How to Select an ERP System for Your Consulting Firm Part 1

ERP for Projects and Engagements

If my experience selecting and implementing ERP software taught me anything, it was that not all solutions are created equal. Enterprise Resource Planning (ERP) and Professional Services Automation (PSA)software solutions can vary dramatically and so can the companies that provide these solutions. I blame the huge and slow moving software companies for perpetuating the idea that an ERP solution has to be clunky, scary, and expensive. As a result, many small and medium sized management consulting firms have come to fear ERP systems, but that doesn’t stop me from shouting, “ERP” from the rooftops!

When consulting firms deliver projects or engagements to clients, another layer is added to the ERP onion. Many firms try to force fit a generic solution that just can’t accommodate the dynamic needs of a project based business. When you use a true project-centric ERP, every transaction is tied to a general ledger account, an organization (department or business unit), and a project. This layering results in precise financial reports, project status updates, resource planning, etc. and ultimately, provides the greatest return for your ERP investment. Let’s agree at the outset that there is an investment associated with the type of comprehensive solution I’m suggesting (as compared to an almost free online accounting tool), but there is an even greater cost associated with the status quo.

Red Flags your ERP System is becoming a Liability

The fact is, many firms stay in bed with software that they should have broken up with years (and in some cases, decades) ago. Let’s face it, there are serious consequences to staying in a dysfunctional relationship for too long. Here are a few I’ve observed from staying too long with the wrong ERP system:

• Projects are difficult to manage due to a lack of good project reporting
• Key business decisions are often based on “guesstimates” due to inaccurate financial reporting
• Systems are disconnected, resulting in a lack of workflow and fractured silos of information
• Project managers are tracking budgets and schedules in spreadsheets stored on their laptops, outside of the firm’s core financial system.
• There’s a lack of integration between finance, workforce optimization, and project delivery causing operational inefficiencies and profit loss.

These issues can hide under the surface, even in successful and mature consulting firms. They may not pose a problem during the good years, but what happens when times get a little leaner and the firm needs relevant information to guide them forward? Regardless of how projects are delivered or how clients are billed, understanding the profitability of individual projects is imperative. What is really working? And what’s not? Sneaky problems can hide in plain sight when business is strong, but how much profitability is leaking out of the firm?

These questions should strike fear in everyone, but many firms don’t think of their operations as one cohesive machine from business development to talent management to project delivery to accounting and back again. Imagine if you did?

Key Ingredients for Project-based ERP Success

If you search, you’ll find plenty of ERP selection checklists, but I found most of them missed the key ingredients for project based ERP success. Here’s the list I made of what’s most important based on my personal experience as a past Director of Finance:

#1 ERP Features and Functionality

Most of the features listed on published checklists are characteristic of all solutions (to some degree), and therefore will not help you differentiate ERP vendor solutions in a meaningful way. I strongly suggest investing time to build your own checklist by going beyond a basic feature list. Remember, you are searching for a solution to solve unique problems in your business. Some problems are obvious, but many are not. To figure out your firm’s specific requirements, take note of the problems that are obvious, but actively search for the ones that aren’t.

How to build your own ERP checklist:

Take a Holistic Approach - Start by understanding the processes that exist in your firm today. Go beyond accounting to understand the whole symbiotic system from business development to project delivery.

Conduct Internal Research - Conduct interviews with multiple users across all areas of the firm and probe - what is working for them and what is not?

Schedule Observations - Schedule time to observe a variety of staff in their day-to-day work; include people from business development, accounting, project management, resource management, and HR. Take detailed notes about the processes they follow and how much time they take.

Prioritize Requirements Once you’ve collected this data, you’re ready to compile your own list of requirements. List and rank these requirements based on input from the ultimate decision makers in your firm. Then start to evaluate which of the available solutions are the most viable.

The work you do in the beginning will help you to gain buy-in from the start of the search. This support is invaluable. Really, I cannot stress enough how important it is to take each step in the ERP selection process in step with the rest of the firm. It is so much more difficult to gain buy-in (and eventually, user adoption) later in the process.

#2 Choose a Partnership

Once upon a time, software was something that we bought and used. End of story. That was before cloud computing and SaaS (Software as a Service) became the industry standard. Software is now almost a living creature with frequent updates and regular upgrades provided as part of the package. This is why the ERP selection process is more important than ever. You are not just buying a tool anymore, you are choosing a partner.

During the selection process you will evaluate features and functionality. Spend at least as much time evaluating the companies that provide these solutions. Look at their websites to get a sense of their culture. What does this solution provider value? Take a look at blogs and articles published by the company, sign up for sponsored webcasts, and attend events if you can. The aim is to gain a genuine and deep understanding of what this company is putting out into the world. Do they demonstrate thought leadership? Do they understand your industry and your pain points? Choosing a partner that you are aligned with will pay off as you scale and grow in sync with the developments they put into their solutions. When you make the best selection, you will co-exist in a mutually beneficial symbiotic relationship.

In part two of this series “ERP Selection Criteria for Consulting Firms”, we’ll talk about ERP Innovation, Implementation, and Customer Service. In the meantime, take a look at some of our other resources:

• Deltek for Professional Services is Changing the Way Consulting Firms Work. Watch one – or the full webinar series.
• New to Professional Services Automation – or want to learn more about it? Click here to download your free copy of the Professional Services Automation for Dummies eBook.

About the Author

Amy Champigny spent more than 15 years working in finance and accounting and most recently she served as Director of Finance for a management consulting group. In 2015 Amy implemented a Deltek ERP and transformed the finance function in her firm.