Resource Management at Medtronic: Investing in Visibility

Manufacturing Insights Opinion

Highly skilled resources are critical to the success of any product development organization – but the ability to actively manage those resources is what sets world-class organizations apart. At the project level, managers require access to a spectrum of cross-functional resources – from product marketers to electrical engineers – and need to be able to manage project workload to meet the product introduction timeline. At the portfolio level, management must have visibility into resource utilization across all projects to enable an array of decisions, including trade-off scenarios, headcount adjustments, skill gaps, and investment approval. Resource management is really the management of a delicate, interdependent system. Manufacturing Insights believes resource management deserves the highest level of attention from executives because:

  • Overutilization and underutilization of resources are among the most common and preventable time-to-market delays.
  • Product development is necessarily a cross-functional endeavor and requires the ability to manage a complex network of diverse contributors.
  • Agile resource management results in significant and favorable financial consequences.

 

In This Case Study

This Manufacturing Insights case study examines the selection, implementation, and benefits of the PDWare resource management solution at a global medical device manufacturer. PDWare allows a chain of stakeholders – executives, project managers, resource managers, team members – to continuously monitor and balance resources, skills, and project needs. The PDWare solution is designed to enable tactical project decisions, strategic portfolio decisions, and corporate financial decisions.

 

Situation Overview 

Most companies do not have the luxury of unlimited time and resources to complete a project, so when a challenge arises, management is often left with a critical decision: cancel the project, reduce scope, postpone completion, or bring in additional resources. Often these decisions are made in the absence of any definitive data about the resource impacts or alternatives. Hal Kaufman, IT manager at Medtronic, knows these challenges well: “Without credible resource information across the entire organization, we were unable to adequately shift existing and planned resources to address the resource risk areas.”

Founded in 1949, Medtronic is a $14 billion global manufacturer of medical devices for a range of therapies, including cardiac rhythm disease management, diabetes management, and spinal and musculoskeletal therapies. Medtronic has been expanding rapidly with an aggressive product introduction schedule of as many as two dozen new products a year.

Like most mature engineering organizations, Medtronic employs a formal process to approve and allocate budgets for projects as well as a phase-gatae methodology to manage project milestones. Resource management, however, was a less mature undertaking complicated by a geographically dispersed organization and lack of formal processes and tools. The lack of formal processes extended to roles and responsibilities that were informal and inconsistent in the area of resource management. As a result, Medtronic was challenged to maintain a complete and reliable picture of how human resources were allocated across projects and geographies. According to Kaufman: “We were questioning our confidence to commit to projects because we didn’t have any central way of seeing where we had resource issues and where we had opportunities.”

The perpetual lack of visibility into resource allocation and utilization also prevented Medtronic from having a reliable financial view of its product development activities. The effort to analyze data from numerous disparate sources, often with stale and inaccurate data, was so burdensome that the finance department would update project actuals only once a year.

An even greater challenge for Medtronic was how to forecast resource consumption and future needs reliably and how to incorporate this information into business-critical decisions. This long-term insight would inform the planning and approval process for new projects and serve as a baseline to monitor and adjust resources throughout the project.

It was clear to Medtronic that it needed a better method to manage its human resources.

 

The Approach

Solution Description

Medtronic decided to implement PDWare, a resource management toolset that enables enterprises to plan, allocate, and manage their human resources. PDWare is designed to manage complex resource requirements in a distributed environment such as Medtronic’s. To address needs at both the project level and the portfolio level, Medtronic selected the PDWare solution.

Selecting the Solution

In addition to Medtronic’s functional requirements, the evaluation team had some significant financial requirements on its list of selection criteria. The solution needed to:

  • Be able to demonstrate value right away, meaning low initial investment
  • Have a low total cost of ownership
  • Require little to no investment in IT infrastructure

Medtronic also had some “soft” criteria – it was looking for a partner that would be flexible, trustworthy, and focused on the relationship. PDWare was selected to participate in the feasibility stage and demonstrated these traits by coaching Medtronic on process changes and tool use. The proof of concept also allowed the selection team to prove the business case to management. Based on these factors, as well as PDWare’s significant cost advantage over competitors, PDWare was selected to move forward with the implementation.

Implementing the Solution

Medtronic wisely espoused the philosophy that “the tool should support the process,” so the first phase of the implementation was focused on process design. This phase included defining an overall process owner, as well as the formal roles and responsibilities that would be associated with the future process. The rollout was phased, starting with a pilot to confirm benefits and then expanding to a single owner in multiple groups. The solution was eventually rolled out to an additional 600 users, but with an intentionally organic uptake. “We allowed each organization to see how it worked for them. Word spread naturally to other organizations, which saw it working and wanted to use it too. With local ownership and meeting specific needs, things happened faster. We had 600 people asking for PDWare, saying ‘Why don’t you just give me the tool, and I’ll enter my own data?’” recalls Kaufman. The final phase was an integration with the finance and HR systems, but only after resource management reached a mature state across the organization.

Medtronic wanted a standard, consistent solution, but it also needed to address a diverse set of requirements among the different functional groups. The resulting implementation approach was both centralized and decentralized. Guidelines and minimum requirements were defined at the corporate level, but each group was free to implement the solution in the way that best met its unique needs.

Business Value

The benefits of the PDWare solution are visible throughout the organization. Individual project resources are much better utilized, resulting in increased productivity and better adherence to timelines. “Managers assign their resources to projects to balance utilization while meeting the needs of the portfolio. Functional leadership proactively resolves resource/portfolio issues. Improved visibility of demand and management of supply and demand allow organizations to focus the appropriate resources on the highest-priority work,” says Kaufman.

The new process and tool provide the analysis and information to justify shifting resources among functions based on project and portfolio demands. The data is highlighted in a monthly scorecard, which has a high level of visibility among management. Any risks identified in the scorecard are discussed, and an action plan is triggered.

Financial tracking has also improved, as PDWare forecast and actual information is updated and transferred to Medtronic’s ERP system systematically, ensuring that project accounting requirements are met and can be audited at any time. Medtronic saves hours of processing time and reduces human errors, and with better data, the company performs faster and more accurate financial forecasts. According to Medtronic’s Aaron Walcott, finance systems manager, the integration of PDWare with other enterprise applications allows him to “access forecasting data at any time and act very quickly to make adjustments accordingly.”

Perhaps most important, with PDWare in place, Medtronic finds it is capable of making smarter business-driven decisions. In years past, the primary decision-making criterion was budget. Now the company does not commit to a project until management is assured that the necessary skills required to get the work done are available. PDWare helps the management team assign and reallocate the most appropriate resources across leadership teams. The results have been so impressive and reliable that the finance organization now first asks, “Do we have the people?” and then asks about the costs.

 

Conclusion

Today, PDWare is used extensively at Medtronic by roughly 700 staff members, more than half of whom are active users. The rest of the staff members use the tool in “read-only” mode for information purposes. PDWare is the system of record for all human resources, managing roughly 3,000 resources simultaneously in all active projects, from large multimillion-dollar R&D projects to small $5,000 projects.

The level of adoption of PDWare is very high, but more important, the benefits have been so clear that the process owners will be receiving the Star of Excellence award for their division.

 

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