Capacity planning can be challenging for organizations of any size. It requires a delicate balance between real-time employee availability, available dollars in the budget, and the demand for work from customers, partners, or other stakeholders.
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We’ve created this handy guide to help you better understand how to manage employee capacity, allocate employee resources, and most importantly, maximize profitability.
What Is Capacity Planning?
Capacity Planning is the process in which organizations or teams match available employee hours against the needs of a project or program.
More specifically, “capacity” is the maximum amount of work that can be completed in a given period. (This is often measured in hours available to be worked by employees.) And in this context, “planning” is the act of scheduling employee hours against a fixed or expected amount of work.
For example: If your company has 10 employees who each work 40 hours per week, then the company has 400 hours of weekly capacity. Without factoring in overtime, this company could handle a maximum of 400 hours of business each week.
Measuring Employee Capacity
Let’s stick with the 400 hours example. If your business has 400 hours of available employee time but only 200 hours to perform, then your team is at 50% capacity. Conversely, if there are 800 hours of work to perform, then your team is at 200% capacity. Generally speaking, neither of these scenarios is ideal. Low-capacity teams have idle time on their hands, which is particularly troubling for agencies, consultants, or anyone who bills for their time (granted, not all non-billable hours are created equal). Teams that are over capacity must contend with long and difficult hours, while management is often forced to hire expensive contractors, pay employee overtime, or deliver lower quality work to the client.
Strategic Capacity Planning
There are three principle methods to approach capacity planning. Each method is based on reacting to or planning for market fluctuations and changing levels of demand.
These capacity planning strategies are Match, Lag, and Lead.
Match
Matching is a strategy that involves monitoring the market for demand increases and decreases on a regular basis. Capacity is then changed to match demand.
Matching capacity is considered to be a moderate strategy that requires near-constant, incremental adjustments. It can require a considerable amount of work, but it is a low-risk strategy that is ideal for many organizations.
Lag
As its name suggest, the lag strategy involves waiting until there is true demand before adding additional capacity. This is the most conservative strategy, as hiring is only initiated when demand is at 100%. This method virtually ensures the lowest possible staffing costs but can lead to the loss of potential customers, if there is not enough talent on hand to deliver products or services.
Lead
Lead capacity planning is the most radical of the capacity planning strategies, as it involves changing capacity in anticipation of market demand. Hiring can be a slow process, and lead capacity planning allows organizations to be prepared for growing or rapidly evolving markets. When demand increases, businesses that successfully deploy lead capacity planning will be ready to meet client needs. Granted, incorrect or off base assumptions by management can result in overstaffed teams and have a significant negative impact on the bottom line.
Capacity Planning Template
How much available employee capacity does your organization have? How do sick time and vacations affect employee capacity? Our capacity planning template will make it easy for you to measure team capacity, better understand project staffing needs, and stay on budget!
Employee Utilization
Employee capacity is the number of available hours a team member has to work on a given project. Employee utilization is the percentage of worked hours that are billable. For example, if a marketing coordinator works a 40-hour week but spends three hours on administrative projects and two hours performing non-billable “favors” for key clients, then that employee is at an 88.25% utilization rate (33 billable hours / 40 possible hours). Since this employee worked all 40 hours, he is at 100% capacity.
Top-performing businesses excel at optimizing employee utilization, managing employee capacity, and understanding when — and what type of employee — to hire.
Capacity Planning Glossary
Want to brush up on capacity planning terminology? We’ve got you covered! Check out our capacity planning glossary, where we define and explain the language and terminology around planning employee and team capacity.
What is Resource Allocation?
Resource allocation, for all intents and purposes, is the same concept as capacity planning. When viewed in terms of employees, both resource allocation and capacity planning involve the management of employee time and cost across a project or series projects. When done well, resource allocation offers a number of benefits to your organization:
- know whether or not you need to hire new team members to take on additional work
- more effectively assess opportunity costs when taking on new projects or clients
- maximize billable hours
- increase employee engagement and reduce turnover
If you want to learn more about resource allocation, you're in luck! We interviewed a group of agency executives about how they manage employee time, plan hours against client budgets, and deliver successful outcomes to their customers. In the world of professional services, increasing utilization rates and improving capacity management by even a few percent can make a big difference on the bottom line. It just takes the right tools and a laser-like focus on improving operations.
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Managing Power BI Premium involves creating, managing, and monitoring Premium capacities. This article provides step-by-step instructions; for an overview of capacities; see Managing Premium capacities.
Learn how to manage Power BI Premium and Power BI Embedded capacities, which provide dedicated resources for your content.
Capacity is at the heart of the Power BI Premium and Power BI Embedded offerings. It is a set of resources reserved for exclusive use by your organization. Having a capacity enables you to publish dashboards, reports, and datasets to users throughout your organization without having to purchase per-user licenses for them. It also offers dependable, consistent performance for the content hosted in capacity. For more information, see What is Power BI Premium?.
Note
Power BI Premium recently released a new version of Premium, called Premium Gen2, which is currently in preview. Premium Gen2 will simplify the management of Premium capacities, and reduce management overhead. For more information, see Power BI Premium Generation 2 (preview).
Manage capacity
After you have purchased capacity nodes in Microsoft 365, you set up the capacity in the Power BI admin portal. You manage Power BI Premium capacities in the Capacity settings section of the portal.
You manage a capacity by selecting the name of the capacity. This takes you to the capacity management screen.
If no workspaces have been assigned to the capacity, you will see a message about assigning a workspace to the capacity.
Setting up a new capacity (Power BI Premium)
The admin portal shows the number of virtual cores (v-cores) that you have used and that you still have available. The total number of v-cores is based on the Premium SKUs that you have purchased. For example, purchasing a P3 and a P2 results in 48 available cores – 32 from the P3 and 16 from the P2.
If you have available v-cores, set up your new capacity by following these steps.
Select Set up new capacity.
Give your capacity a name.
Define who the admin is for this capacity.
Select your capacity size. Available options are dependent on how many available v-cores you have. You can't select an option that is larger than what you have available.
Select Set up.
Capacity admins, as well as Power BI admins and global administrators, then see the capacity listed in the admin portal.
Capacity settings
In the Premium capacity management screen, under Actions, select the gear icon to review and update settings.
You can see who the service admins are, the SKU/size of the capacity, and what region the capacity is in.
You can also rename or delete a capacity.
Note
Power BI Embedded capacity settings are managed in the Microsoft Azure portal.
Change capacity size
Power BI admins and global administrators can change Power BI Premium capacity. Capacity admins who are not a Power BI admin or global administrator don't have this option.
Select Change capacity size.
On the Change capacity size screen upgrade or downgrade your capacity as appropriate.
Administrators are free to create, resize and delete nodes, so long as they have the requisite number of v-cores.
P SKUs cannot be downgraded to EM SKUs. You can hover over any disabled options to see an explanation.
Important
If your Power BI Premium capacity is experiencing high resource usage, resulting in performance or reliability issues, you can receive notification emails to identify and resolve the issue. See capacity and reliability notifications for more information.
Manage user permissions
You can assign additional capacity admins, and assign users that have capacity assignment permissions. Users that have assignment permissions can assign a workspace to a capacity if they are an admin of that workspace. They can also assign their personal My Workspace to the capacity. Users with assignment permissions do not have access to the admin portal.
Note
For Power BI Embedded, capacity admins are defined in the Microsoft Azure portal.
Under User permissions, expand Users with assignment permissions, then add users or groups as appropriate.
Assign a workspace to a capacity
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There are two ways to assign a workspace to a capacity: in the admin portal; and from a workspace.
Assign from the admin portal
Capacity admins, along with Power BI admins and global administrators, can bulk assign workspaces in the premium capacity management section of the admin portal. When you manage a capacity, you see a Workspaces section that allows you to assign workspaces.
Select Assign workspaces. This option is available in multiple places.
Select an option for Apply to.
Selection Description Workspaces by users When you assign workspaces by user, or group, all the workspaces owned by those users are assigned to Premium capacity, including the user's personal workspace. Said users automatically get workspace assignment permissions.
This includes workspaces already assigned to a different capacity.Specific workspaces Enter the name of a specific workspace to assign to the selected capacity. The entire organization's workspaces Assigning the entire organization's workspaces to Premium capacity assigns all workspaces and My Workspaces, in your organization, to this Premium capacity. In addition, all current and future users will have the permission to reassign individual workspaces to this capacity. Select Apply.
Assign from workspace settings
You can also assign a workspace to a Premium capacity from the settings of that workspace. To move a workspace into a capacity, you must have admin permissions to that workspace, and also capacity assignment permissions to that capacity. Note that workspace admins can always remove a workspace from Premium capacity.
Edit a workspace by selecting the ellipsis (. . .) then selecting Edit workspace.
Under Edit workspace, expand Advanced.
Select the capacity that you want to assign this workspace to.
Select Save.
Once saved, the workspace and all its contents are moved into Premium capacity without any experience interruption for end users.
Power BI Report Server product key
On the Capacity settings tab of the Power BI admin portal, you will have access to your Power BI Report Server product key. This will only be available for Global Admins or users assigned the Power BI service administrator role and if you have purchase a Power BI Premium SKU.
Selecting Power BI Report Server key will display a dialog contain your product key. You can copy it and use it with the installation.
For more information, see Install Power BI Report Server.
Next steps
More questions? Try asking the Power BI Community
Power BI has introduced Power BI Premium Gen2 as a preview offering, which improves the Power BI Premium experience with improvements in the following:
- Performance
- Per-user licensing
- Greater scale
- Improved metrics
- Autoscaling
- Reduced management overhead
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For more information about Power BI Premium Gen2, see Power BI Premium Generation 2 (preview).