In the article about Operating Models, one of the four primary systems is the Resource Management System as shown in the following figure.
Several comments have been made about the need or value in considering the Resource Management System. This has prompted me to elaborate further on:
- the role and purpose of this system
- the increasing importance of this system and the implications of ignoring this system
Role and purpose
All enterprises rely on a range of resources as part of their enterprise capabilities, established to deliver their intended products / services. These resources include:
- Finance (a means of securing other resource types)
- People (and their associated knowledge, experience, skills, attitudes and behaviours)
- Information (both the information consumed and the information generated and consumed by other parts of the enterprise)
- Assets (fixed assets, plant and equipment, and technology)
- Materials (or consumables)
The types of resources required can vary significantly across different enterprises and different industries. All enterprises have in common the need to manage finance, people and information. Many enterprises have few assets that they require and can often access the assets on a usage basis without involving the additional activities and responsibilities entailed in asset ownership. Enterprises have varying needs for materials.
The primary role of the resource management systems is to ensure that other systems are readily able to access appropriate resources meeting their performance and other requirements. These systems attend to common activities such as those relating to:
- financial resources, including management of financial resources, financial transactions (creditor and debtor management), allocation of financial resources and reporting of financial performance
- human resources, including support for recruiting, employment conditions, training and development, workplace safety and performance management
- information resources, including sourcing, organising and supporting access
- physical assets, including the management of the asset through its lifecycle from acquisition / creation through to disposal
- materials, including supplier selection and management, sourcing, storing and ensuring they are available for immediate use so as not to impede the productivity of the people or machines consuming them
These activities emerge and develop as enterprises grow in size and complexity. They are most commonly seen in the form of Corporate Service Divisions or Shared Service Centres. Their establishment and operation enables others to focus on their core capabilities and ensures that a consistent approach is taken to management and availability of these critical resources.
In some enterprises, intermediate products and services are developed and provided to provide more effective support to the core capabilities within the enterprise. This might constitute specific value adding services around a basic resource. For example, the fleet function in a policing organisation acquires vehicles and fits them out to be an appropriate resource for patrol staff. This takes a basic resource (car) and creates a key resource for a core capability – response to incidents. It is not a core value adding process and capability, rather it is a value adding capability in providing a critical resource.
Without these capabilities, enterprises are prone to:
- duplicating these capabilities within their core capabilities
- failing to adequately manage these capabilities
- compromising overall enterprise performance
The extent and sophistication of the resource systems vary considerably for different types of enterprise and different size and scale of enterprise.
In a small enterprise, the resource management capability is most likely to be part of the manager or director roles. As the enterprise grows, it might establish a “business manager” role, which may encompass a range of the resource management functions. Further growth will lead to a point where a Finance Manager may be appointed, or a HR Manager position established. As indicated earlier, these capabilities can grow to the point of an entire Division supporting the resource management systems.
In such situations, one needs to be mindful that some of these systems operate across all functions within the enterprise. So, for example, every manager in a 10,000 person enterprise will have financial management responsibilities and people management responsibilities. There may also be other roles in providing support. For example, in a university setting, when considering the HR or people management system, one needed to be mindful that this encompassed:
- every employee
- every manager
- HR support functions at School level
- HR support functions at Faculty level
- HR support functions at Corporate level
In such scenarios, any one of the resource management systems can be viewed as an enterprise in its own right, and will entail a complex set of systems and functions providing support to the entire organisation. Whilst these systems are not part of the operations system, delivering the core products and services of the organisation, they can be critical to the success of the enterprise, and the manner in which they operate may be part of the way in which the enterprise is able to differentiate itself.