GUIDE: What are the steps to choose an ERP for a service company?

Despite a service company's desire to acquire an ERP, three fears regularly disrupt the purchase decision: acceptance by the teams, fear of change and a complex deployment fear.

A detailed analysis of your needs and of what the ERP systems you are comparing will allow you to better align your specific needs with the functionalities offered by the tools, and will ensure that you overcome these three difficulties inherent to such a change.

By following this guide, you will be able to accurately assess each step of your processes and ensure that you identify the best ERP for your service company. Let us guide you step by step.

 

SUMMARY

Quick access : Benefits and steps

The advantages of an ERP for professional services companies

All teams save time in their work when an ERP is implemented:

- Employees can find all their actions in the same tool. Depending on their rights, they can access their projects, their time tracking, their schedule, their expenses and absence management. In addition to saving time by having everything on a single platform, the employee experience is also simplified

- Support teams, finance teams and management perform their monitoring, validation and control tasks on a single platform. Notifications and tasks are centralized, which makes it possible to move forward more quickly

A service company that uses an ERP adapted to its business, increases tenfold the visibility on its performance.

Precise knowledge of project margins. Anticipation of projects that are going off-budget. Visibility on the utilization rate of collaborators (time spent on billable projects).

The numerous indicators on the past and projected performance of the company allow to quickly improve the situation by knowing where the improvements are, and gaining anticipation in the decisions.

The ERP in a service company connects all the teams, but also the stakeholders of the projects on which the company works. The ERP is a central solution on which all actors connect and share information. This connection brings efficiency in the work and a better quality to the projects.

Step 1

Narrowing the field of possibilities

When you start your search for an ERP, make sure you identify solutions that are truly dedicated to your business. If you are a consulting company for example, do a specific search for an ERP dedicated to consulting companies. There are indeed ERP solutions dedicated to all types of businesses and it is not uncommon to find the ones that are best suited to your needs.

For this initial analysis, a thorough search on the internet is sufficient. There are software comparators, and especially Google, which allows you to identify the solutions most aligned with your needs.

Generally, the ideal search should narrow the analysis down to a number of 3-5 solutions. It may not be very productive to search beyond that number, as chances are that the initial analysis will allow you to narrow it down.

Step 2

Prepare your specifications to compare ERPs

To make a foolproof comparison and make the best choice, you can create a benchmark document to review all the topics that matter to your company. To make your job easier, we have listed the different topics to review, and the questions you can ask.

1. The main points to study on the functionalities

Management of the planning and resource planning of the teams

A good ERP should give you as much visibility into the past as into the future. Resource and schedule management is the difference between a basic ERP and an end-to-end solution that integrates the key process of resource planning and scheduling that is at the heart of a service company.

It should be verified that the ERP allows:

  • assigning employees to projects and cases
  • to calculate load indicators such as staff activity rate, TACI, ...
  • Facilitate the search for profiles based on skills and other criteria (experience, employee preferences, etc.)
  • view schedules, and connect to the calendars of employees
  • calculate production, turnover and forecasted costs of projects thanks to the load forecast
  • flogging employees who are at risk of going on inter-contract

Questions you can ask about this topic:

  • Is skills management integrated?
  • Can employee preferences be taken into account?
  • What are the indicators that allow for better load management?
  • Can employees be easily assigned to projects and tasks?
  • How can we script resource planning on projects that have not yet started?

Project management and margin calculation

ERP should provide your company with complete visibility into business performance.

The points to check are as follows:

  • Monitoring of all costs (staff, subcontracting, purchases, expenses)
  • Calculation of the turnover adapted to the type of invoicing (fixed price, management, subscription, ...)
  • Calculation of margins to date and to completion of the project
  • Gap analysis between project production and invoicing
  • Gap analysis of time spent on the project, on project tasks, by person

Questions you can ask about this topic:

  • How is revenue recognition managed?
  • How are project margins calculated?
  • How is unbilled production reported?
  • How are subcontracting costs tracked?

Global and activity-based reporting

An ERP for a service company must provide all the necessary indicators to improve the company's performance and facilitate decision-making.

Ensure that the following indicators are included in the reporting:

  • utilization rate, staff activity rate, TACI
  • Production in days and value
  • Sales and margins per project, per department, consolidated
  • Average Days Rate
  • Profit and loss accounts
  • Cost analysis and invoicing of subcontracting
  • Analysis of time spent by type of activity

You can ask the following questions:

  • How is the time spent on billable projects calculated in relation to the time available?
  • How do you value the production?
  • How does the solution differentiate between valued production and revenue?
  • What reports do you provide to check if the pricing is good?

Project billing

Centralizing invoicing in the same tool as activity monitoring allows for automated invoicing, more reliable data, and easier analysis of variances between production and invoicing.

Important points to see about billing:

  • Ability to invoice projects on a fixed-price basis, on a contract basis, on a subscription basis, etc.
  • Bulk sending of invoices by email
  • Customization of invoice templates
  • Follow-up of unpaid bills and automatic reminders
  • Sending billing data to accounting solutions

Questions you can ask:

  • How is billing automated with the available data?
  • How are unpaid bills handled?
  • How can I connect an email address to the ERP for sending invoices?
  • How are variances between planned, produced and invoiced analyzed?
  • How is billing data extracted and transferred?

Other useful features

An ERP for professional services companies must centralize a maximum of functionalities to automate the tasks and to exploit the data as well as possible. It is necessary to check the capacities to manage the following functionalities:

  • Expense management and chargeback of billable expenses
  • Absence management with connection to HRIS software
  • General purchasing management
  • Management of subcontractor invoicing

Questions to ask:

  • Are fees managed, via a mobile app with data recognition?
  • How is the chargeback managed?
  • How do you manage the different types of absences?
  • Can we manage purchases and supplier invoicing?

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2. The major points to study on deployment

The success behind the implementation of an ERP

The success behind an ERP implementation for a service company lies in the ability of the deployment teams to deliver change. Knowledge of the use cases and full mastery of the solution is a key success factor among others.

Key points to know:

  • Quality of support
  • Cost of support
  • Import management and migration of historical data
  • Management of user and administrator training, ...
  • Customization and specific developments

Questions to ask about ERP deployment and integration include:

  • How is the deployment of the solution going?
  • Are the integration teams internal or external to your teams?
  • What is the level of support, what is the time spent by the ERP editor's teams and by the customers' teams?
  • How does the data recovery work?
  • How do you set up connectors with other software?
  • What are the trainings done before the go-live?

3. Generic points about the company

Its policy in terms of security

Finally, choosing an ERP for a professional services company also means choosing a vendor that must demonstrate its ability to maintain the ERP over time and provide the technologies necessary to continue to make it attractive. The ERP vendor must also prove its resilience, its compliance with personal data processing standards, and its actions in terms of cybersecurity.

Things to watch out for:

  • Hosting and location of customer data
  • Rights and access management
  • RGPD policy and respect of personal data
  • Action to ensure security and prevent intrusion attempts

Questions to ask:

  • Where are your servers located?
  • What data is transferred outside your hosting sites and to which countries?
  • How do you ensure compliance with the GDPR?
  • What protection measures have been put in place: pentests, data encryption, etc. to reinforce security?

Step 3

Go to the demos and fill in your file

With all these points, which you can also complete, you can create a specification and a comparison file.

List all the points that you feel are important to review during vendor interactions. In the column, list the different ERP vendors you plan to analyze.

Complete the file as you go along, leaving comments to remind you of the answers given on the different topics.

You can apply a scale with a weighting to better rank the different ERP solution providers.

At the end of this work, you should be able to clearly see which solution is the best and has the best alignment with your needs.

Our team is here to help you throughout the process if you wish.

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