The IBM Project Resource Forecasting Process at Royal & SunAlliance will be discussed. R&SA is one of the largest Outsourcing clients that IBM has within the UK, with project resources provided in the UK, India & South Africa.
STRATEGIC ROLE OF THE PROCESS
The strategic role of the process is to enable IBM to maximise revenue by supplyling the right level and quantity of IT skills at the right time to deliver the IT project requirements of R&SA. This enables R&SA IT to deliver projects that enable revenue enhancement, cost reduction, competitive advantage and compliance with the Financial Services Authority.
This is a key objective as the process needs to provide a level of detail and accuracy to enable the forecast to be of value, otherwise the output may not offer any additional value than an experienced individual applying their judgement. The forecast should estimate the required:
-> skills (type and level), man days, timing, any other specific requirements e.g. location
The speed of the process is not significantly important. The forecast should provide an estimate of the resources required in three months time. The further R&SA are required to forecast into the future, the lower confidence they have in this information as there is a high risk that the information is subject to change. IBM is more likely to fulfil changes in R&SAs demands the more notice is provided.
The process is used once per month and should be approached in the same manor each time to avoid the process output being affected.
The purpose of the process is to enable IBM flexibility in supporting the changing requirements of R&SAs project needs, so that the type, level and volume of resources can be adjusted in-line with demand. There is not total flexibility in this process, as:-
-> The forecast must be provided three months before the resources are required for IBM to commit to providing the forecasted demand
-> IBM require a minimum demand commitment so that the overheads of the service to be recovered and the standard charge rates to be sustainable
The IT industry is a commoditised market, causing significant pressure on IBM to maintain its cost levels in line or better than the market place. In addition the agreements exist between IBM and R&SA which benchmark the rates IBM charge for project services. This means that the cost of supporting the Project Resource Forecasting Process must be kept to a minimum also, in order for there to be a cost/benefit of using the process.
Design: What role should the people who staff the operation play in its management?
The IBM employees who deliver the process need to be part of the IBM Project Delivery management, as the information needs to be regularly reviewed e.g. weekly, to ensure that the actual demand being experienced is in line with the forecast. Where the actual demand differs, this needs to be quickly discussed between IBM and R&SA to agree the approach for fulfilling this change in demand.
Delivery: How much inventory should the operation have and where should it be located?
The operation should not have more resources that those which can be funded under the minimum forecast commitment. The resources that are most frequently demanded in terms of skills and location should be retained as inventory. The management of the process may decide also to retain any scarce skills that may be difficult to replace if released.
Development: How should the operations performance be measured and reported?
Performance should be measured in terms of:-
- The accuracy ratio of forecast versus actual demand experienced for each quality measure
- Any process deviations/exceptions from the agreed approach
- The satisfaction of R&SA and IBM that the process is achieving its objectives
The performance should be reported monthly, to review the months actual’s versus forecast. This information should be distributed to the R&SA and IBM management teams and be discussed as part of the management governance, with the key stakeholders.
BIBLIOGRAPHY & REFERENCES
- Slack, N., Chambers, S., Johnston, R., Betts, A. (2006) Operations and Process Management, London: FT Prentice Hall
- Walley, P. (2007) The Warwick MBA: Operations Management, Coventry: University of Warwick