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Capacity analytics
What is it?
Capacity analytics seeks to establish how operationally efficient individual employees are.
Taking into account administration time, travel time, etc., a consultant may have 30 potential ‘billable hours’ per week and capacity analytics would determine how many of those 30 potential billable hours are actually billed out to clients and, therefore, how much additional capacity he or she still has for more work.
Why does it matter?
Capacity analytics matters because it affects revenue.
If you don’t know what your people are doing and how many billable hours they are actually billing for then you can’t manage that employee capacity more appropriately. If one consultant is at full capacity then he or she should not be expected to pick up the slack with the new client. If another consultant is spending too much time on administration then he or she is not productive or profitable.
When do I use it?
It is wise to measure capacity every six months or at least every year. People are people, not machines, so an individual’s capacity will fluctuate throughout the year based on a variety of factors.
These peaks and troughs of productivity are normal. However, capacity analytics can help to alert you to negative or worrying productivity trends. This analysis allows you to then step in with additional training or support to help the individual get back on track before they become too demoralised or negative.
What business questions is it helping me to answer?
Capacity analytics helps you answer business questions such as:
- How effectively do we employ our people?
- To what extent do we have spare capacity in our company?
- To what extent do we overstretch out people?
How do I use it?
As long as you have a system that tracks data on how people spend their time you can use this data to establish capacity levels. The data can come from time-tracking systems (where people clock in and out) or from sensors (see Chapter 26). Some companies even use RFID (radio frequency identification) sensors in name badges to track where employees are, which allows them to automatically assign what people are doing – e.g. by pulling in data on what department they are in, which office they are in, what machine they are working on, etc.
This data can then pulled into analysis software or even tools such as Microsoft Excel for analysis.
Practical example
Say you are a software engineering company and you have 20 software engineers working in your business. Capacity analytics will allow you to track how much time they actually spend coding and how much time they spend doing other work. This ratio can then be tracked over time to ensure the actual time spent (obviously relative to the billable output) on programming is not going down.
It also allows the company to understand how much capacity they have to take on new projects. If everyone is at 100 per cent capacity then taking on any more work is not advisable unless capacity can be increased by, for example, recruiting new staff.
Capacity analytics can also help to identify patterns and trends in employee performance that can then be used to improve recruitment or training and development.
Tips and traps
Capacity analytics can make people very nervous. The idea is not to find out who to whip into greater effort, but rather to identify gaps in capacity that can then be closed to increase profit. Be careful how you position capacity analytics to your people.
Further reading and references
For further insight into capacity analytics see for example: