Bridging the gap between resource management and profitability in professional services
Once seen as a back-office function, resource management is nowadays a critical area for professional services firms. New research shows that resource management can be an important driver of both project margins and firm profitability.
With the ever-evolving competitive landscape and increased private equity investment, firms in the professional services industry are under greater pressure to improve people efficiency, enhance operational performance, and protect and predict profitability.
While there are numerous ways to boost profitability in professional services, a new report from Dayshape and Resource Management Institute (RMI) has found that resource management is one important route to consider. The report identified a clear connection between resource management, project success, and financial performance.
Yet, at the same time, the study also uncovered that most firms struggle to translate resource management into financial performance, leading to costly inefficiencies, from missed revenue opportunities to preventable write-offs.
Christine Robinson, Strategic Advisor at Dayshape, walks through the key challenges professional services firms face and how they can bridge this gap:
Resource management isn’t fully aligned with financial goals
One of the most significant barriers is the disconnect between resource management and financial objectives. While most resource management teams support broader strategic priorities, fewer than half of firms say their resourcing practices align with revenue goals. Even more concerning, only 26% of firms report that their resource management function includes financial planning and reporting.
There is a strong intent to link resource management with profitability, but in many firms, this remains more aspiration than reality. Until resource management is embedded in financial planning, firms will struggle to close the gap.
Limited visibility into the financial impact of resource management
Another challenge is the lack of real-time financial visibility into resource planning decisions. The research indicates that only 14% of firms have full insight into how changes in resource plans affect project profitability, while 42% report having little to no visibility at all.
This makes it difficult for firms to adjust resourcing strategies in ways that protect margins and optimise revenue. Without a clear view of how resource allocation impacts the bottom line, firms are left making decisions in the dark - reacting rather than proactively contributing to profitability.
A reactive approach to profitability tracking
Many firms still take a reactive approach to monitoring project profitability, limiting their ability to manage revenue risks in real time. While 37% of firms proactively track project profitability, too many wait until the later stages of a project – or even after completion – to assess financial performance.
By the time profitability issues surface, it’s often too late to take corrective action or have timely conversations with clients about potential impacts. This reactive approach not only results in missed opportunities to optimise project margins, redeploy underutilised resources, or prevent revenue leakage but can also erode client trust and satisfaction.
To bridge the gap, professional services firms must adopt real-time financial monitoring and proactive decision-making – ensuring they can address risks early, ensure a high level of work quality, and maintain strong client relationships.
Systems and process inefficiencies prevent strategic decision-making
Even when firms recognise the importance of resource management, their ability to act strategically is often hindered by outdated software systems and fragmented processes. Many firms still rely on multiple, siloed tools that fail to provide a unified view of resource capacity, project demand, and financial performance.
As a result, resource managers struggle to identify key risks – such as capacity gaps, budget overruns, or skill shortages – until it’s too late to address them efficiently. The research highlights that fewer than half of firms can perform these tasks without significant manual effort, creating an operational bottleneck that slows down decision-making and impacts profitability.
These issues aren’t quick fixes, but firms that take a disciplined, consistent approach to improving processes and data integration will have the best shot at bridg the gap. This takes time, effort, and investment – not just in refining ways of working but also in the systems that support them.
Moving away from outdated, disconnected tools and adopting advanced resource management software can provide the resource visibility, process standardisation, and forward-looking insights that enable more informed decisions and a connection between resource planning and financial impact.
Investment in resource management will pay off
Bridg the gap between resource management and financial performance presents challenges, but also major opportunities. Firms that take resource management seriously – embedding it into financial planning, enhancing visibility, adopting real-time financial tracking, and investing in the right technology – can turn it into a powerful lever for profitability and long-term business success.
For CFOs and business leaders, resource management isn’t just about internal operations. It’s about the bottom line. Those that recognise this and act now will strengthen margins, improve efficiency, and set their firms up for long-term success - and what business leader wouldn’t want that? As firms sharpen their focus on profitability, an efficient and strategic resource management function is key.
