Commentary
7/13/2005
09:33 PM
Commentary
Commentary
Commentary

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 [email protected]


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

Question B: How should we determine the appropriate network-support staffing level for a 10,000-node network?

Our advice: Network organization staffing models should be guided, in our view, by business-process considerations. In this context the Open Systems Interconnection (OSI) Management Framework provides a useful starting point where network management processes are:

  • Fault management -- Detect, isolate, notify, and correct faults encountered in the network


  • Configuration management -- Configuration aspects of network devices such as configuration file management, inventory management, and software management


  • Performance management -- Monitor and measure various aspects of performance so that overall performance can be maintained at an acceptable level


  • Security management -- Provide controlled access to network devices and corporate resources to authorized individuals


  • Accounting management -- Collect network support and usage information, allocate expenses, bill for network services, and prepare financial reports


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This framework has been used primarily to write specifications for network-management software but is equally relevant in the broader context intended here. Separation of work between network operations and network planning and architecture is another important dimension to designing network staffing models.

The process of developing a network architecture can be broken down into six steps:

  • Prepare needs analysis


  • Identify architectural issues and projects


  • Develop architectural alternatives


  • Select optimal alternative


  • Conduct competitive procurement


  • Manage implementation

Since network technology encompasses a wide scope, the work tasks can be grouped into technical specialties, including:

  • Local-area data communications -- LAN, wireless, video (IP multicast), VPN, network management systems
  • Data-communications security -- Firewall, DMZ, antivirus, anti-spam, access-control tools, intrusion detection, network-security standards, network-security monitoring tools
  • WAN -- Routers, WAN services, Internet service
  • Network media -- Cable, wire, outside plant, wire closets

Staffing Recommendations
Staff roles (job descriptions) should be aligned primarily with the five network-management processes and the six network-planning and -architecture processes, and secondarily with the four groups of technical specialties. For a 10,000-node network, we recommend a staff of at least six--a network operations manager, a project management and architecture manager, and at least four network-support specialists.

  • The network operations manager would be responsible for successful operation of the network and for implementing the five network-management processes. This manager would additionally be responsible for performance management of the network-support specialists.
  • The project management and architecture manager would be responsible for successful planning, design, and implementation of all networking projects. This role would include the six architecture process steps listed above.
  • Organizational structure, performance measurement, and compensation should be established after, and conform to, a needs analysis and formal definition of the work processes. Redoing the organization without identifying needs and rethinking processes is best characterized as "rearranging the deck chairs on the Titanic."

    -- Michael Kennedy


    Beth Cohen, TAC Thought Leader, has more than 20 years of experience building strong IT-delivery organizations from user and vendor perspectives. Having worked as a technologist for BBN, the company that literally invented the Internet, she not only knows where technology is today but where it's heading in the future. Her specific expertise includes building scaleable, robust IT architectures, operating systems, desktop support, process improvement, program management, IT/business alignment, security, and integration of networks, applications, and systems.

    Michael Kennedy, TAC Expert, has more than 25 years experience helping enterprises including utilities, universities and financial-services firms develop network architectures and designs that meet business goals as well as develop operationally mature management processes. Founder and president of Network Strategy Partners, a management-consulting firm helping clients make strategic decisions, mitigate risk, and effect change through business- and technology-consulting engagements. He has had more than 200 presentations and articles published and writes a bimonthly column on the business applications of networking technology. He was a financial analyst at Soundview Financial and AT&T, and worked in telecommunications and IT engineering at Bell Labs and IBM.

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