Make intelligent decisions to accurately meet the demand for your company’s goods and services with a comprehensive overview of capacity planning.
Included on this page, you’ll find a capacity planning worksheet sample , a checklist with the most important capacity planning considerations, and tips from capacity planning experts.
Capacity planning is the ability to make informed decisions on whether you have enough resources available for a project. The goal of capacity planning is to optimize service delivery and meet service level agreements (SLAs).
Capacity planning is important to overall client satisfaction. The process allows a business to match current capacity with future demands, as analyzing capacity data ensures that teams are productive and projects don’t fall behind schedule or run over budget.
Richard Gimarc, an independent consultant and author who specializes in capacity management, shares the importance of capacity planning: “If a business is providing a service to its customers, capacity planning ensures the customers are receiving a responsive service and there is a full understanding of the cost of the digital infrastructure required to provide that level of service.”
Capacity planning provides transparency into what the team is working on, skill sets, and availability. The number one benefit of capacity planning is that it enables teams to deliver on-time, on-budget projects.
Below are the top four benefits of capacity planning:
Gimarc says, “In the perfect world, capacity planners work with their business partners to predict the impact of business demand on the availability and scalability of their digital infrastructure, and then determine the most cost-effective way to optimize service delivery and meet SLAs. Capacity planning is the single source of truth for the business process in question.”
He offers the following example: “How well is the digital infrastructure supporting SLAs and application availability, and what does the future look like based on business demand? Are we near a digital infrastructure breaking point, are we introducing new business services, or are we continuing business as usual?”
Capacity planning requires collaboration among the business, application, IT, and facilities teams. Communicating across each of these silos tends to be a significant challenge.
In their research paper, “The Language of Capacity Planning: Business, Infrastructure, and Facilities,” Gimarc and Amy Spellman, Former Global Practice Principal, 451 Research Advisory Services, describe the four key silos to consider as you promote capacity planning and discuss the importance of the capacity planner role in merging communication.
“Today’s capacity planner must work with all areas of an enterprise’s digital infrastructure, which includes the business owners, the application teams, the infrastructure group, and facilities. In a sense, this is good news. As the central point of contact for planning and coordination, the capacity planner is well-positioned to ensure that there is sufficient capacity across the breadth and depth of the digital infrastructure to satisfy business demand cost-effectively.”
Capacity planning is not a siloed, one-time activity; it is collective and continuous. Business goals and insight into future growth are crucial to managing capacity. To succeed, you need to continually measure, analyze data, and anticipate the future plan.
“The capacity planning group works for the business. Consider starting out with a line of business that is directly associated with revenue, such as sales,” suggests Gimarc. “The best way to manage capacity planning is to focus on a business owner who is willing to work with you. Once you get the business owner on board, look at metrics and infrastructure that is specific to that line of business.”
Capacity planning minimizes costly mistakes. Teams can begin by measuring current capacity, then they can forecast demand, analyze gaps, and plan for the future.
Use these capacity planning templates to measure, forecast, and analyze capacity.
Below you will find a capacity planning checklist to guide you through the six main capacity planning considerations. Use this any time you need to plan for future capacity.
Capacity planning is a valuable practice, regardless of industry or company size, as it helps with planning human resources, production tools, and IT resources. Below is a worksheet for new practitioners.
Use this example Agile capacity planning worksheet from Nicole Eiche, a senior Agile consultant and solution engineer at Method, to balance team capacity to iteration load and arrive at team velocity. Eiche suggests that the team “conduct iteration planning before starting each iteration where your team determines goals based on the amount of backlog they can commit to.”
A business can use capacity planning to ensure critical resources are available to meet project demands. Here are a few common types of capacity planning:
Project management capacity refers to the maximum amount resources can produce or accomplish in a given timeframe. Capacity planning in project management aims to adjust resources to meet demand, with the goal of improving capacity while minimizing cost.
Capacity and resource planning are related and complementary. Capacity planning balances the future need for resources against the capacity of resources. Resource planning process functions to allocate people and teams to meet the demands of your projects and programs.
Visit this resource planning guide to learn more.
Companies can benefit from capacity planning, particularly when available resources continually don’t meet the demands of project work. To adequately plan, you must first gain insight into current capacity and future demand. Below, industry experts share their advice from practical experiences.
Cindy VanEpps, a principle consultant at Project and Team, suggests that capacity planning take place as a team: “Capacity planning is more than just the addition of estimates by each team member. Combining the estimates with building high-performing teams that focus on the same product or outcome helps the team collaborate and identify disruptors.”
VanEpps offers a quote from Donald G. Reinertsen’s book, The Principles of Product Development Flow: Second Generation Lean Product Development: “Operating a product development process near full utilization is an economic disaster.”
Of this statement, VanEpps says, “Reinertsen is correct; planning at 100 percent capacity is an economic disaster. The team must understand the work enough to account for variability imposed by learning. By working in smaller, more manageable batches, the team can allow for potential variability.”
Additional tips for capacity planning include the following:
Lack of historical information and business insights leave capacity planners without the necessary data to make intelligent decisions, and planning will fail without data. Below, industry experts share their advice on mistakes to avoid when creating a capacity plan.
Joao Natalino De Oliveira, Regional Chair and International Officer at Computer Measurement Group, says that the first mistake he sees with startups is the failure to build a capacity plan. “Eighty-five percent of startups fail because they don’t analyze and plan for demand,” he says. “Enterprise companies have dedicated capacity planners. In the early days, these companies preferred to work with large server farms and disk subsystems to sustain during peaks. After several outages, they turned to capacity planning.”
He gives a specific example: “I visited a digital bank with a large number of cloud resources, but without a dedicated capacity planner. They started seeing elevated costs. They saw drastic improvement with a capacity planner that focused on better appropriation.”
Working in silos is another avoidable mistake. As Gimarc says, “Capacity planning should be a point of intersection for the business, application, IT, and facilities teams. Ignoring technology advances is another mistake. Capacity planners should utilize observability information rather than depending on ad hoc documentation and outdated flow diagrams. Finally, a capacity planner must speak the proper language, translating from the business to applications, infrastructure, and facilities.”
Other mistakes to avoid include the following:
There are four main strategies for capacity planning. You will choose a lag, lead, match, or dynamic approach to helping optimize capacity.
Here’s how each strategy works:
Having the right resources on hand to forecast and manage customer demand is not a new concept. Capacity planning is more crucial than ever. Fortunately, AI tools are available to accurately bill, optimally staff, and effectively plan for future projects.
Modern tools geared toward capacity planning promise greater visibility into projects, resources, and teams, along with the effective prioritization and management of workloads. Gimarc would not be surprised if a new term arises for capacity planning: “The terms capacity planning and capacity management were introduced over 50 years ago, and they do not always garner positive opinions.”
As for what the future holds, De Oliveira says, “in the near future, capacity planning means saving money, surviving, and winning in the IT jungle.” He expects to see more AI, deep learning, and machine learning to automate capacity planning: “The instrumentation of business applications that targets capacity and capacity planning will continue to expand from the mainframe arena to other platforms, even edge computing.“
Experts contend that there is no gold standard tool for capacity planning. Some consider capacity planning to be old and outdated. Still, here are three commonly used tools for capacity planning: Kanban boards, critical path, and Gantt charts.
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