-making related to resource scheduling, budgeting, and planning are made by a central authority. In a larger organization, this may be through a Resource Management Office - or RMO. In a smaller business, it might just be a senior resource manager.
Certain strategic decisions are made centrally, but departments have autonomy over day-to-day decisions. For example, policies, project prioritization, and conflict resolution may be centrally controlled, but project allocations are managed by individual departments.
Decision-making authority is distributed widely, with individual departments or business units having substantial autonomy in resource management - including resources, budget, and decision-making processes. But typically following some form of central guidance.
Each department operates independently with full autonomy in decision-making, resource allocation, and planning. There is minimal central oversight or coordination between them. There is no central record of resources across the organization and no company-wide policies or processes for resource management.
Let’s look at two imaginary businesses - one big, one small - and see what resource centralization might entail for them.
This enterprise currently has a decentralized approach. Individual departments and geographic locations control their day-to-day allocations. There are no standard policies or procedures, so allocations are made on a first-come-first-served basis at the departmental level. Utilization rates vary greatly between departments and some teams experience higher employee burnout and turnover than others.
The business introduces a Resource Management Office to centrally oversee all resource management activities. They create standardized workflows for resource requests and changes, and set criteria for how projects are prioritized and how conflicts - like two projects wanting the same resource - are resolved. Allocations are prioritized according to a project’s strategic alignment.
People are found and chosen from a central pool of resources - from across the entire organization - providing more choice of resources, increasing allocation accuracy, and balancing workload more evenly. Utilization rates are optimized, burnout reduced, and formerly idle resources fully utilized.
This software development business has grown from two people to a small team, to multiple teams and business units. Their small number of projects and resources meant they used to be able to manage resources easily - based on their knowledge of the work and the skills of their teammates. Records were kept in spreadsheets.
However, this approach is now untenable. There are too many people and projects to keep track of - and planning in Excel isn’t sustainable anymore. It’s hard to know who’s allocated, how much capacity they have, and whether they’ve got the skills and availability for incoming projects.
It’s difficult to make good decisions - and projects hit bottlenecks and miss targets. The business is growing but their reputation is at risk.
This business doesn’t need an RMO but they do need a centralized system for resource scheduling. They replace spreadsheets with resource management software. It provides a centralized resource pool that shows people, skills, allocations, availability, capacity, and utilization in real time. They can easily find the right person for each project, allocate them, and the system automatically updates all the info.
Centralizing resource management benefits various businesses - from global enterprises to busy boutique professional service firms. However, the right resource management approach will depend on your unique business case.
Larger businesses have more people to manage and therefore benefit more from standardized, centralized resource management. It’s harder to know who’s at your disposal when you have thousands of employees. And inefficiencies and inconsistencies at scale can cause significant problems.
Companies that operate from multiple locations can find it harder to maintain visibility into all their people. These businesses need to work a little harder to understand available resources - and to ensure that out-of-sight colleagues aren’t struggling with overutilization and burnout.
Firms where projects are essential to operations - such as IT firms, agencies, consultancies, and construction - benefit from centralization. Project teams need to be created dynamically, which requires high visibility into real-time availability and allocations - as well as the ability to prioritize and strategically align resource requests.
Regardless of sector, some businesses engage in highly complex projects - for example, internal IT teams. These projects span multiple departments or locations, run over long timeframes, and may have a lot of dependencies. Centralized resource management streamlines cross-team coordination.
As we described in the example above, growing businesses will get to the point where they need to centralize their resource management to improve visibility into their resources and allocations. Otherwise, unfit-for-purpose processes will become a barrier to efficient delivery and cost-effectiveness.
If you’re reading this, we’re assuming you’re a resource manager or similar. You understand the importance of effective resource management and the general benefits of better resource planning - like improving utilization rates, controlling costs, and preventing burnout.
So we’ll skip those (admittedly awesome) benefits and look specifically at how centralization creates benefits compared to a decentralized resource management approach.
Think about how resource management practices have improved your performance at a team or department level - like optimizing resources, improving utilization rates, reducing bottlenecks, etc. Now imagine that amplified across your entire business. Access to everyone in your organization. Prioritizing all projects in the portfolio. Seeing data from every team. It’s easy to see how that translates into better outcomes.
A range of stakeholders use resource data to make decisions - HR about who to hire, Sales about project viability, senior leaders for capacity planning. All of these decisions are improved by access to a centralized source of data. Instead of making decisions based on incomplete siloed information - or an analyst spending days compiling reports - everyone can see a single source of truth and make confident data-based decisions.
Resource risks can be avoided - but only if you see them coming. Centralization gives you 360-degree visibility into resource risk in the business, rather than it hiding away in individual teams and departments. This means you can proactively address it, instead of reactively dealing with it once it happens.
You never want to be in a situation where there's an iceberg in the distance and you didn't see it coming. Certain things are unavoidable. But if you have information - even if it's basic information around scheduling into the future - having that insight and making decisions based on that information is going to help the organization be successful. - Christine Robinson, former Baker Tilly Director of Resource Management, speaking in our on-demand webinar - Resourcing for Success: Best Practices Every Manager Should Know
Centralization standardizes resource management processes and embeds best practices for the allocation of resources. This drives up quality across your organization. Whether you simply standardize resource scheduling practices by using an organization-wide RM platform or go further and mandate specific workflows for resource requests, allocations, changes, etc.
Clear, organization-wide prioritization criteria let you schedule resources based on your full project portfolio. Instead of ad hoc allocations based on local needs, short-term gains, or a first-come-first-served basis, resource centralization prioritizes projects and allocations based on alignment with strategic goals.
A centralized resource management system gives project managers access to historical resource usage data - how many resources did past projects use, what type, and did they deliver on time and budget? This improves resource planning and forecasting - reducing uncertainty and creating more confident operational plans for future projects.
Centralized resource management gets everyone on the same page - allowing for more strategic staffing decisions around hiring, training, and upskilling - to support your longer-term business objectives. For example, centralized skill tracking and utilization data can inform recruitment plans. This helps you move from transactional to strategic resource management.
In the spirit of impartiality, we need to flag some disadvantages too.
Centralization can add another layer of complexity (you might call it bureaucracy) to resource allocation. This can slow down the resource scheduling process. A slower decision-making process can be problematic in a dynamic project environment.
However, organization-wide insights into resource availability and allocations can support better decision-making overall. So it depends on the particular challenges your business is facing. Do you need better visibility or higher agility? Could a hybrid approach do both?
Some employees may feel disempowered and disengaged if they are allocated away from their usual team or comfort zone, by people who don’t know them personally.
However, this can be countered by centralizing in a thoughtful, people-centered way. Watch our on-demand webinar - Putting the Human in Resource Management - to learn how.
Plus, centralization can reduce other morale-sappers like overutilization and burnout - so it isn’t black-and-white.
There are different levels of resource centralization - and which you choose depends very much on your unique business case. Take the time now to consider whether full centralization or a hybrid approach will work for your organization. Discuss whether you’ll simply provide centralized resource management tools or also standardize processes and workflows. If you’re a larger organization, consider whether setting up an RMO would deliver the benefits you need.
Like any business project, resource centralization will require time, energy, budget, and buy-in. You need to be clear on why you’re doing it and how you’ll measure whether it’s been successful. To ensure all stakeholders are aligned and clear on what you’re trying to achieve, define your objectives.
For example, you might want to:
Establish your reasons for resource centralization and how you’ll measure your effectiveness.
Managing resources is undervalued in organizations. Senior leaders sometimes fail to join the dots between efficient resource allocation, project success, cost efficiency, and business profits.
But you’re going to need both budget and buy-in if you want your resource centralization project to succeed. Your investment with pay dividends - you just need to prove it to decision-makers!
Looking at your project objectives and overall organizational goal, consider the following ways resource centralization can benefit your organization. Look for statistics that can help build your business case around them and show ROI.
Next, you must choose the tools you’ll use to centralize your resources. Now is not the time to cut corners and try to use spreadsheets just because they’re free. This approach will cost you dearly, undermining the efficacy of your whole project. Check our article on Runn vs Spreadsheets for resource management.
You need a resource management platform that’s designed for the purpose - and lets your resource manager or RMO do their job quickly, accurately, and efficiently.
An effective resource management system allows you to:
Check out our buyer’s guide to resource management software for more on what to look for.
It’s now time to create a centralized resource pool. Set-up will be so easy with the right resource management app up and running.
You should be able to upload a CSV file - or you might even be able to sync to other systems, like your HR team’s database.
This should create a profile for each person in your organization - name, job title, location, etc.
Next, you need to populate those profiles with the information you need to manage your resources more effectively. For example
You might have this information already available and just need to consolidate it in one place. Or you might need to survey people to update the information.
For some businesses, it may be enough to simply implement resource management software. If so, congratulations, you’ve centralized your resources. Go forth and allocate!
However, some companies will benefit from standardizing their resource management processes as well.
Inconsistent resource management processes in an organization can lead to issues around prioritization, conflict resolution, and short-term vs strategic allocation. This can lead to misalignment between resources, projects, and business objectives.
Whereas standardized processes create clarity, transparency, fairness, and strategic alignment. Some processes to consider include:
Whether you’ve opted to centralize resources through a PMO or just through a resource management platform, you’ll need to train people in your new ways of working.
With your resources centralized - and your resource managers using new tools and techniques - it’s time to monitor your success. Assess performance against the KPIs you set in Stage 1. And seek feedback from PMs, RMs, and your project teams to refine processes further.
See how easy it can be to build a centralized resource pool using Runn. Get 14 days of free access to explore how resource management software works.
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