Enterprise Resource Planning – or ERP systems – are well known for their ability to help growing manufacturing and distribution companies manage sales, inventory, and finance. But what about project based businesses like professional services companies? Can those SMBs benefit from an ERP system as well?
In a recent webcast China Martens, Analyst at Forrester Research, tackled this question. This post summarizes the key points. The full webcast is available for viewing here: http://bit.ly/PknCbK
Unlike product-based businesses, professional services firms are project-based businesses that derive all or a large proportion of their revenue from managing external projects for their customers. They are different from product-based businesses in that they have a different organizational structure and the success (or failure) of projects depends heavily on the performance of full-time and/or contract staff. Additionally, they have a different set of key performance indicators (KPIs) than other companies.
That said, project-based businesses also have unique needs including, for example, the need to allocate resources (particularly staff) optimally across multiple projects, deliver consistent customer experiences and replicate successful projects, among others. But China Marten’s research finds firms suffering the most pain have no formal ERP system in place or have a mix of poorly integrated typically off-the-shelf applications. These underperforming firms use a mix of documents, spreadsheets, and email that aren’t integrated, don’t scale and don’t allow the firm to gain an overall view of their enterprise. The bottom line is: These firms lose business, and/or end up going out of business.
However, successful firms with project-based ERP systems are quite the opposite. They are able to capitalize on potential additional project business at existing customers, quickly pull together bids for new projects and adequately plan, budget, and staff up to meet the needs of that project pipeline. The reason is that ERP combines project management, accounting, and human capital management applications thereby ensuring project managers and execs have access to all the relevant project data – from project accounting, resource allocation, to billing and reporting. The benefits of project-based ERP include having access to more accurate and timely project information which enables project managers and executives to be more proactive in decision-making about potential and current projects. This insight and ability to direct resources improves their bottom line and prevents lost revenue.
ERP systems that are specifically designed for SMB professional services firms come with some unique capabilities. They can benefit your firm in three important ways:
- Have the right people on the right projects
- Increase client satisfaction and retention
- Deliver services in a highly efficient manner
Case in point: By using a dedicated ERP Schouten & Nelissen was able to improve delivery reliability and reduce errors in invoices from 10% to 1.5%. CIBER International, based in the Netherlands, also saw similar benefits. CIBER International provides IT services and solutions for private and public enterprises. They were able improve flow of information from territories to corporate office and increase data accuracy and reduce time spent on manual processes. In the end, CIBER was able to improve decision support and productivity to support business growth without adding staff.
Finding this kind of industry-specific ERP solution is not as challenging or as expensive as you might think. When looking, evaluate solutions with embedded best practices. Embedded best practices significantly accelerated ERP time-to-value while targeting the greatest area of business impact first. Also, assess whether the system helps you manage the entire engagement lifecycle and whether the platform is “future-proof”. You may not need it now, but at some point you will need real-time business analytics and mobility integration. Better to buy smart now than rip-and-replace at high cost tomorrow. In the end you’ll have a very robust system to help you grow your business.
