An ERP Guide for Project-driven Companies

Explore the essential ERP strategies for project-driven companies in this guide. Learn to enhance efficiency, integrate operations, and overcome challenges.

James Thomas

Industry Director, Professional Services

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Table of Content

    Enterprise Resource Planning, or ERP, is the management of all the information and resources involved in a company’s operations by means of an integrated computer system. It was first defined by Gartner in 1990 to represent a system to manage traditional distribution and discrete manufacturing organizations with repetitive processes. It first encompassed manufacturing resource planning, or MRP, functions. The first iteration did not support project-driven companies.

    The Evolution of ERP for Project-driven Companies

    The second evolution of ERP began to incorporate project accounting, revenue recognition, and project management functions. But despite this functionality, project-based companies continued to use a multitude of stand-alone systems. Because the project lifecycle is complex, spanning every facet of an organization, these stand-alone systems grew into an unmanageable mess of separate systems and spreadsheets for quoting, estimating, resource scheduling, expenses, and accounting.

    Modern cloud-based ERP solutions emerged to support all project-based requirements including the quote-to-cash process, resource management and talent acquisition, time and expenses, billing, and more. Modern ERP provides real-time business insights, improves efficiency, and seamlessly fuses the front-office project operations with back-office project financials for project-driven companies. Is it time for your company to modernize your ERP?

    Is Your Current ERP System Getting the Job Done?

    When you look at your existing system, are projects central to the system? If not, you may have a lack of visibility and control of project operations and performance. Are you able to make well-timed business decisions about projects? With manual processes, oftentimes project managers must wait for data to be collected, which means issues go unnoticed until something becomes serious enough to put the project at risk. It’s difficult for project managers to make effective decisions with limited and outdated information.

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    Likewise, lack of control over project operations with disparate business processes make it difficult to institutionalize business processes. When data resides on individual laptops or in a project manager’s head, it’s impossible to insert a mechanism of control or analyze data to draw business insights.

    According to ScottMadden, a management consulting firm, a key sign that an ERP system is no longer managing the business well is when manual processes, workarounds and spreadsheet jockeying creep in. “Ineffectiveness also manifests itself in receivables,” says ScottMadden partner George Penton. “Manual processes generate billing issues which lead to customer service issues,” continues Penton.

    ProServ Experts Discussion

    The Cost of Not Upgrading a Legacy System

    Companies will make a significant investment in ERP, but they fail to have a mindset of continuous improvement beyond their initial investment. It’s important to keep the system updated and upgraded with new functionality. It’s a mistake when companies don’t adopt a continuous improvement process to keep systems current. Otherwise, manual processes, workarounds, bolt-ons, or even additional needless investments happen. Perhaps during your initial ERP implementation, when there was project fatigue, phase two never happened. There is a significant cost when you don’t keep your system current. You may have to add employees to manage the manual workarounds or grow your finance team because you’re not leveraging the technology you own.

    The good news with cloud-based solutions is that they update themselves, and therefore always stay current.

    How Do You Know it’s Time to Upgrade? What’s the Tipping Point?

    Project-based companies usually know when it’s time to upgrade based on aging technology or changes in the business. Your team needs to develop a list of requirements and ensure that they align with business goals and objectives and overall growth plans.

    Velosio performs a Business Value Assessment for clients where, through workshops and interviews with the C-suite, SMEs and through to the line managers, the team collects goals for the ERP project. Velosio’s Business Value Assessment then takes the primary project goals and aligns solutions to business outcomes, quantifying key improvement metrics, and creating a clear cost/benefit analysis.

    The key steps are:

    1. Understand Your Strategy: Digest your documented business strategy or facilitate a strategic plan.
    2. Value Strategic Initiatives: Digest or elicit the key strategic initiatives that support your strategy and assign a monetary value to each.
    3. Map to Current State: Map key initiatives to your current systems and identify gaps.
    4. Align with Future-State: Map current-state system gaps to a potential future-state system and validate which gaps would be eliminated.
    5. Evaluate the Value: Compare the business value of an upgrade to its costs to support the upgrade decision process.

    Through this process, Velosio helps project-driven companies identify and benchmark KPIs against competitors. These KPIs are typically: project gross margin, repeatable revenue, net operating income, billable utilization, ID to quote, time to source, and more.

    Six Key Components of Project-based ERP

    There are usually six key components in a project-based ERP solution. Not all these components are always involved but may be.

    1. Corporate financial management
    2. Customer Relationship Management (CRM), sales, and marketing functions
    3. HR management
    4. Professional Services Automation (PSA)
    5. Business Intelligence (BI) – analytics drawn from the fully integrated solution
    6. Procurement – materials and products as part of a bundle with service delivery

    Avoiding ERP Project Fatigue

    To avoid ERP project fatigue, it’s critical to incorporate change management from the start of the project and treat the ERP implementation as not just another tool, but an opportunity to transform how your business operates. Build hype around the project and consider branding it. Print t-shirts to make the project fun and exciting. Remember, end users are worried about job security, so it’s important to boost morale. Keeping end users engaged and informed increases user adoption and avoids “garbage in, garbage out.”

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    Training is also an important part of the project. Classroom training is not right for all the end users. It may be right for project professionals or accountants who may be in the system for eight hours a day, but not for an approver or someone who jumps in to run a report every once in a while. For lighter users, just in time, consumable content may be more appropriate. You should also consider how different generations of workers consume training. Baby boomers may want classroom training, but Gen Z may benefit more from YouTube-like training videos.

    Common Mistakes to Avoid when Deploying an ERP Solution

    The two biggest mistakes we see project-based companies make when deploying an ERP solution are when they attempt to recreate their old system into the new system by replicating old processes, and stumbling when it comes to training. All ERP vendors incorporate best practices into their system, and it’s best to use the system as it comes, without heavy customizations. This is also the best way stay within your budget.

    The second biggest mistake, and we’ve mentioned this above, is taking for granted how people learn and absorb information. System training should be tailored to each person’s organizational role and their learning style.

    Microsoft Dynamics 365 Business Central + Progressus

    Velosio’s project-driven solution, Progressus, is purpose-built for project-based companies and powered by Microsoft Dynamics 365 Business Central. The Progressus solution was crafted to cater to the intricate and dynamic needs of project-based businesses such as Project Accounting, Project Management, Project Resource Management, and Project Reporting. Progressus was built by professional service industry experts who understand the complex requirements of project-based companies. It supports remote work environments and is available 24/7 via the cloud. Together with Microsoft Dynamics 365 Business Central, Progressus includes all six ERP components mentioned above for project-driven companies.

    Interested in learning more? Check out the interview with Consulting Magazine, Velosio, and ScottMadden, where all the information and more is covered.

    To learn more about Progressus, visit the website.

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    James Thomas

    Industry Director, Professional Services

    Follow Me: