This article was downloaded by: [203.200.225.

151] On: 18 September 2016, At: 06:05

Publisher: Institute for Operations Research and the Management Sciences (INFORMS)
INFORMS is located in Maryland, USA

Interfaces
Publication details, including instructions for authors and subscription information:
http://pubsonline.informs.org

HP Enterprise Services Uses Optimization for Resource

Planning
Cipriano Santos, Tere Gonzalez, Haitao Li, Kay-Yut Chen, Dirk Beyer, Sundaresh Biligi, Qi
Feng, Ravindra Kumar, Shelen Jain, Ranga Ramanujam, Alex Zhang,

To cite this article:

Cipriano Santos, Tere Gonzalez, Haitao Li, Kay-Yut Chen, Dirk Beyer, Sundaresh Biligi, Qi Feng, Ravindra Kumar, Shelen
Jain, Ranga Ramanujam, Alex Zhang, (2013) HP Enterprise Services Uses Optimization for Resource Planning. Interfaces
43(2):152-169. http://dx.doi.org/10.1287/inte.1110.0621

Full terms and conditions of use: http://pubsonline.informs.org/page/terms-and-conditions

This article may be used only for the purposes of research, teaching, and/or private study. Commercial use
or systematic downloading (by robots or other automatic processes) is prohibited without explicit Publisher
approval, unless otherwise noted. For more information, contact permissions@informs.org.

The Publisher does not warrant or guarantee the article’s accuracy, completeness, merchantability, fitness
for a particular purpose, or non-infringement. Descriptions of, or references to, products or publications, or
inclusion of an advertisement in this article, neither constitutes nor implies a guarantee, endorsement, or
support of claims made of that product, publication, or service.

Copyright © 2013, INFORMS

Please scroll down for article—it is on subsequent pages

INFORMS is the largest professional society in the world for professionals in the fields of operations research, management
science, and analytics.
For more information on INFORMS, its publications, membership, or meetings visit http://www.informs.org
 Vol. 43, No. 2, March–April 2013, pp. 152–169
ISSN 0092-2102 (print) — ISSN 1526-551X (online) http://dx.doi.org/10.1287/inte.1110.0621
© 2013 INFORMS

HP Enterprise Services Uses Optimization for

Downloaded from informs.org by [203.200.225.151] on 18 September 2016, at 06:05 . For personal use only, all rights reserved.

Resource Planning
Cipriano Santos, Tere Gonzalez
HP Labs, Palo Alto, California 94304
{cipriano.santos@hp.com, maria-teresa.gonzalez.diaz@hp.com}

Haitao Li
College of Business Administration, University of Missouri, St. Louis,
St. Louis, Missouri 63121, lihait@umsl.edu

Kay-Yut Chen
HP Labs, Palo Alto, California 94304, kay-yut.chen@hp.com

Dirk Beyer
MarketShare L.L.P., Los Angeles, California 90025, dbeyer@marketshare.com

Sundaresh Biligi
HP Enterprise Business, Bangalore 560 100, India, bilgi@hp.com

Qi Feng
McCombs School of Business, University of Texas at Austin, Austin, Texas 78712,
annabelle.feng@mccombs.utexas.edu

Ravindra Kumar
HP Enterprise Business, Bangalore 560 100, India, ravindra.kumar@hp.com

Shelen Jain
HP Labs, Palo Alto, California 94304, shailendra.jain@hp.com

Ranga Ramanujam
HP Enterprise Business, Bangalore 560 100, India, ranga.ramanujam@hp.com

Alex Zhang
HP Labs, Palo Alto, California 94304, alex.zhang@hp.com

The main responsibility of resource and delivery managers at Hewlett-Packard (HP) Enterprise Services (HPES)
involves matching resources (skilled professionals) with jobs that project opportunities require. The previous
Solution Opportunity Approval and Review (SOAR) process at HPES addressed uncertainty by producing
decentralized project staffing decisions. This often led to many last-minute subjective, sometimes costly, resource
allocation decisions. Based on our research, we developed a decision support tool for resource planning (RP)
to enhance the SOAR process. It optimizes matching professionals who have diverse delivery roles and skills
to jobs and projects across geographical locations while explicitly accounting for both demand and supply
uncertainties. It also embeds capabilities for managers to incorporate tacit human knowledge and judgment
information into the decision-making process. With its 2009 deployment in Best Shore, Bangalore operations of
HPES, the RP tool’s significant benefits include reduced service delivery costs, increased workforce utilization,
and profitability.
Key words: resource planning; workforce optimization; decision support; mathematical programming; supply
and demand uncertainty; human knowledge.
History: This paper was refereed. Published online in Articles in Advance August 24, 2012.

152
 Santos et al.: HP Enterprise Services Uses Optimization for Resource Planning
Interfaces 43(2), pp. 152–169, © 2013 INFORMS
H ewlett-Packard (HP) Enterprise Services (HPES)
is a worldwide multibillion-dollar business that
employs about 100,000 professionals. It offers a wide
Downloaded from informs.org by [203.200.225.151] on 18 September 2016, at 06:05 . For personal use only, all rights reserved.
range of services, including application solutions, out-
sourcing, and information technology (IT) services to
its customers. Its workforce consists of HP regular
and contingent employees and non-HP third-party
partners worldwide.
The objective of resource planning (RP) is to pro-
vide workforce resources who have the right skill for
the right job at the right time and at the right cost
(Grinold and Marshall 1977). RP at HPES has three
formidable challenges. The first is scale and complex-
ity. Thousands of professionals with diverse service
delivery roles and skills must be matched dynamically
to a myriad of projects and jobs in countries world-
wide. The second is uncertainty in both labor sup-
ply and demand. Most demand information comes
from estimates of future project opportunities by the
HP sales force. The main sources of demand uncer-
tainty relative to a project are whether HPES will win
it, when it will start, and what its associated labor
needs are. On the supply side, the availability of work-
ers is often uncertain because of attrition. The third
challenge is that matching resources and jobs must
consider multiple attributes. A well-defined objective
function for matching is not readily available. For
example, suppose the manufacturing industry has a
demand for an expert-level Java programmer, and
HPES has an employee (e1) who is an intermediate-
level Java programmer from the aerospace industry
and an employee (e2) who is an expert-level Java pro-
grammer from the telecom industry. Whether e1 or e2
is better suited for the job is unclear. Similarly, projects
can have importance beyond their financial impact.
A small project for a strategic customer could be
more important than one that generates higher prof-
its, because of the future profit opportunities. Much
of the information relevant to the objective function
is tacit and exists only in managers’ minds.
HPES employs an approval structure, the Solution
Opportunity Approval and Review (SOAR) pro-
cess, to evaluate project opportunities. SOAR consists
of four events: opportunity assessment (OA), bid
approval (BA), terms and conditions (Ts&Cs), and
scope change (SC). Various RP functionalities are
embedded in these SOAR events to match resource
153
demand with supply for project delivery. For exam-
ple, during OA, target revenue and standard job
requirements are defined. Win probabilities are then
estimated, based on which workforce sourcing deci-
sions resource managers make. This information is
updated and repeated as the process approaches the
BA and Ts&Cs event.
Although SOAR provides workforce supply and
demand matching, its previous RP methodology has
the following limitations. (1) Resource managers lack
visibility of the project funnel because SOAR staffing
decisions are decentralized. A resource manager can
look only at the resource requirements and search
supply in a specific business domain, with no commu-
nication between other domains of service. (2) SOAR
either does not consider the uncertainty of resource
demand or treats it in a primitive way—HPES staffed
project opportunities with a win probability over a
prespecified threshold. This approach often led to
suboptimal solutions because it completely ignored
the resource demand incurred by those opportunities
with win probabilities that are less than the thresh-
old. (3) Because of limitations (1) and (2), many last-
minute decisions had to be made manually based
only on managers’ experiences and subjective discre-
tions. Such last-minute decisions were costly because
HPES often had to resort to a more expensive contin-
gent workforce (CW) to fill gaps. (4) Matching relied
primarily on management judgment or soft matching
rules, which resource or project managers implicitly
implemented. No unified and systematic approach to
performing such soft matching existed.
We proposed a new RP solution to enhance the
SOAR process. It allocates labor resources based on a
hybrid approach that consists of a rigorous optimiza-
tion model and a set of business processes to augment
RP decisions with human judgment and knowledge.
This paper focuses on the optimization and process
aspects; supply and demand analysis (e.g., the calcu-
lation of win probabilities) is outside the scope of this
discussion.
Resource Planning at HPES
In this section, we describe the RP problem (see Fig-
ure 1). Labor demand is derived from job requirements
of project opportunities and attrition replacements.

154
Job
requirements
Downloaded from informs.org by [203.200.225.151] on 18 September 2016, at 06:05 . For personal use only, all rights reserved.
opportunities
Job Attrition
characterization replacements
Labor demand
Job
attributes
Labor
nomenclature Current and
future bench
Employee
characterization
Joinee
pipeline
Labor supply
Figure 1: This diagram provides a high-level description of the RP problem at HPES.
Both job requirements and labor supply capabilities
can be characterized by a labor nomenclature that is
defined by job attributes such as location, industry,
skill type, and proficiency level. Labor supply is avail-
able from the following sources:
• Current bench: the existing workforce capacity
(i.e., a group of employees waiting to be assigned to
project opportunities)
• Future bench: employees released from com-
pleted projects
• Joinee pipeline: newly hired employees with cer-
tain lead time to be deployed
• Transition: employees to be qualified for projects
or jobs through training and redeployment
• Hiring: employees to be hired
Demand is stochastic in this setting. In particular,
whether a project opportunity will be won, its start-
ing time, and its workforce requirements (determined
by the scope of work) are uncertain. In addition, sup-
ply is also stochastic. That is, the number of employ-
ees available over the planning horizon is affected
by attrition. They might also be engaged in ongoing
projects for longer or shorter periods than expected.
A resource manager creates a scenario by defining
the scope of labor supply and demand he (she) wants
Santos et al.: HP Enterprise Services Uses Optimization for Resource Planning
Interfaces 43(2), pp. 152–169, © 2013 INFORMS
Demand
fulfillment
Fulfillment/
allocation
Project
plan
Transition
RP PLANS
Plan plan
scenario
Process
Hiring
Transition plan
rules
Hiring Utilization/
rules demand
Resource
fulfillment
allocation
reports
to match, planning parameters (e.g., limits on num-
ber of people to hire, service levels, or hiring and
training lead times). Resource planning has four out-
put components: an employee allocation and fulfill-
ment plan, an employee transition plan, a hiring plan,
and reports about demand fulfillment and resource
utilization at various aggregation levels. The alloca-
tion and fulfillment plan provides the project-job-
employee-time allocation based on preferences (busi-
ness rules), which specify the priority for different
sources of capacity. The employee transition plan
describes employee training, promotions, and rede-
ployment (i.e., any factor that changes an employee’s
current status to satisfy job requirements). It identi-
fies opportunities to increase resource utilization and
aligns employee career paths with the business needs
of satisfying project requirements. Job requirements
that the fulfillment plan and employee transition plan
cannot fill are filled by hiring new employees. The
demand fulfillment and resource utilization reports
help resource managers to evaluate the current sce-
nario. Executing these plans and realizing the random
events update the state of the system for the next
planning period, reflecting the dynamics of the RP
problem being addressed.
 Santos et al.: HP Enterprise Services Uses Optimization for Resource Planning
Interfaces 43(2), pp. 152–169, © 2013 INFORMS
Related Research
The operations research (OR) community has exten-
sively studied workforce planning under the topic of
Downloaded from informs.org by [203.200.225.151] on 18 September 2016, at 06:05 . For personal use only, all rights reserved.
manpower and personnel planning. The general prob-
lem of manpower planning, as Gass (1991) defines
it, involves determining the number of workers and
their skills that best meet an organization’s future
operational requirements. Research on planning a
multiskilled workforce is abundant in various set-
tings. In the military area, applications include both
long-term strategic manpower planning (Gass et al.
1988) and matching personnel with jobs at the short-
term operational level (Holder 2005, Li and Womer
2009b). Applications in the service sector include shift
scheduling (Burns and Koop 1987), nurse rostering
(Kao and Queyranne 1985), and crew scheduling in
the airline (cf. Barnhart et al. 2002, Yu et al. 2004)
and railway (Abbink et al. 2005) industries. The HPES
resource-planning problem differs from those men-
tioned earlier in that it addresses matching workforce
supply with service-project based demand.
Recent studies on optimizing project staffing can be
found for managing service projects in the context of a
service center (Valls et al. 2009) and IT project staffing
(Li and Womer 2009a). In both settings, operational-
level personnel assignment and task-sequencing
and scheduling decisions are simultaneously opti-
mized in the framework of resource-constrained
project-scheduling problems (cf. Demeulemeester and
Herroelen 2002). In our RP problem, staffing deci-
sions must be made at the tactical level. Each project
opportunity is associated with a fairly predictable and
staged set of jobs to be executed, and the sequence
of required jobs for each opportunity is derived
in advance from the project plan. Therefore, rather
than considering task-sequencing decisions as in a
typical scheduling problem, our RP problem treats
project opportunities at an aggregate level and opti-
mizes resource-and job-matching decisions. It consid-
ers the richness and complexity of job and workforce
attributes and business rules for resource demand
matching, training, hiring, and relocation.
Our work fills the gap between long-term strate-
gic workforce planning and short-term personnel
scheduling in a hierarchical modeling framework, as
Gass (1991) and Pinedo (2005) suggest. In particular,
155
the project-job-employee-time allocation plan pro-
vided by RP (Santos et al. 2009a) may serve as a
bridge between workforce capacity and capability
optimization (Santos et al. 2009b) at the strategic level,
and task scheduling with multiskilled personnel (Li
and Womer 2009a) at the execution level.
Modeling Approach
There are various ways to deal with optimization
under uncertainty. The analyst must choose a trade-
off between modeling capability and solution effi-
ciency. We can view the addressed stochastic RP prob-
lem as a sequential decision problem, which we can
model as a Markov decision process (MDP) (Puter-
man 2005). However, solving such a high-dimensional
MDP for thousands of projects and employees is
challenging, because classical dynamic programming
(DP) (Bellman 1957) based on Bellman’s recursion is
computationally intractable. Stochastic programming
(SP) (Birge and Louveaux 1997) is another possibility,
which potentially leads to a large-scale mixed-integer
program (MIP), with its size growing rapidly as the
number of scenarios grows. Because HPES faces a
large-scale RP problem under uncertainty and must
solve it frequently, we did not choose an approach
that attempts to address uncertainty and random-
ness over all periods in one model (e.g., MDP or
SP). Instead, we used a two-phase approach that
first builds a buffer capacity of a workforce (planned
bench) to provide reliable estimates of the quantity
of resources with certain attributes over the planning
horizon by accounting for the uncertainty of labor
demand and supply. We then enter this buffer capac-
ity into an optimization model to obtain RP solutions.
Our modeling approach (see Figure 2) consists of
two modules: a preprocessing module, supply and
demand consolidation (SDC), and an optimization
module built upon an MIP model. The SDC mod-
ule takes information about project opportunities,
employees, and various uncertainties as input. Its
main outputs include: (1) a qualification table that
determines jobs for which an employee is fully (i.e.,
100 percent) qualified; (2) a transition table that defines
the score for less than fully qualified matching and the
type of workforce transition (e.g., training, promotion
and demotion, and relocation) required to fully qualify

156
Demand and supply consolidation
Input
Employees jobs-projects
+ Job-opportunity requirement
Downloaded from informs.org by [203.200.225.151] on 18 September 2016, at 06:05 . For personal use only, all rights reserved.
+ Win probabilities
+ Starting-time probabilities
+ Employee qualifications and trainability
+ Job attrition rates
Input
+ Availability of resources
+ Hiring and training lead times
+ Job-opportunity requirement
Mathematical optimization
Figure 2: This diagram describes the two-phase RP modeling approach.
the employee for the job; and (3) a planned bench of
employees who can serve as a buffer capacity to hedge
against demand and supply uncertainty. We enter
these outputs into the optimization module to con-
struct the MIP model, which optimizes demand ful-
fillment by balancing the trade-off between workforce
utilization and availability. The optimization module
must encode business rules that reflect manager pref-
erences in allocating employee resources. We discuss
these two modules next.
Supply and Demand Consolidation (SDC)
The SDC module includes three main components:
mechanisms for consolidation, building a planned
bench, and flexible matching.
Mechanisms for consolidation: The mechanism for
consolidation relies on a unified nomenclature of job
attributes (see Figure 3) that describe a job, resource,
and workforce transition (training or relocation).
• Skill group (SG) maps resource demand with the
language of labor supply; examples include Java 2
Enterprise Edition (J2EE), dot net, and Advanced Busi-
ness Application Programming (ABAP). We obtain it
by identifying standard projects of a practice, standard
jobs required by a standard project, and the main tech-
nical skills required to perform a standard job.
• Job level defines a resource’s expertise level,
including entry level (ENT), intermediate level (INT),
expert level (EXP), and master level (MAS). Given dif-
ferent pay grades associated with the expertise level,
this attribute incorporates the cost of assigning or
Santos et al.: HP Enterprise Services Uses Optimization for Resource Planning
Interfaces 43(2), pp. 152–169, © 2013 INFORMS
Output
+ Qualification table
+ Transition/training table
+ Buffer capacity — Planned
bench
Output
+ Allocation plan
+ Transition plan
+ Hiring plan
MIP model
+ Utilization/demand fulfillment
reports
deploying a resource to a project, making the delivery
cost visible during the RP process.
• Workforce (WF) type identifies a resource’s
source—regular workforce (RWF) or contingent work-
force (CW).
• Location identifies a source’s geographical lo-
cation.
• Business domain (BD) expresses a resource’s area
of expertise (e.g., manufacturing, aerospace, telecom-
munications).
• Location type identifies whether a resource is
onsite or offshore.
Building the planned bench: We designed the
planned bench as a buffer to address supply and
demand uncertainty. The main source of demand
uncertainty is the highly unpredictable sales process.
We cannot perfectly forecast which projects HPES will
win. Thus, we assign a probability (i.e., the win prob-
ability) to each project being pursued. Sales teams are
required to update this information via the SOAR pro-
cess. However, as Chen et al. (2004) discuss, human
estimates of probabilities are not always unbiased or
accurate. Therefore, we developed a separate method-
ology to improve the accuracy of the win probability
estimate by removing bias and increasing the effi-
ciency of information use through a behavioral eco-
nomics model that captures the salient characteris-
tics of the human forecasting process. This work has
implications beyond the workforce matching issues
presented here, thus beyond the scope of this paper.
 Santos et al.: HP Enterprise Services Uses Optimization for Resource Planning
Interfaces 43(2), pp. 152–169, © 2013 INFORMS
Employee
Downloaded from informs.org by [203.200.225.151] on 18 September 2016, at 06:05 . For personal use only, all rights reserved.
Qualified for
Job
SG
level
Belongs to
Contains
Technology
Skills
Figure 3: This diagram provides an example of the hierarchy of job attributes for SDC.
The main source of supply uncertainty is employee
attrition. In some countries, attrition rate can be
higher than 30 percent per year. The planned bench is
a probabilistic model that maps the uncertain project
opportunities and the attrition process to service lev-
els. Appendix A provides details of the model.
Figure 4 illustrates an instance of planned bench
for a particular skill group. The probability distri-
bution on the left shows a 60 percent confidence
interval of [8,000, 11,000] (i.e., there is a 60 percent
probability that between 8,000 and 11,000 man-days
of this skill group will be required). The bench to
achieve a 75 percent service level (SL) must have
9,600 man-days. As we mentioned earlier, the HPES
business practice prior to implementing the RP tool
was to staff project opportunities with win probabili-
ties higher than or equal to SL (75 percent). Note that
if a firm only staffs opportunities with a win probabil-
ity greater than 75 percent, the bench size is approx-
imately 6,200 man-days with an actual SL of only
5 percent. Thus, the RP decisions based solely on win
probability may lead to a poor SL.
Flexible matching: Matching a job and an employee
who has 100 percent of that job’s requirements is
straightforward. Although easy to implement, such
157
Labor demand
Job attributes
Specified as
Defined as
WF Location
Location BD
type type
Example
Skill group— J2EE, dot net, ABAP
Job level —ENT, INT, EXP, MAS
Workforce type— RWF or CW
Location— Bangalore, Chennai, USA, Germany, UK
Business domain—Manufacturing, Aerospace, Finance
Location type—Onsite or Offshore
exact matching often results in poor demand fulfill-
ment and resource utilization: only about 40–50 per-
cent of job requirements can be matched exactly by an
available worker. This motivated us to design a flex-
ible matching method (FMM) (Gonzalez et al. 2009);
we use the analytical hierarchy process (AHP) (Saaty
2000) approach to compute weights of job attributes
that reflect each job attribute’s importance to perform-
ing the job. FMM enables us to match employee capa-
bilities with job requirements at less than 100 percent.
We define a hierarchy of job attributes based on
their relative importance (weights), and label each
job attribute as either mandatory or flexible. If a
job-resource mismatch of a mandatory attribute is
present, the resource is not qualified to perform the
job; if a mismatch of a flexible attribute is present,
we calculate a matching score to quantify the quality
of the matching. We designed a rescaling mechanism,
which adjusts the attribute weights, to account for
the dependency among job attributes and its impact
on the matching score (see Appendix B). For exam-
ple, Table 1 shows three candidate employees to
be matched with a job described by five attributes
without rescaling. Employee 1 (E1) matches the job
requirements perfectly. Both E2 and E3 match the
 Santos et al.: HP Enterprise Services Uses Optimization for Resource Planning
158 Interfaces 43(2), pp. 152–169, © 2013 INFORMS

Probability density of requirement Accumulative probability of requirement

1.8 100
Set target availability
1.6 90
level to be 75%
Downloaded from informs.org by [203.200.225.151] on 18 September 2016, at 06:05 . For personal use only, all rights reserved.

80
1.4
70
1.2
60
1.0

(%)
(%)

50
0.8
40
Satisfy
0.6
30 requirement 5%
0.4 of the time
20
0.2 10
0.0 0

1,800

3,600

5,400

7,200

9,000

10,800

12,600

14,400
00

00

00

00

00

00
0

30

80

30
8

,8

,3

,8
1,

3,

4,

6,

7,

9,

10

12

13 Staffing for projects with

Most likely (60%) to probability >75% Need to
require 8,000–11,000 requires 6,200 man-days plan 9,600
man-days man-days

Figure 4: This graph shows that staffing projects based only on win probability may lead to poor service levels.

mandatory attribute skill group, but not all the other
flexible attributes. For example, both E2 and E3 are
EXP for the attribute job level, which is one level
overqualified for the required INT level, and are
assigned with a similarity score of 0.25. Without
rescaling of weights (see Table 1), E2 and E3 will have
the same matching score of 70, which cannot differ-
entiate between E2 and E3 for the job. After rescaling
(see Table 2), E2 is preferable to E3 because E2 has
a higher rescaled matching score (62) than E3 (57.5).
Note that E3 does not have the attribute of WF type,
which is a more important attribute in the hierarchy
than other flexible attributes.
Flexible matching output includes a qualification
table with 100 percent matching, and a transition
table with matching scores for less-than-100 percent
matching. Both are used as inputs to the optimization
module.
The MIP Model
We can verbally describe the MIP model in the opti-
mization module as follows. Appendix C provides
details about its notation and formulation.
Decision variables: the MIP model makes the fol-
lowing decisions:
• employee allocation: a binary variable indicating
if an employee is allocated to a job in a project oppor-
tunity in a period;
• hiring: number of people to hire for a job in a
project opportunity in a period;

Nonrescaled
Similarity score matching score
Resource attributes 4ƒ5 4w · ƒ5

Flex. Weight Job E1 E2 E3

Attributes type 4w 5 attributes E1 E2 E3 E1 E2 E3 (100) (70) (70)

SG Nonflexible 50 Java Java Java Java 1 1 1 50 50 50

Job level Flexible 20 INT INT EXP EXP 1 0025 0025 20 5 5
WF type Flexible 15 RWF RWF RWF CW 1 1 0 15 15 0
Location Flexible 10 Bangalore Bangalore London Bangalore 1 0 1 10 0 10
BD Flexible 5 Finance Finance Telecom Finance 1 0 1 5 0 5

Table 1: This table shows that without rescaling, E2 and E3 have the same matching score.
 Santos et al.: HP Enterprise Services Uses Optimization for Resource Planning
Interfaces 43(2), pp. 152–169, © 2013 INFORMS 159

Nonrescaled
matching score Scaling coefficient 45 Scaled matching score
4w · ƒ5 % 4 · w · ƒ5
Downloaded from informs.org by [203.200.225.151] on 18 September 2016, at 06:05 . For personal use only, all rights reserved.

Flex. Weight Job E1 E2 E3

Attributes type 4w 5 attributes E1 E2 E3 E1 E2 E3 (100) (62) (57.5)

SG Nonflexible 50 Java 50 50 50 100 100 100 50 50 50

Job level Flexible 20 INT 20 5 5 100 60 60 20 3 3
WF type Flexible 15 RWF 15 15 0 100 60 30 15 9 0
Location Flexible 10 Bangalore 10 0 10 100 40 30 10 0 3
BD Flexible 5 Finance 5 0 5 100 30 30 5 0 105

Table 2: This table shows that with rescaling, E2 is preferable to E3.

• training: a binary variable indicating if an
employee allocated to a job in a project opportunity
starts training in a period.
Objective function: the objective function explicitly
expresses a resource planner’s preference for allocat-
ing resources to fulfill demands. At HPES, job require-
ments are first satisfied by available employees, who
include both the current bench (i.e., employees cur-
rently available for allocation) and future bench
(i.e., employees who are currently assigned to ongo-
ing projects but will be released at some period dur-
ing the planning horizon). If more than one employee
is qualified for a job, then the employee with the
highest matching score is allocated. If no employee
is available or qualified to perform the job, then the
transition table is checked for an employee who can
be trained to qualify for the job. If no employee can
be trained, we consider hiring new employees. If hir-
ing is impossible, we declare a gap. To summarize,
the allocation preference is: current bench and future
bench  transition (training)  joinee pipeline of new
hires  gap. We model this allocation preference by
appropriately specifying the job-resource allocation,
training, and hiring penalties (costs) in the objective
function.
Constraints: the main constraints of the MIP model
include
• satisfying requirements of high-priority opportu-
nities using available employees
— through employee allocation or employee
training
— through hiring or identifying a gap
• employee capacity and capability constraints
— employee can be allocated to at most one job
over the planning horizon
— employee can only be trained once over plan-
ning horizon
— employee to be allocated (trained) must be
qualified and available
• other constraints
— tracking inventories of newly hired people
— hiring limits defined at different levels of
aggregation.
Note that by allowing a gap for the unsatisfied
demand, the MIP model will always be feasible. This
is a desirable feature for practitioners to use the RP
tool and interpret solutions.
A Heuristic Solution Procedure
The MIP model is solvable using exact integer pro-
gramming methods such as branch and bound and
branch and cut, which are available in many com-
mercial solvers. Because the problem may involve
thousands of individuals and jobs, the size of the
MIP formulation can easily explode to millions of
binary decision variables and constraints. To make
our optimization approach computationally tractable,
we designed and implemented a heuristic method to
rapidly obtain a near-optimal solution.
The main concept of our heuristic is to solve a
single-opportunity RP problem iteratively in a pre-
defined order, which is determined according to a
weighted priority score calculated from the oppor-
tunity win probability, opportunity revenue, oppor-
tunity start time, and opportunity user-specified
priority. We sort the funnel of project opportunities
 Santos et al.: HP Enterprise Services Uses Optimization for Resource Planning
160 Interfaces 43(2), pp. 152–169, © 2013 INFORMS

Demand Resource
No. of No. of No. of fulfillment utilization
Scenario # projects jobs employees Hiring limit (%) (%)
Downloaded from informs.org by [203.200.225.151] on 18 September 2016, at 06:05 . For personal use only, all rights reserved.

Sce232 20 53 1,017 10 0024 0053

Sce328 6 48 1,017 None 0000 0000
Sce330 10 44 1,019 None 0000 0057

Table 3: This table shows a gap of the heuristic solution from the optimal solution for three scenarios.

in descending order of their weighted priority score.
The heuristic approach updates and solves a single-
opportunity MIP until all project opportunities—
including the planned bench—have been staffed.
The heuristic approach typically takes 40–60 sec-
onds to consider a dozen project opportunities with
hundreds of jobs. The planned bench always takes
most of the run time, because it addresses supply
and demand uncertainty; hence, it requires staffing
all the jobs that have an unfilled demand. We com-
pare the results of the heuristic approach with the
optimal solution for three real scenarios, which are
randomly selected to show typical characteristics of
the RP problems at HPES. The scenario numbers
are directly taken from the system. Table 3 provides
information about the three scenarios and the quality
of the heuristic RP solutions. The last two columns
report the percentage of gap of demand fulfillment
and resource utilization, respectively, of the heuristic
solution relative to the optimal solution.
For the three scenarios, the heuristic solutions are
optimal or near optimal—with gaps of less than
one percent. For Scenario 330, the solution is opti-
mal with respect to demand fulfillment, but not opti-
mal for resource utilization—with a gap of 0.57 per-
cent: the heuristic solution hires people to fill demand,
whereas the optimal solution is able to train resources
to fill the demand. The heuristic performs so well
for the three scenarios because the resource supply is
ample and not all the demand was considered: only a
dozen high-priority project opportunities are staffed.
To examine the heuristic’s performance under
various resource capacities, we generate scenarios,
adapted from real project data, considering expected
utilization rates of 50, 75, and 95 percent. For each
expected utilization rate, we generate five instances
with workforce sizes ranging from 500 to 5,000 (see
Table 4). When we expect about half of the employ-
ees to be committed, the heuristic solution deviates
from the optimal solution by about 6 percent on aver-
age (for both the fulfillment rate and utilization rate).
Because of its greedy nature, the heuristic procedure
might assign an employee with two skills (one spe-
cialized skill and one common skill) using his (her)
common skill for a higher-priority job. However, there
might be a lower-priority job requiring the specialized
skill that cannot be staffed because capacity is tight.
Thus, the heuristic tends to have lower fulfillment
and utilization rates when the resource supply is not
ample. There are various ways to improve the heuris-
tic approach. For example, when the more “flexible”
employees (i.e., those who have more skills) are lim-
ited in number, to avoid a shortage of skills, allocating
less-flexible employees first would be better.

Demand fulfillment (%) Resource utilization (%)

Expected Avg. no.
utilization rate (%) of jobs min avg. max min avg. max

50 1,301 4035 6032 7014 5038 6063 7031

75 1,989 10039 11063 13074 10049 11096 14052
95 2,537 11056 12046 13050 11057 12057 13077

Table 4: This table shows a gap of the heuristic solution from the optimal solution when resource capacity varies.
 Santos et al.: HP Enterprise Services Uses Optimization for Resource Planning
Interfaces 43(2), pp. 152–169, © 2013 INFORMS
RP Human Processes
Even with the complex structured information of the
labor supply and the demand information pulled
Downloaded from informs.org by [203.200.225.151] on 18 September 2016, at 06:05 . For personal use only, all rights reserved.
from the funnel, the system does not use a signif-
icant amount of supply and demand information.
Although the model can optimize resource planning
based on the information provided to the system, the
actual allocation is suboptimal because tacit human
knowledge and judgmental information are not fully
incorporated. In this section, we discuss the specifics
of information not captured in the system, and how
additional human processes that interact with the
optimization system help capture some of this infor-
mation in the final allocation.
Capturing human information is not a new idea
in the literature. For example, Plott and Sunder
(1982, 1988) show that experimental markets can be
designed to solicit and aggregate human informa-
tion into forecasts. This concept of a prediction mar-
ket has been applied to contexts like political events
in the Iowa Electronic Market (Forsythe et al. 1992)
and to sales forecasting at the Hewlett-Packard Com-
pany (Chen and Plott 2002). Many variations on the
actual mechanism exist. Examples are Chen et al.
(2003, 2004), which use a combination of scoring rules
and behavioral modeling and correction. However,
we are not aware of any work, with respect to solic-
iting human information, in a planning setting. Thus,
we had little theoretical guidance for designing an
information-soliciting mechanism that integrates with
a planning process.
Financial estimates of opportunities and our like-
lihood of winning them are quantitative information
that the current system can capture. However, it can-
not capture tacit information such as the strategic
value of a deal (e.g., a small project that might lead to
future opportunities). Similarly, managers might have
tacit information about their direct reports. For exam-
ple, two individuals, one from Mexico and one from
Iceland, might be classified as proficient in Java and
be at the same job level; however, they might have
different competencies relevant to a project opportu-
nity. If an opportunity is in Mexico, a resource man-
ager might know that the Mexican employee is more
familiar with the Mexican culture. Although the sys-
tem can capture employee nationality, it cannot cap-
ture knowledge about such cultural competency.
161
Thus, we designed specific tasks in the RP process
so that managers can incorporate this type of infor-
mation into the system. Because most of this informa-
tion is unstructured, we cannot directly incorporate
it into the model and optimize allocation directly in
response. We cannot solicit this information because
we do not know its structure. Therefore, we allow
direct human intervention in the allocation space.
That is, the process allows managers to adjust allo-
cations. We created two specific mechanisms: preal-
location and gap allocation. An individual human
resource is frequently not unique within the RP
system because the person has the same skill clas-
sification and salary levels as some peers. Thus, the
optimization problem that RP solves commonly has
multiple solutions.
In the preallocation mechanism, human managers
are encouraged to input allocations to projects (often
only a subset of all projects being allocated) before
RP finds an allocation solution. If the RP system finds
multiple solutions, it uses these preallocations to iden-
tify the most desirable solution; it uses only preallo-
cations that are consistent with RP optimization.
This process captures additional supply-side infor-
mation such as “the manager knows that programmer
A is more suited to do project X, although his skill
classification indicates that he is equally suitable for
X and Y .”
The situation in which certain positions cannot be
filled is almost as common as nonunique solutions.
This happens whenever more positions than resources
are available. Given the uncertain nature of both sup-
ply and demand, this happens with a probability of
one over an infinite horizon. When demand is larger
than supply (i.e., a gap), RP will optimize the allo-
cation with respect to financial objectives and match-
ing criteria. However, it cannot factor in strategic,
often important, considerations. For example, a small
project in a large account might not generate much
revenue, but could result in a much bigger future
opportunity.
Therefore, we created a gap allocation mechanism
to incorporate missing information. If the system iden-
tifies a gap between available resources (supply) and
positions (demand), it flags the appropriate manager
and lets that manager decide which position should
not be filled; thus, managers can judge the relative
importance of projects beyond their financial impacts.

162
RP Planning Process
In a business environment, how a decision support
tool is used is as important as what it does. In the RP
Downloaded from informs.org by [203.200.225.151] on 18 September 2016, at 06:05 . For personal use only, all rights reserved.
planning process, the process captures both the neces-
sary information flowing into the RP tool and how the
behavioral mechanisms (preallocation and gap alloca-
tion) are integrated into the system. First, we discuss
the roles of resource managers and delivery managers.
Resource manager functions include the following.
• Update demand and supply data into RP in each
planning cycle by (1) entering labor requirements for
new or updated opportunities, and (2) classifying or
updating resources by skills and business domain.
• Preallocate by designating preferred allocations.
• Run the RP planning scenario weekly by (1) de-
fining planning parameters (e.g., hiring bounds, ser-
vice levels), (2) executing the planning scenario
through RP runs, (3) reviewing global metrics (i.e.,
resource utilization and demand fulfillment), and
(4) running RP for unplanned demand, if needed.
Delivery manager functions include the following.
• Review allocation plans. Approved allocations
will be frozen as actions; open allocations will be dis-
solved at the next RP run, and potentially new allo-
cations will be determined.
• Resolve gap. The manger does this through a
manual allocation, by hiring, or by leaving a posi-
tion open.
If HPES wins an opportunity or an unplanned
demand must be satisfied, delivery managers staff
the opportunity or unplanned demand using RP-
approved allocations.
Input
Uncertainty
Demand
and labor supply
forecast
Action RP
Today – 3
Planning horizon
Planning
Soft
Output
allocation and
fulfillment
plan metrics
Figure 5: This diagram shows the implementation of the RP process.
Santos et al.: HP Enterprise Services Uses Optimization for Resource Planning
Interfaces 43(2), pp. 152–169, © 2013 INFORMS
The RP planning cycle (see Figure 5) defines the
planning horizon of RP decisions and the frequency
with which decisions are made. Each decision point
represents a connection between execution and plan-
ning. It is characterized by the current status of the
resources and the expected labor demand for future
periods within the cycle. Then the RP tool optimizes
the resource allocation, transition, and hiring plans to
maximize utilization and matching scores (i.e., mini-
mizes gaps). The user can define the cycle length; we
set it as one week. When HPES wins a project, the
delivery manager executes the allocation and transi-
tion plans. The next planning cycle then starts.
RP Implementation and Benefits
We implemented the MIP model and heuristic pro-
cedure in GAMS (GAMS 2008). For the RP tool, we
developed a graphical user interface (GUI), which
embeds the SDC and optimization modules at the
core. Using the Web-based RP tool, users can access
the tool based on their roles, which can include
read and (or) write capabilities for certain data types
and the ability to run the mathematical optimization
engine. We initially deployed the RP tool at HPES in
Bangalore, India in 2009.
Figure 6 shows screenshots of the allocation plan
and transition plan. The allocation plan advises deliv-
ery managers regarding which employee will be
allocated to which job required by each project oppor-
tunity in the planning scenario (see Figure 6(a)). It
also defines periods of the planning horizons during
Demand Demand
and labor and labor supply Demand
and labor
supply forecast
supply
RP
Today + 3
Today
Execution Planning
Execution
Assignment Soft
Assignment
and project allocation and
and project
schedule fulfillment
schedule
plan metrics
 Santos et al.: HP Enterprise Services Uses Optimization for Resource Planning
Interfaces 43(2), pp. 152–169, © 2013 INFORMS 163

(a) The employee allocation plan

Downloaded from informs.org by [203.200.225.151] on 18 September 2016, at 06:05 . For personal use only, all rights reserved.

(b) The employee transition plan

Figure 6: These screenshots show the RP solution reports of the employee allocation plan (a) and the employee
transition plan (b).
 Santos et al.: HP Enterprise Services Uses Optimization for Resource Planning
164
which the allocation is active. Delivery managers may
approve, modify and approve, or leave open each
allocation in the plan. Approved, or modified and
Downloaded from informs.org by [203.200.225.151] on 18 September 2016, at 06:05 . For personal use only, all rights reserved.
approved, allocations are considered frozen alloca-
tions. The RP tool cannot modify these allocations; it
can only modify an allocation that is left open. Fig-
ure 6(b) shows the matching score of an allocation.
If the matching score of the allocation is less than
100 percent, it will show the type of transition or train-
ing required to make the resource 100 percent quali-
fied for the job.
In comparison to the manual decentralized spread-
sheet approach that resource and delivery managers
used previously, our RP tool has the following advan-
tages. First, it makes RP decisions in a centralized
fashion, thus improving the visibility of the work-
force pool and providing resource economies of scale.
Second, the automated RP process enhances the effi-
ciency and accuracy of staffing decisions. The RP
tool makes proactive decisions by considering var-
ious workforce demand and supply uncertainties
prior to making a decision; the manual approach
was reactive—it made many last-minute decisions
in response to unexpected resource demand or sup-
ply. Moreover, the RP tool’s built-in optimization
functionality enables resource and delivery man-
agers to align their resource allocation decisions with
the strategic and tactical goals and business rules
of HPES. Without optimization, resource allocation
decisions were often made subjectively and sponta-
neously. For example, the managers who requested
first or spoke the loudest often received the resources,
to the detriment of more profitable project opportuni-
ties. In summary, the RP tool provides more objective
and better resource allocation solutions in terms of
HPES internal workforce utilization, staffing cost, and
profitability.
Since its deployment in our Bangalore operation, the
RP tool has enabled resource utilization rates of 90–95
percent, compared with utilization rates of 75–80
percent before its implementation. The Bangalore
workforce of 5,000 is only a small portion of the world-
wide HPES workforce of 100,000; therefore, we expect
significantly more benefit when we deploy the tool
worldwide. We are currently working with our service
business unit for the ES-wide global deployment of RP
tool with suitable enhancements.
Interfaces 43(2), pp. 152–169, © 2013 INFORMS
Conclusions and Future Research
In this paper, we address the workforce optimization
problem in a business setting by using a combination
of optimization mathematics and process design. The
underlying problem involves staffing projects in the
IT service industry using the right people at the right
time and at the right cost. Many firms in the con-
sulting and IT industries encounter similar problems.
We developed our RP optimization model to opti-
mize matching and allocation of employees to jobs in
a set of incoming project opportunities. By treating a
project opportunity at an aggregate level, RP differs
from many existing project-staffing tools that focus
on addressing assignment and scheduling decisions at
the execution level. To increase our billable resource
utilization, we consider workforce transition such as
training, promotion, or redeployment as an alterna-
tive to hiring new employees. To obtain reliable and
robust solutions, we explicitly consider the dynamics
and uncertainty from both the demand and supply
sides. On the demand side, the win probability and
uncertain starting times of project opportunities shape
the demand pattern over time; on the supply side, the
uncertain attrition rate directly affects the availability
of the workforce.
Because of the problem’s size and the need for fre-
quent RP decisions, we devised a two-phase approach
to model the RP problem. In the first phase, we
obtain estimated resource demand by computing the
convolution of random variables given managers’
estimates about win probability, starting time, and
attrition rate. We build buffer capacity into such esti-
mated demand (planned bench) to hedge against both
demand and supply uncertainty, and then enter the
planned bench into the second-phase MIP model to
obtain the optimal resource allocation, employee tran-
sition, and hiring plans. Our approach also includes
a flexible matching method to allow and quantify
imperfect matching between resources and jobs.
In addition, we developed two accompanying
mechanisms to incorporate tacit knowledge and judg-
ment, which the previous acquisition process did not
capture, into our process. Although this is less opti-
mal than incorporating the missing knowledge into
the optimization model, it is a reasonable solution,
given that we do not know the structure of the miss-
ing knowledge.
 Santos et al.: HP Enterprise Services Uses Optimization for Resource Planning
Interfaces 43(2), pp. 152–169, © 2013 INFORMS
The process is built into Web-based software.
This software tool embeds modules for preparing
input data, constructing and solving the optimization
Downloaded from informs.org by [203.200.225.151] on 18 September 2016, at 06:05 . For personal use only, all rights reserved.
model, and generating solution reports. Its Web-based
architecture enables resource and delivery managers
globally to access the tool seamlessly. More impor-
tantly, the shared database provides these managers
with visibility to a database of the global workforce
pool to better support their resource management
decisions. The RP tool fits nicely into the HPES hierar-
chical workforce optimization framework, serving as
a bridge between higher-level labor strategy optimiza-
tion and lower-level scheduling optimization. It offers
functionalities superior to those reported in the liter-
ature, and the workforce planning tools available in
the market for this class of project staffing problems.
Future research can take multiple directions. One
direction is to refine the model to address issues cur-
rently not addressed. For example, delivery managers
manually enter project job requirements, typically
very late in the SOAR process. We are considering
implementing a bill-of-labor process that would pro-
vide an estimation of project job requirements early
in the SOAR process for each project type. We might
also improve the flexible matching scheme to capture
additional soft allocation rules. Another direction is to
develop better mechanisms to solicit human knowl-
edge and judgment and develop the accompanying
models to integrate them into the optimization model.
Companies in other industries, including health care,
public sector, finance, insurance, and staffing agen-
cies, have also shown interest in our workforce man-
agement solutions.
Appendix A. Building the Planned Bench
Let random variable Xi represent the number of people with
a given job attribute (e.g., a certain SG) required by project
opportunity i, and xi be the units required if i is won. Then,
Xi follows a Bernoulli distribution:
( equals 1. A mismatch has two possibilities: a flexible job
p Xi = xi 1
Pr4Xi 5 = i (A1)
1 − pi Xi = 00
Consider now that the starting time of opportunity i is
also uncertain, and let pit be the probability of winning i
and starting in period t. Then, the probability it of having
opportunity i active in period t is:
t
it =
X
pit 1
’=max8t−’4i5+11 19
165
where ’4i5 represents the duration of opportunity i. The
summation ranges over all periods for which, if i starts in
that period, it would still be active in period t. Thus, the
random variable Xit of the workforce required by opportu-
nity i at period t has the following Bernoulli distribution:
(
t it Xit = xi 1
Pr4Xi 5 = (A3)
1 − it Xit = 00
We assume that project opportunities are independent of
each other. Then, we can obtain the total number of workers
with the specific job attribute required by all opportunities
X t as the convolution of Xit over all opportunities:
X t = Xit 0
X
(A4)
i
On the supply side, consider replacement requirements
At as the number of workers who are assigned to ongoing
projects and who leave the company because of attrition in
period t. Let n be the total number of workers assigned to
the ongoing projects, each of whom has a probability of 
(attrition rate) of leaving the company. We assume that At
follows a binomial distribution:
!
t n
Pr4A = k5 = · k · 41 − 5n−k 1 k = 01 11 0 0 0 1 n0 (A5)
k
We compute the distribution of total resource demand in
period t as the convolution of two random variables:
Dt = X t + At 0 (A6)
Appendix B. Computing Matching Score
We calculate the matching score kj between resource k and
job j as follows:
X
kj = a · wa · ƒkja 1 (B1)
a
where a and wa are the scaling coefficient and original
weight of attribute a, respectively, and ƒkja refers to a simi-
larity score between resource k and job j for attribute a.
The HPES resource planners designed and filled out a
survey of the relative importance of job attributes. Then
weights are determined using the scale recommended by
Saaty (2000). For a perfect match, the similarity score
attribute either has or does not have a substitute value. If
it has a substitute value, the similarity score of a substi-
tute is represented by a factional value between 0 and 1.
Otherwise, the similarity score is 0. For example, consider a
flexible job attribute job level requiring a value of INT with
substitute values of ENT and EXP. Under labor-cost reduc-
tion pressure, a resource planner might assign a similarity
score of 0.75 to ENT and 0.25 to EXP (with respect to INT),
(A2) making ENT preferable to EXP (because job level reflects
salary level).
 Santos et al.: HP Enterprise Services Uses Optimization for Resource Planning
166 Interfaces 43(2), pp. 152–169, © 2013 INFORMS

We calculate the scaling coefficient  as follows: KjH : upper bound on number of workers hired for job j.
( K H : upper bound on total number of workers hired. The
a−1 if perfect matching1 hiring limits KjH and K H are defined by a resource planner
a = (B2)
Downloaded from informs.org by [203.200.225.151] on 18 September 2016, at 06:05 . For personal use only, all rights reserved.

based on business conditions and HPES hiring policies.

P
a−1 − wa / f wf if not perfect matching1

where a−1 refers to the scaling coefficient of a’s immedi- C.2. Decision Variables
ate preceding attribute in the hierarchy, and the denomi- The main decision variables of the MIP model are as
P
nator f wf is the sum of original weights of all flexible follows.
attributes. The rationale behind such rescaling is that if a xwjit ∈ 801 19: xwjit = 1 if employee w is allocated to job j
resource misses an important attribute (with a large weight) of opportunity i in period t.
of a job, its matching score for the job should be penalized xwjit ∈ 801 19: •wjit = 1 if employee w starts transition
(reduced). (training) for job j of opportunity i in period t.
hjit ≥ 0: number of people to hire for job j of opportunity
Appendix C. MIP Formulation i in period t.
ƒjit ≥ 0: number of hired people allocated for job j of
C.1. Sets and Parameters opportunity i in period t.
I: set of project opportunities. The following additional derived decision variables are
J : set of jobs. needed.
W : set of available workforce. uwji ∈ 801 19: an indicator, uwji = 1 if employee w is used
T: set of periods in the planning horizon. for job j of opportunity i.
djit : number of workers required to perform job j of yjit ≥ 0: number of people needed that available employ-
opportunity i in period t. Resource and delivery managers ees cannot satisfy.
enter these data as soon as HPES decides to pursue the —jit ≥ 0: inventory of people hired for job j of opportunity
opportunity. i in period t.
pi : win probability of opportunity i. The sales team esti- ”jit ≥ 0: gap or unfilled demand for job j of opportunity
mates and updates this value through the SOAR process. i in period t.
„i : a flag; „i = 1 means that an active opportunity i can
only hire new employees to fill the requirements. It applies C.3. Objective Function
to a technology project that requires new hires (e.g., college 
graduates with a specific skill). min cwU ·
XXX
uwji
ljH : lead time for hiring a worker to perform job j. w j i
We obtain this from historical data.   t 
Qwj : qualification table. Qwj = 1 if employee w is 100 per- +c I ·
XXX
4—jit −ƒjit 5+
XX X
Rw’ −
XX
•wjit
cent qualified to perform job j, 0 otherwise. j i t w t ’=1 j i
QTwj : employee transition or training table. Each entry in T
•wjit +cjH ·
XXXX XXX
the table is the matching score 0 < wj < 1 of employee w +cwj · hjit
w j i t j i t
with job j.
T
lwj : lead time to transition employee w to perform job j.

+c L ·
XXX
It can be computed from historical data or provided by the 6—’—−4t −157pi ”jit 0 (C1)
j i t
best estimates of resource planners.
Rwt : employee release period. Rwt = 1 means that
The objective function (C1) minimizes the total workforce
employee w is released from ongoing projects in period t;
cost (TWC) for service delivery, which consists of five terms.
we derive it from the status of the ongoing projects assigned
The first term is total utilization cost of available employ-
to w.
ees; the second term calculates total cost of idled employees,
cwU : cost of allocating employee w for a job in an oppor-
which includes both the unallocated new hires and future
tunity. We compute it from Equation (C3) with the base
bench (i.e., people released from ongoing projects); the third
allocation cost c0U set to 10 in our implementation.
and fourth terms represent the total cost of transition and hir-
c I : average cost for an employee to be idle. We set it at
ing, respectively; the fifth term calculates the expected loss of
50 in our implementation.
T the unfilled job opportunity period given the win probability.
cwj : cost for training employee w to be qualified for job j.
It is important to stress again that the objective function
We compute it using Equation (C4a).
can be configured to reflect the firm’s resource allocation
cjH : hiring cost for job j; we compute it using Equa-
preference. In our implementation, we enforce that
tion (C4b).
c L : average revenue loss because of a nonstaffed project cL  cH > cT > cI > cU 1 (C2)
opportunity. We assign it a value far larger than the other
cost items. to encode the business rules at HPES.
 Santos et al.: HP Enterprise Services Uses Optimization for Resource Planning
Interfaces 43(2), pp. 152–169, © 2013 INFORMS 167

Consider the number of periods a4w5 for which resource Constraint (C9) keeps the inventory-balancing constraint for
W has been waiting on the bench, and amax as the maximum new hires. X
number of periods for available resources. We calculate the xwjit ≤ —T— · uwji ∀ w1 j1 i0 (C10)
Downloaded from informs.org by [203.200.225.151] on 18 September 2016, at 06:05 . For personal use only, all rights reserved.

cost of allocating w as: t

Constraint (C10) identifies whether an employee is allocated
cwU = c0U + 4amax − a4w551 (C3) for an opportunity (in any of the —’— periods) during the
planning horizon.
where c0U is the base allocation cost. Thus, the longer a
T
t−lwj
resource has been on the bench, the smaller the allocation  t
X X ’
X

cost, cwU . xwjit ≤ 41 − „i 5 · Rw’ Qwj + QTwj · •wjit · Rw1 ’’
A resource who is not qualified for a job, but can be ’=1 ’=1 ’’=1

trained for the job, incurs a training cost higher than any ∀ w1 j1 i1 t0 (C11)
allocation cost of qualified resources. This way of comput-
Constraint (C11) specifies the conditions under which an
ing training cost is consistent with the hierarchy of pref-
employee can be allocated: (1) the hire-only flag must be
erence, which states that a qualified resource should be
off (i.e., „i = 0); (2) an employee is qualified and avail-
allocated to a job before any trained resource is allocated able (the product of Rw’ and Qwj identifies whether an
to that job. Consider a base training cost c0T such that employee is qualified and released from ongoing projects
c0T = max8w ∈ W 2 cwU 9 + 1; the cost of training a resource can before period t); (3) or an employee can be transitioned and
be defined as the product of the base training cost times the available for transition (i.e., released from ongoing projects
T
lead time lwj to train the resource w for job j. Thus, we cal- before the period when the transition starts).
culate the training cost for resource w and job j as follows:
X
 t
X

T
cwj = c0T · lwj
T
0 (C4a) QTwj · •wjit · Rw’ ≤ 1 ∀ w1 j1 i0 (C12)
t ’=1
Similarly, to ensure that the training cost is always less Constraint (C12) restricts an employee to only one tran-
than the hiring cost, we compute a base hiring cost c0H = sition for a job in an opportunity.
T
max8w ∈ W 1 j ∈ J 2 cwj 9 + 1. Then the hiring cost cjH for job j is
hjit ≤ KjH ∀ j1
XX
(C13)
i t
cjH = c0H · ljH 1 (C4b)
hjit ≤ K H 0
XXX
(C14)
where ljH is the hiring lead time for job j. j i t

Constraint (C13) and (C14) limit the upper bound on hires

C.4. Constraints
for a job and overall number of new hires, respectively.
The MIP model includes the following constraints.
X
41 − „i 5 xwjit + yjit = djit ∀ j1 i1 t0 (C5) Acknowledgments
w We thank Babu Rangaswamy and Gopi Madle. Because of
their leadership, vision, and trust in HP Labs, they made
In Constraint (C5), if parameter „i = 1, opportunity i can
it possible for us to deploy the RP tool at ES-BestShore in
only be staffed with new hires; otherwise, Constraint (C5)
Bangalore. We also thank Ivan Lopez for his help in running
allocates available workforce from bench, ramp-downs, or
the RP experiments, and the three anonymous referees for
new hires. XXX their thoughtful comments, which helped to improve this
xwjit ≤ 1 ∀ w0 (C6)
t j i
paper.

Constraint (C6) enforces that each employee is allocated

to at most one job of an opportunity during the entire plan- References
ning horizon.
Abbink, E., M. Fischetti, L. Kroon, G. Timmer, M. Vromans.
2005. Reinventing crew scheduling at Netherlands Railways.
ƒjit + ”jit = yjit ∀ j1 i1 t0 (C7)
Interfaces 35(5) 393–401.
Constraint (C7) states that workforce requirements that Barnhart, C., A. Cohn, E. L. Johnson, D. Klabjan, G. L. Nemhauser,
available employees cannot satisfy may be filled by allocat- P. Vance. 2002. Airline crew scheduling. R. W. Hall, ed.
Handbook in Transportation Science. Kluwer Academic Publish-
ing new hires or declaring a gap. ers, Norwell, MA, 517–560.
ƒjit ≤ —jit ∀ j1 i1 t0 (C8) Bellman, R. 1957. Dynamic Programming. Princeton University Press,
Princeton, NJ.
Constraint (C8) ensures that new-hire allocations cannot Birge, J. R., F. Louveaux. 1997. Introduction to Stochastic Program-
exceed the available inventory. ming. Springer, New York.
Burns, R. N., G. J. Koop. 1987. A modular approach to optimal
—jit = —ji1 max811 t−19 + hji1 t−lH ∀ j1 i1 t0 (C9) multiple-shift manpower scheduling. Oper. Res. 35(1) 100–110.
j
 Santos et al.: HP Enterprise Services Uses Optimization for Resource Planning
168
Chen, K., C. R. Plott. 2002. Information aggregation mechanisms:
Concept, design, and implementation for a sales forecasting
problem. Working paper, California Institute of Technology,
Pasadena, CA.
Downloaded from informs.org by [203.200.225.151] on 18 September 2016, at 06:05 . For personal use only, all rights reserved.
Chen, K., L. Fine, B. Huberman. 2003. Predicting the future. Inform.
System Frontier 5(1) 47–61.
Chen, K., L. Fine, B. Huberman. 2004. Eliminating public knowl-
edge biases in information-aggregation mechanisms. Manage-
ment Sci. 50(7) 983–994.
Demeulemeester, E. L., W. S. Herroelen. 2002. Project Scheduling:
A Research Handbook. Kluwer Academic Publishers, Dordrecht,
The Netherlands.
Forsythe, F. N., G. Neumann, J. Wright. 1992. Anatomy of an
experimental political stock market. Amer. Econom. Rev. 82(5)
1142–1161.
GAMS. 2008. GAMS User’s Guide. GAMS Development
Corporation, Washington, DC.
Gass, S. I. 1991. Military manpower planning models. Comp. Oper.
Res. 18(1) 65–73.
Gass, S. I., R. W. Colins, C. W. Meinhardt, D. M. Lenmon,
M. D. Gillette. 1988. The army manpower long-range planning
system. Oper. Res. 36(1) 5–17.
Gonzalez, M. T., C. A. Santos, A. Zhang, S. Jain. 2009. Flexible
matching method to qualify resources for job requirements
in resource planning tool. HP Labs Technical Report, Palo
Alto, CA.
Grinold, R. C., K. T. Marshall. 1977. Manpower Planning Models.
North-Holland, New York.
Holder, A. 2005. Navy personnel planning and the optimal
partition. Oper. Res. 53(1) 77–89.
Kao, E. P. C., M. Queyranne. 1985. Budgeting costs of nursing in a
hospital. Management Sci. 31(5) 608–621.
Li, H., K. Womer. 2009a. Scheduling projects with multi-skilled
personnel by a hybrid MILP/CP Benders decomposition
algorithm. J. Scheduling 12(3) 281–298.
Li, H., K. Womer. 2009b. A decomposition approach for shipboard
manpower scheduling. Military Oper. Res. 14(3) 1–24.
Pinedo, M. 2005. Planning and Scheduling in Manufacturing and
Services. Springer, New York.
Plott, C. R., S. Sunder. 1982. Efficiency of experimental security
markets with insider information: An application of rational-
expectations models. J. Political Econom. 90(4) 663–698.
Plott, C. R., S. Sunder. 1988. Rational expectations and the aggre-
gation of diverse information in laboratory security markets.
Econometrica 56(5) 1085–1118.
Puterman, M. L. 2005. Markov Decision Processes: Discrete Stochastic
Dynamic Programming. John Wiley & Sons Inc., New York.
Saaty, T. L. 2000. Fundamentals of Decision Making and Priority
Theory with the Analytic Hierarchy Process. RWS Publications,
Pittsburgh.
Santos, C. A., A. Zhang, M. T. Gonzalez, S. Jain. 2009a. Work-
force planning and scheduling for the HP IT service businesses.
MISTA Conf., Dublin, Ireland.
Santos, P., H. Li, M. T. Gonzalez, A. Fuciec, S. Jain. 2009b. Workforce
capacity and capability planning at Hewlett-Packard. Technical
report HPL-2009–239, HP Labs, Palo Alto, CA.
Interfaces 43(2), pp. 152–169, © 2013 INFORMS
Valls, V., A. Perez, S. Quintanilla. 2009. Skilled workforce schedul-
ing in service centers. Eur. J. Oper. Res. 193(3) 791–804.
Yu, G., J. Pachon, B. Thengvall, D. Chandler, A. Wilson. 2004.
Optimizing pilot planning and training for Continental
Airlines. Interfaces 34(4) 253–264.
Verification Letter
Babu Rangaswamy, Director, Best Shore Application
Services India, Hewlett-Packard, Electronics City, Banga-
lore 560 100, India, writes: “I would like to offer this let-
ter of support for the submission of the research paper
entitled ‘HP Enterprise Services Uses Optimization for
Resource Planning’ to Interfaces, written by Cipriano San-
tos, Tere Gonzalez, Haitao Li, Kay-Yut Chen, Dirk Beyer,
Sundaresh Biligi, Qi Feng, Ravindra Kumar, Shelen Jain,
Ranga Ramanujan, and Alex Zhang.
“In the services industry, optimal use of human resources
involves a fair degree of advance planning with available
data. We have implemented the optimization process, tools
and techniques described in the paper ‘HP Enterprise Ser-
vices Uses Optimization for Resource Planning.’ It is an
ongoing effort to fine-tune the forecast and execution. It
has provided valuable inputs, and helped in continuously
improving the accuracy of this forecast.”
Cipriano Santos is a principal scientist at HP Labs in
Palo Alto, California. During his 22 years at HP Labs he has
participated on several applied research projects developing
mathematical programming models and decision support
tools for Supply Chain Management, Customer Relation-
ship Management, Optimal Resource Allocation for Large
Data Centers, large scale Workforce Planning tools for the
services industry—including tactical resource planning, air-
line dispatcher workload distribution optimization, and
anesthesiologist allocation at operating theatre. Pano won
the prestigious 2004 HENAAC (Hispanic Engineer National
Achievement Awards Corporation) award for outstanding
technical achievement. In 2005 and 2008, he was nominated
among the most important Hispanics in the U.S. by the His-
panic Engineer & Information Technology Magazine. He has
a bachelor’s degree in applied mathematics from the Uni-
versity of Mexico (UNAM), and master’s and PhD degrees
in operations research from the University of Waterloo in
Canada.
Tere Gonzalez is a software architect at HP Labs in
Palo Alto, California. She specializes in business analyt-
ics services and collaborative frameworks for decision sup-
port systems. She has participated designing methods and
components in optimization, forecasting, and simulation for
workforce and healthcare planning tools. Her interests are
in developing machine learning and text mining solutions
for search, learning and recommendation problems. She
received a master’s degree in information technology from
Monterrey Institute of Technology and Higher Education.
 Santos et al.: HP Enterprise Services Uses Optimization for Resource Planning
Interfaces 43(2), pp. 152–169, © 2013 INFORMS
Haitao Li is an assistant professor of logistics and opera-
tions management in the College of Business Administration
at University of Missouri–St. Louis. His research interests
Downloaded from informs.org by [203.200.225.151] on 18 September 2016, at 06:05 . For personal use only, all rights reserved.
focus on optimization modeling, simulation, and algorithm
design, in application areas of project scheduling, supply
chain design, and workforce optimization. He worked as a
statistical analyst at the Naval Personnel Research, Study
and Technology (NPRST) in Millington, TN, and was a vis-
iting scholar at Hewlett-Packard Laboratories (HP Labs) in
Palo Alto, CA. He holds a bachelor of engineering in foreign
trade in industry and aeronautical engineering from Beijing
University of Aeronautics and Astronautics, P.R. China, a
master of arts in economics and a PhD in production and
operations management from the University of Mississippi.
Kay-Yut Chen is a principal scientist at Hewlett-Packard
Laboratories. He started behavioral economics research at
HP Labs, a first in a corporation, after he received his PhD
from Caltech in 1994. He is one of the first researchers to
apply behavior economics to business issues in areas such
as supply chain contracting and human-based forecasting.
His work has been featured in many popular publications
such as Scientific American (2006), Newsweek (2003), The Wall
Street Journal (2000), Financial Times (2002), and others. He
is the author of the book, The Secrets of the MoneyLab, pub-
lished by Portfolio in October 2010.
Dirk Beyer is the chief scientific officer at M-Factor, a
software company providing marketing investment man-
agement solutions. He has more than 13 years of experience
in the design and development of analytical tools and appli-
cations. Before joining M-Factor, he held a position of prin-
cipal scientist and research manager at HP Labs. During his
tenure there, he worked on a variety of projects in the fields
of marketing, supply chain management, as well as com-
puter infrastructure management. He has taught courses in
statistics and operations research at Leipzig and Cottbus
Universities in Germany, and York University in Toronto,
Canada. He holds a master’s degree in education and a PhD
in operations research from Leipzig University, Germany,
and he has authored more than two dozen scholarly papers
and has 30 patents issued or pending.
Sundaresh Biligi is a country manager from HP India
who has a wealth of experience in management and strat-
egy consulting, building emerging technology practices like
Business Technology Optimization, and delivering large
multimillion dollar outsourced–best shored deals in HP.
He holds an MBA in finance and a bachelor’s degree in
engineering.
Qi Feng teaches operations management at the Univer-
sity of Texas at Austin. She has worked with HP in research
and development in the Business Optimization Lab since
2004. Her research focuses on supply chain management,
contract negotiation, economic growth theory, and system
169
maintenance policy. She earned a PhD in management sci-
ence at the University of Texas at Dallas in 2006.
Ravindra Kumar is affiliated with the HP Enterprise
Business, Bangalore, India.
Shelen Jain is a distinguished technologist and research
manager at HP Labs. At HP, Shailendra established and
managed the Decision Technology Department—a group of
applied researchers focused on business process innovation
through analytics. He has led business analytics projects
in several areas, including inventory management and pro-
duction planning, forecasting, marketing spend optimiza-
tion, product variety management, workforce optimization,
post-sales services design, and pricing optimization. He also
established HP Experimental Economics program and Auc-
tion research program at HP Labs. Most recently, the success-
ful deployment of tools for product variety management, in
several businesses of HP and the resulting business bene-
fits of over $500 million have been recognized by the Edel-
man Prize of INFORMS for HP during 2009. The opti-
mization technology development and deployment for this
project was led by him at HP Labs. Currently, he is leading
the applied research efforts of HP Labs in service innova-
tion area, with specific emphasis on work-force planning/
optimization, advanced analytics solutions for healthcare
vertical, and support services design and pricing. He rep-
resents HP on INFORMS Roundtable. He holds a PhD in
management science from UCLA and master’s in industrial
engineering from IIT, Delhi.
Ranga Ramanujam has been heading Information Sys-
tems Group at HPGS and BAS India Cluster for the last
10 years. Ranga specializes in envisioning and implement-
ing Enterprise IT solutions to business situations. He also
specializes in architecting user-friendly and error-free large
volume data handling and application integration. He has
implemented supply chain and optimization solutions in
various areas like raw material procurement in large steel
plants and distribution and manufacturing optimization in
large FMCG organizations. He has also developed resource
planning and optimization solutions in collaboration with
HP Labs in Enterprise IT Services at HP with a huge poten-
tial for HP’s software and services businesses.
Alex Zhang is a principal scientist at HP Labs in Palo
Alto, California. He specializes in mathematical and sta-
tistical modeling and optimization approaches in business
analytics. His interests are in developing practical methods
and software tools for solving problems in business perfor-
mance analysis and optimization, customer behavior mod-
eling, and demand prediction. He has been involved in a
variety of projects with HP business divisions in supply
chain optimization, data-based customer relationship man-
agement, and IT consolidation. He received a PhD in indus-
trial engineering from Stanford University.