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SmartAdvice: ERP Systems Move To Professional Services

Match ERP tools with your business strategy and chose an industry-tailored system, The Advisory Council says. Also, align network-support staffing levels first with network-management processes and network-planning and -architecture processes, then with technical specialties.

Editor's Note: Welcome to SmartAdvice, a weekly column by The Advisory Council (TAC), an advisory service firm. The feature answers two questions of core interest to you, ranging from career advice to enterprise strategies to how to deal with vendors. Submit questions directly to

Beth CohenQuestion A: What enterprise-resource-planning options are available for a professional-services organization?

Our advice: Large vendors such as SAP and Oracle have been pushing comprehensive ERP systems for years, and these systems have a long history of successful implementations at many major companies. Nevertheless, ERP systems have a reputation for complexity and for a manufacturing bias. Still, the growing services sector has just as much need as manufacturing for comprehensive tools and in-depth analysis capabilities.

As the U.S. economy shifts from manufacturing to services, the tools need to change to match the new business models. Companies that provide consulting or other types of billable services, rather than tangible products, need to track billable hours and other intangibles. There are a variety of methods for pricing and billing project work. For example, a cost-plus project will have a very different set of requirements than a fixed-price contract. In the first case, a services company will want to maximize billable hours, while in the latter case, the objective will be to minimize them.

Consider who will need to review and manipulate the data. Each role in the organization has a unique project perspective. Program managers often will need full control, including the ability to change project projections, while staff only needs to be able to record billable project hours, and accounting needs enough access to build the company cash flows from aggregate project data. A typical professional-services business often will have few assets, yet must keep close track of staff billable hours to remain competitive.

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Each project must be tracked and billed separately. Government project work has an additional set of challenges because of stringent audit requirements. Services companies often need to run forecasts and what-if project scenarios and to modify renegotiated total costs as a project evolves.

Since an ERP system often is expensive and complex to deploy, it's important to understand your motivation. What problems need to be solved? For example, using the system to improve project profitability by analyzing historical data from similar projects is a very different animal than a need to optimize current staff deployments. What goals are you hoping to achieve? Do those tools match your overall business strategy? If you mostly service high-volume cookie-cutter projects, you'll need different information than if most of your work is research contracts. Find out about the history of a tool before plunking down a couple hundred thousand dollars. Many available systems originally came out of the construction industry. This isn't necessarily bad, but it does mean that the system has an underlying bias. You might be better off choosing a system that's popular in your industry, because the vendor will more likely have already encountered many industry-specific issues.

Look for systems that are project-oriented and have tools for tracking billable hours and to produce project what-if projections. Base your decision on your comfort level with the product and the vendor, since you'll be living with it for many years.

-- Beth Cohen

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