Why Generic ERP and PSA Fall Short for Services Firms
Deltek recently had the opportunity to interview Bob Anderson, Vice-President and Analyst at Gartner Research Inc., and Warren Linscott, Vice President of Product Strategy and Cloud Operations at Deltek, to get their insight on what is happening in the services sector in regards to Enterprise Resource Planning software (ERP software) and Professional Services Automation software (PSA software). This is first in a three-part blog series that provides highlights from the interview. – and is now available as an on-demand webcast.
Before we take a deep dive into ERP and PSA software designed for service-centric firms, let’s first take a look at what defines a service-centric firm and which industries they represent.
What is a services firm and which industries do they represent?
Services firms can be broadly defined as those organizations that are focused on people and project delivery. Typically the key asset they deliver to their clients are projects or services, as opposed to product-centric organizations that are focused on delivering products to their customers.
The services sector includes a wide variety of service industries which include IT and Management Consulting, AEC (Architecture, Engineering and Construction industries), Media and Advertising Services (e.g. Marketing Agencies), Government Contracting, Legal Services and Accounting Services. The services sector also includes service industries in the public sector such as Education, Healthcare and Non-Profit Services. For more information on service industries visit the Deltek industries page.
The common theme across all of these services industries is that they all have people providing high quality services to clients, usually in the form of projects or engagements. Similar to how product-centric companies have proprietary product IP (intellectual property) to protect, services firms also IP, which is the expertise, innovation and specialized services they provide to their clients.
To grow and maintain a competitive edge, professional services firms must be constantly focused on steering the business to better, more innovative and profitable services. To do so they need to hire and retain the best and brightest talent in their industry and strive to improve knowledge sharing and collaboration across their organization.
So what are the hot trends happening in services today?
“We are seeing tremendous growth in services. In mature markets service industries are beginning to dominate the economy. Today there are more services businesses joining the global economy than any other type of business. There are more services-centric firms on the Fortune 500 today than at any time previously. And not just that, even product-based firms are introducing services. In fact, it’s the fastest growing segment of their business and quickly becoming the most profitable. So service industries are the place to be.”
– BOB ANDERSON, VP AND ANALYST, GARTNER RESEARCH
What’s exciting about the services sector is that it’s a fluid, constantly changing environment. However, at the same time this can be challenging, because in an industry when things move quickly, it can be a difficult environment to predict and manage.
How can services firms use technology as a competitive weapon?
Wherever there is growth and opportunity, there is also competition. So although services industries are experiencing growth and opportunity, they are also experiencing increasing global competition, a war for talented resources, and market disruption. In growth markets, there is always the potential for newcomers to jump into the game and disrupt traditional industry leaders and markets.
To address these challenges, professional services firms are turning to ERP software and PSA software to build competitive advantage. They are also looking to benefit from new technologies like SaaS (software as a service), mobility, social media, collaboration, and real-time, embedded analytics.
"Gartner clients in project-based professional services are leveraging technology to bolster their value proposition and to prepare for the future competitive onslaught.” BOB ANDERSON, VP AND ANALYST, GARTNER RESEARCH
How are services firms leveraging technology to be more competitive?
Services firms are beginning to leverage technology in these three key areas to become more competitive:
- To be more adaptive and agile: They are using purpose-built ERP and PSA software solutions to outflank competitors and be more responsive to their customers.
- To be more efficient and productive: In a service business there are a lot of manual, error-prone, time consuming tasks that take away from adding business value. Purpose-built ERP and PSA software can be used to automate many of these manual tasks.
- To improve the quality of decision making: As the pace of business accelerates, services firms are having to make better decisions, faster. Sound business decision making relies on purpose-built ERP software and PSA software solutions that provide good visibility across the organization and accurate information on-demand.
Purpose-built ERP and PSA software solutions are helping services firms address all three of these areas. To be successful the agility of the underlying business platform is critical, which is precisely why services firms need to use solutions purpose-built for both their projects and their specific industry.
“Of course, there’s been a few ERP vendors like Deltek that have a rich heritage of completely focusing on selling ERP solutions to project firms incorporating things like Professional Services Automation.” BOB ANDERSON, VP AND ANALYST, GARTNER RESEARCH
But to stay competitive in the future, services firms must not delay and put in place these technologies today.
“Services firms need to start putting in place the right ERP and PSA systems today that are able to carry them the distance. Waiting 3 to 5 years could be too late. As I’ve mentioned before, in many cases the solutions that have brought project firms this far are probably not going to be sufficient in the world to come.” BOB ANDERSON, VP AND ANALYST, GARTNER RESEARCH
- Agile Consulting
- Deltek Insight
- Financial Management Consulting
- Growth and Profitability
- Industry Trends Consulting
- KPIs and Benchmarking
- Management and IT Consulting
- Management Consulting
- Organization and Culture
- Project Management Consulting
- Reporting and Business Intelligence
- Resource Planning Consulting
- Talent Management Consulting
- Technology for Consulting Firms