To provide some background, Knowledge Management Associates is an IT consulting firm that specializes in designing and building knowledge management and business intelligence systems using the Microsoft toolset. We also sell a product Mekko Graphics, a PowerPoint add-in that creates charts used by business analysts.

Resource allocation process

Like most consulting firms, personnel costs make up a large percentage of our costs. To be profitable, we much reach a certain level of utilization—billable hours divided by total hours. On the other hand if our utilization is too high, we might not be spending enough time on training, sales and marketing and our consultants are in danger of getting burned out. While we might be able to sustain a high utilization for a few weeks, it is not sustainable over a long period of time.

At the top level, the utilization graph is a stacked bar/line chart that tracks billable hours, hours spent on product (Mekko Graphics) work, and non-billable hours (sales, marketing, administration, and training) in the bars. The line is utilization (billable hours divided by billable+non-billable hours). Using this measure for utilization allows us to ignore time spent on product development and support and vacation and holidays. We also include a utilization data row, so that we can all easily see the exact utilization number.

We produce this graph weekly and measure trends over the last four weeks. This gives everyone in the organization a sense of how busy we are and the utilization trend. We find that utilization is a good leading indicator of company profitability.

Why weekly? It feels right. A daily scorecard would require consultants to submit daily timesheets and would require daily administrative effort to produce. A monthly scorecard would keep consultants out-of-the-loop for too long. They like to know, in a short meeting, what’s going on in the company every week.

We can drill down from this data by using an Excel PivotTable. This allows us to view detailed information on hours billed by client, project, consultant and week.

Sales process

For KMA, the sales process is critical to our long-term success. Without new projects and new customers, we can not grow. We have developed a set of measures to track sales. We use these measures to allocate resources to sales and as an early indicator of future revenue and future growth.

We have developed a single sales graph that we share with all KMA employees weekly. We use a sales pipeline Marimekko chart to present sales opportunities by pipeline stage.

We use three pipeline stages: need identified, pre-proposal, and proposal. We felt that dividing these opportunities into a more complex 8-10 stage sales cycle was overkill. Opportunities are classified into the four major KMA practice areas: knowledge management, business intelligence, data and presentation solutions, and emerging technologies.

The single graph is sufficient to share sales activity with our consultants. It provides an overview of sales activity for those not involved in the day-to-day sales process. Again Excel PivotTables are available for drill down to individual opportunities. We can look at opportunities by size, client, project name, and practice area. If needed, we can quickly produce additional charts to track trends over time and additional tables to provide detail on the sales opportunities.

We also use other measures to track key financial indicators and Mekko Graphics product sales. We have refined our measures and reports over time and will continue to do so, based on changing market conditions and feedback from our consultants. If you have any comments on our approach, or would like more detail, please feel free to contact me.