Any IT company that uses agile methods must have flexible methods. However, resources are not always flexible and cannot immediately meet the needs of administrators.
This is why competency management is very important in this work.
What is capacity and capacity management? Default definition
In the IT industry, productivity is usually defined as the maximum production that a company can maintain in the production process or service. This means the time spent by the employee or team on all business related activities.
These values are usually the most important for IT companies, because they will pay customers according to the time required for employees to complete projects. Therefore, full utilization of capacity is the source of income for these entities.
Therefore, it is not surprising that capacity management is the foundation of all operations in the it industry. There is no single definition of this process. It consists of all actions aimed at maximizing the company’s production.
Capacity Type
The capacity definition looks simple, but there are many types of capacity, which can distinguish the time used for different operations. This includes:
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Total Capacity – The number of hours an employee worked in a specified time period. It does not include leave and absence.
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Available capacity – Absence and holidays are not included in the total capacity. If employees have been assigned to other projects, this time must also be deducted from the total production capacity.
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Billing Capacity – The total amount of billable time compared to employee capabilities.
These types of capacities are used in different situations, and all of them are described below.
How is capacity calculated and managed?
Default capacity formula
Agile means flexibility. This flexibility has a significant impact on capacity. This does not mean that capacity cannot be calculated in an agile environment. In fact, it is often the foundation of all agile projects. Especially in companies that execute multiple projects at the same time.
In general, the following equation can be used to calculate the capacity:
Total capacity=working days * working hours – rest time
This formula describes most examples that can be encountered in an agile environment. No matter how flexible they are, they can be seen in the following examples:
Calculate total capacity
Suppose the administrator wants to calculate the total capacity of Java developers in a month. This is February, 28 days in total, 20 business days. Of course, the workday is eight hours. However, your country has an extra holiday, a public holiday on Thursday.
Therefore, the total capacity is:
20(weekdays) * 8 hours – 8 hours(public holidays)=152 hours.
In some cases, these capabilities may change. For example, if an expert decides to take sick leave or leave, time must be taken from the total capacity.
Calculate user capacity
Before the start of this month, Java developers had proven to be needed for other projects. He will finish the work in 5 days(or 40 hours). Therefore, you can use the following capabilities in other projects:
Total production capacity 152 hours – other projects 40 hours=112 hours
If a worker is assigned to any other project, the time required for him to complete the task shall also be deducted from his available capacity.
Calculate Billing Capacity
Our Java developers are also busy helping customers with internal projects that do not pay company fees. Internal work takes him 16 hours. Therefore, the billing capacity of the expert is as follows:
Total capacity 152 hours – 16 hours for internal projects=136 reimbursement time
If internal items take longer than usual, other times should also be excluded from the billing capacity.
Calculate team capacity
For an enterprise that specializes in renting car bodies, the ability to calculate specific employees is sufficient. But some IT service companies need to lease the entire team, or send experts to many intertwined projects at the same time. Therefore, you may need to calculate the team’s capabilities.
To do this, you can use the following formula:
Total team capacity=expert capacity 1+expert capacity 2+.
However, when doing this, all experts must calculate the same type of capacity. Otherwise you will get the wrong result!
Management Capability in Agile Environment – Strategy
Calculating capacity is a simple task. But management may not be that simple. IT companies often assume how to manage capacity by choosing one of four strategies. The following are:
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Geo strategy. Enterprise decisions are based on the capacity of existing data. This policy does not require administrators to make long-term predictions. In contrast, the backup strategy only affects recent and future capacity. However, only very stable enterprises can successfully use this strategy. Sudden demand changes may cause problems in project completion and force experts to work overtime.
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Leadership strategy. This is a perfect solution for enterprises that want to grow dynamically. The strategy assumes that the company can use all its resources to complete projects for new customers. As a result, the company continues to recruit new experts. However, this strategy is only applicable to companies that want to develop!
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Matching policy. This is a strategy that requires constant monitoring of all actions. The primary goal is to constantly repeat capacity planning to accommodate all changes. These strategies minimize risk, which is large enough for a company, but on the other hand, they are also troublesome and may take a long time.
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Adjust policies. Companies using this strategy will adjust resource planning and allocation based on historical data. This solution may be correct, but it requires extensive monitoring tools without considering any guidance. Therefore, this strategy is a good choice for large entities with years of experience.
Do you want to know more about capacity?
We realized that it might not be easy to calculate and manage capacity with or without digital tools. Therefore, the Capacity Management Integration Guide can help you understand this issue in greater depth. Click the following link for more examples, definitions, and useful tips:
