How Work Visibility can Transform your Business
Shirish Deodhar
CEO and Co-Founder,
Innovize Tech Software
Innovize Tech Software
The second most important currency at work: Time/Effort
Most industries use ERP (Enterprise Resource Planning) software for optimizing their delivery and operations. They have production targets, and precise information on total material used, person-hours of effort and actual output.
This is hard to do at companies whose employees spend time on computers to deliver their products and services. These include software product or services firms, KPO/BPOs, engineering services, and IT and back office teams at organizations in various sectors.
In such businesses, the Time/Effort put in by their employees drives the total Work Output, which in turn determines the revenue and profitability of the company. Time is each employee’s contribution to assigned work, while Effort is the collective time spent by all team members towards achieving end objectives.
Despite its critical linkage to financial outcome, Time/Effort is not measured in any meaningful way. Companies adopt a rigorous process to keep track of cash related expense and revenue, with quarterly reports and annual balance sheet for senior management. But there is no equivalent process for what is underpinning the financials: namely Time/Effort.
Productivity is becoming critical
Though proper Time/Effort measurement and estimation has always been of importance, these recent trends are making it critical for Indian companies:
* Billing Rates in IT Services are eroding due to competition, both within India and from other countries such as China, Vietnam, and Philippines.
* In traditional Time & Material based outsourcing, service providers did not have to worry about productivity. To limit costs, outsourced contracts are now increasingly fixed price or service level driven (output based). It is estimated that 30-40% of all contracts are already fixed price, and this will rise to 60% and more in the next few years. Vendors are beginning to focus on productivity improvements to protect their margins.
* For product companies, time-to-market can mean the difference between success and failure. Productivity has to be high, and effort estimates have to be accurate.
Productivity is a problem
Over 50% of cost is in employee compensation, yet there is no easy way to verify that an employee’s time is being utilized properly. Individuals and managers know that time management is a problem, but nobody really is aware of its extent.
Most industries use ERP (Enterprise Resource Planning) software for optimizing their delivery and operations. They have production targets, and precise information on total material used, person-hours of effort and actual output.
This is hard to do at companies whose employees spend time on computers to deliver their products and services. These include software product or services firms, KPO/BPOs, engineering services, and IT and back office teams at organizations in various sectors.
In such businesses, the Time/Effort put in by their employees drives the total Work Output, which in turn determines the revenue and profitability of the company. Time is each employee’s contribution to assigned work, while Effort is the collective time spent by all team members towards achieving end objectives.
Despite its critical linkage to financial outcome, Time/Effort is not measured in any meaningful way. Companies adopt a rigorous process to keep track of cash related expense and revenue, with quarterly reports and annual balance sheet for senior management. But there is no equivalent process for what is underpinning the financials: namely Time/Effort.
Productivity is becoming critical
Though proper Time/Effort measurement and estimation has always been of importance, these recent trends are making it critical for Indian companies:
* Billing Rates in IT Services are eroding due to competition, both within India and from other countries such as China, Vietnam, and Philippines.
* In traditional Time & Material based outsourcing, service providers did not have to worry about productivity. To limit costs, outsourced contracts are now increasingly fixed price or service level driven (output based). It is estimated that 30-40% of all contracts are already fixed price, and this will rise to 60% and more in the next few years. Vendors are beginning to focus on productivity improvements to protect their margins.
* For product companies, time-to-market can mean the difference between success and failure. Productivity has to be high, and effort estimates have to be accurate.
Productivity is a problem
Over 50% of cost is in employee compensation, yet there is no easy way to verify that an employee’s time is being utilized properly. Individuals and managers know that time management is a problem, but nobody really is aware of its extent.
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