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Optimization apps promise to help companies run at peak efficiency.
August 10, 2001
More businesses are taking a page from professional-services firms as they try to rein in projects and better manage the people working on them. They're using an emerging category of applications called workforce optimization to assess skills and project costs, forecast results, and shift resources for maximum efficiency as priorities change.
Royal Caribbean Cruises, financial-services provider Merrill Lynch, and logistics powerhouse Ryder System are among those using the tools to get a better handle on the time and costs of internal staff and external consultants. Some of the applications have roots in professional services, where they've been used to track the billable hours, areas of expertise, and whereabouts of consultants. "We need to adopt some of the same processes as [those] services firms," says Geoff Lawson, manager of supply-chain transformation at $3 billion Royal Caribbean in Miami.The cruise line is using Niku Corp.'s Resourcer application to categorize the skills and track the work of its more than 370 IT professionals. The software gives an overview of tasks across all projects, showing who's working, who's available, and when. In all, says Tom Murphy, Royal Caribbean CIO, the cruise line is using Resourcer to manage 150 IT projects that range from a $20,000 Web-site redesign to building a multimillion dollar J.D. Edwards supply-chain management system.The company's marine operations division-including shipbuilding and maintenance-may also use the software."In the current economic situation, internal organizations are under pressure to justify themselves or be outsourced. That's hard to do if you can't get a handle on your projects," says Bettina Zwerdling, an AMR Research senior analyst. "These applications lead to better profitability." IT advisory firm Gartner estimates workforce-optimization software sales will reach $1.5 billion by 2005, up from $235 million last year.PeopleSoft Inc. this month will unveil a workforce-planning application, the latest addition to its Workforce Analytics suite that lets companies maintain rankings of employees based on descriptions of their training and competencies, comments from supervisors on performance, and details about availability, location, and other criteria. Later this year, PeopleSoft plans to unveil Business Analyzer Modeler, a spreadsheet-like tool for creating "scenarios" to determine the best employees and resources for a project, says Dana Zeunen, director of product strategy for workforce analytics.Other software vendors are delivering their own enhanced functionality. Evolve Software Inc., whose customers include Novell, Siemens, and Sun Microsystems as well as professional-services firms EDS and Cambridge Technology Partners, last month launched Evolve 4.0. New in the suite, which already offered skill assessment and scenario building, are time and expense accounting and contractor management.Project-management and enterprise resource planning tools have their own people-tracking capabilities. But some of the new, specialized apps go further by aggregating information about personnel in a central repository and providing analytical capabilities that help project managers determine staff levels and project duration or alert them when the project deviates from the plan, says Bob McCullough, a Hurwitz Group analyst.BT, Southwest Airlines, and Warner Bros. last week began testing Niku 6, the latest package from Niku that ties together previously separate applications for resource allocation, project management, revenue management, collaboration, and financial management. Managers can input employee data into the platform, and the software can extract other information from an ERP system.Ryder uses Evolve's Resource Manager and Time & Expense tools to better control its IT resources. The $5.3 billion Miami logistics firm developed a Lotus Notes application specifically to track its IT consulting projects and 400-plus North American consultants. However, the customized database lacked critical capabilities in the areas of skills assessment, security, and access control.Using Evolve, Ryder consultants now have business rules to map out new initiatives and track everything from worker skills to project completion. Project managers can request the skill sets they need and get a list of available people who meet the criteria. While it's too soon to see a hard return on investment-each application can cost up to $500 per user-there are notable improvements in project efficiency, budgets are more closely aligned with goals, and overall project costs are down, says Vince Livingston, director of program management. Ryder plans to expand use of the software to its South American operations by year's end and then into the Far East.NCR Corp., the automated teller machine and data-warehousing company, is in the process of implementing Changepoint 6.0, from Changepoint Corp., to help it track and manage 4,500 IT workers and 1,000 engineers at a cost of about $5 million. The software will support project, resource, time, expense, and knowledge management, as well as pre-billing and "opportunity management," which refers to potential business. "It was planned for the professional-services group," says Joe Federer, VP of professional services for that division. But NCR realized it could also help internally.NCR's first goal is to improve efficiency by consolidating functions that are being performed by seven or eight applications. But it also sees the opportunity for revenue generation by helping its IT department implement customer-oriented applications more quickly. Budgetary constraints are also a motivator. "There's a huge demand for IT organizations to deliver higher-quality systems than ever before," Federer says. Companies want IT "to do more with less," he says.NCR plans to integrate Changepoint with Microsoft Project, so that the company can ensure it's maximizing its own people before going to outside consultants, Federer says. The company plans to have the software fully implemented in the first half of next year.Merrill Lynch is using software from Business Engine to track personnel, time, and money in IT departments and other project-oriented organizations. The New York financial-services firm plans to roll out the software within its 8,000-person Global Technology Organization so services can be charged back to business units. Merrill Lynch also wants to do a better job of managing its internal resources, says Ken Brzozowski, a VP with the corporate technology group. One example: making more efficient use of its expensive database administrators' time.Merrill Lynch plans to link the software into its PeopleSoft human-resources applications for improved career tracking. And there's another advantage: "When budgets are tight, there's a lot more scrutiny," says Brzozowski. The system "will help us assess [financial] questions more effectively."Analysts say most businesses don't need to track employee time with the same precision as lawyers and consultants, who charge by the hour. And the process isn't always easy or fast: Royal Caribbean's 18-month implementation has been complicated by process changes that the software required. But with personnel costs a major expense at most companies, workforce optimization may be a concept whose time has come.--With Larry Greenemeier, Christopher T. Heun, Mary Hayes, and Steve Konicki
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