If you manage IT or business projects, you must have heard about demand planning and capacity planning. Two concepts that are often confused, although they respond to very distinct challenges.
On the one hand, demand planning consists in listing and prioritizing everything the company wants to do: new functionalities, evolutions, strategic projects...
On the other hand, Capacity Planning aims to ensure that we have the necessary resources (human, technical, budgetary) to carry them out.
And that's where it often gets stuck.
Many businesses spend time defining their demands, but without checking whether they are realistic based on available capabilities. The result: unsustainable roadmaps, overloaded teams and urgent decisions. Conversely, some companies are focused on their resource constraints without having a clear vision of business needs, which leads to under-exploitation of teams and a lack of value created.
The challenge is therefore to balance these two approaches: to make what we want to do coincide with what we can really do. This is where a good governance framework comes in, with the right tools to manage both demand and capacity.
In this article, we will see The fundamental differences between demand planning and capacity planning, why they are inseparable, and especially how to integrate them intelligently to avoid falling into the trap of unfeasible projects or overloaded teams.
Demand planning (or sometimes demand management) is a process that aims to predict the company's future demand for projects. Its main objectives: to meet customer demand (external as well as internal), and to promote transformation and innovation within the organization.
In short, demand planning consists in collecting the company's future needs in terms of products, services or features. It allows you to channel incoming projects, to be sure to only launch initiatives that have a real chance of succeeding.
We call Capacity Planning, the process of planning the resources required to meet needs already identified. The objective of capacity planning is to ensure that there is enough available capacity to meet demand.
In short, Capacity Planning consists in evaluating and optimizing the available resources (human and financial) to respond effectively to existing or planned demand.
To dig deeper into the subject, go to our article “Capacity Planning: definition and basic principles”.
First of all, these two methodologies are not used for the same reasons.
On the one hand, demand planning aims to anticipate needs of the various stakeholders in the company. The emphasis is therefore placed on forecasting these needs, through an analysis of historical trends and customer behaviors, but also a collection of the expectations of the various actors in the organization.
On the other hand, Capacity Planning focuses on the allocation and management of resources to meet these needs. This approach therefore focuses on adapting available resources to predicted needs. It ensures that the company has enough resources, whether in terms of production capacity or labor, to meet demand.
Who says different methods, says different data to use.
On the one hand, demand planning will be based on historical company data, its forecasts or trends, as well as on the requests received from the professions.
On the other hand, Capacity Planning will focus on The current capacity, its constraints and its projections in terms of workload.
Hence the need to adopt different tools to carry out these two methods successfully.
We tell you more at the end of this article about the tools to design your Capacity Planning - but if you are impatient, you can already discover the Airsaas solution and its macro capacity functionalities.
While these two methods are useful for project management in the company, they do not have the same links with your project portfolio.
Demand planning can influence your projects because it allows you to identify periods of high demand, peak workloads, or deliverables that need to be developed quickly to ensure that the business maintains its competitive edge.
Capacity Planning allows you to ensure that you can execute your projects smoothly, without being held back by a lack of resources.
In short, when demand planning answers the question “What projects should we do?” , Capacity Planning allows you to ask yourself the question “Can we do these projects?”
This is why capacity plan and demand planning are also complementary! Both methods form two sides of the same coin: the balance between needs and resources.
By combining these two approaches, you can maximize the operational efficiency of your organization. Reliable demand planning allows your Capacity Planning to run on solid foundations, while well-managed Capacity Planning ensures that demand forecasts can be achieved without interruptions or delays.
Together, they create an integrated strategy, where demand guides priorities and resources ensure their implementation.
The idea: schedule demand management meetings (or request reviews) every two weeks with IT - Business duos, allowing you to collect demand from the various stakeholders. Subsequently, the elements collected allow you to organize your Capacity Planning over a longer period of time - quarter, semester or PI, depending on the temporality of your organization.
Designing a Capacity Planning requires you to collect all the current and planned demand from your business and then align it with the resources available over the period.
If the method is completely unknown to you, do not hesitate to consult our 7-step guide to designing your capacity plan.
But, if you've already created a Capacity Planning, you know it: running on a single Excel table can quickly become an unnamed headache. Indeed, your schedule must be collaborative, and easily updated according to the fluctuation of demand and resources.
To help CIOs, PMOs and project managers better manage their company's production capacity, we designed the Airsaas Capacity Planning feature.
It's simple: on Airsaas, you design one capacity per team for the period you want: quarter, semester, or PI. So, you focus on the real build of the company.
Each team reports in Airsas the resources they can make available for your projects.
Then simply create scenarios to assess where to allocate your resources according to priorities. A simple step, thanks to the Capacity view, which allows you to see at a glance where your projects are blocking, and what additional resources you need.
Stop wasting your (precious) time on the capacities of the person and the task: opt for pragmatic Capacity Planning with Airsas!
And now that you've fully understood the major differences between demand planning and capacity planning, you're ready to get started with your capacity plan.
Request an Airsaas demo, and let our project portfolio management platform streamline your business transformation.
