Why Choose Project Based ERP vs Generic ERP
Learn the Key Differences Between Project based ERP and Generic ERP
Project based companies have unique needs and requirements and they must be able to view their business from different angles. They need to be able to see the nature of the expense, the resource that performed the work, and for which project the work was accomplished.
A key difference between Project-based ERP vs Generic ERP is that Generic ERP can’t fundamentally understand the project dimension. Projects are truly an afterthought in the system design and will require customizations to the system to make it operate with a project point of view. This will cost you big bucks and will result in a higher total cost of ownership. Project based businesses that attempt this pancake maneuver in their generic system experience poor visibility, manual costing, manual reconciliations, assumed revenue calculations, and manufacturing systems that are not tied at all to projects where the work is being done on.
Generic solutions also struggle to provide common deliverables that are tied to the project difficult or impossible to produce. This means it is impossible to get an accurate view of project status, budgets, costs and profitability. Without a clear picture it’s more difficult to keep projects within budget and on time.
With a true project based ERP system, every single transaction is tied to an account, an organization and a project. It’s this linkage that enables the precise and timely production of project deliverables that are critical to the success of any project based business. These deliverables include financial reports, project status reports, invoices and more.
- Account – The General ledger account that describes the expense. For instance hotel, airfare, labor, or subcontracts are just a few examples. This is sometimes referred to as a chart of accounts.
- Organization – This may describe a department, functional group, or a business line and it describes who is doing the work.
- Project – This is the product or service that is being delivered to a customer or client. It is the central activity that makes the business stay in business. It is where value is created.
These three elements must be linked in order to produce accurate and timely deliverables for project-based businesses. Unlike generic ERP, Project-based ERP is designed from the ground up to be able to do this.
When your corporate and project financial information are tied together through the system you have unparalleled visibility and control of your business that will enable you to make decisions based on current real time information rather than managing through a rear view mirror of the business.
This article is based on content in Deltek’s “Project-based ERP for Dummies”. If you are a project-based company, you will benefit from this complimentary book. This book is a great reference guide and contains valuable and detailed information about how you can improve your firm’s performance and project success with project-based ERP.
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