By Brian LaMee, Vice President Product Marketing at Deltek.
Why Your Business Will Benefit From a Project-Based vs. Generic ERP
As a project-based business, you have unique needs and requirements. Not only is the type of work you do unique to a project-based company, but the solution you choose to power your business should be dynamic enough to provide visibility into the various dimensions of your business. Many Enterprise Resource Planning (ERP) systems try to meet the needs of all types of businesses and provide the functionality to cover as many bases as possible, but that approach isn’t always effective.
That’s where the term Generic ERP came from. It represents an ERP solution that’s generic enough, in theory, to work with any type of project-based business, but inhibits the ability for customization, especially without the use of third-party bolt-on components. The result is a one-size-fits-all software solution that doesn’t truly fit. Companies are moving away from these types of generic tools to very specific industry applications built for the task at hand.
Why You Need A Project-Based ERP
ERP systems are designed to integrate an organization’s business information, including finance/accounting, customer relationship management, management accounting, procurement, human resources, budgeting, sales order entry, materials, and manufacturing. In a sense, they’re designed to manage the entire business process for an organization. Now, here’s the catch: As a project-based business, your process is much different than that of a manufacturer that makes and ships bicycles, for instance. So, how can two companies use the exact same tools when their businesses are so different? The answer? They shouldn't!
Think of this another way. A family of five planning a family-friendly road trip and a farmer needing a dependable, heavy-duty vehicle for the farm will not have the same automobile requirements. One will probably look for a comfortable minivan or SUV while the other will probably look for a powerful pickup truck. So, why would we think software is any different when we know that some tools are designed for some jobs and not others? That’s why an ERP system designed for projects looks completely different than an ERP system designed for bike manufacturers.
A project-based ERP system will contain the components to help you manage the entire project lifecycle, including:
- Customer Relationship Management (CRM) – Identify and win new projects
- Estimating – Build accurate project estimates using historical data
- Finance and Billing – Manage billing nuances of the client and the project
- Project and Resource Scheduling – Assign the right people to the right project at the right time
- Reporting and Analytics – View the whole project portfolio to get the information you need
- Talent and HR – Attract and retain the core of your business
- Time and Expense – Capture actual costs against projects
When you have a tool that can help manage and view the entire project process within your business, you get to take advantage of the next important part … really understanding your projects.
Peeling an Onion Without Any Tears
Let’s look at a key advantage of an ERP system designed for projects. Everything is tracked at the project structure level. This is often termed the Work Breakdown Structure (WBS). The project and its structure are the heart of the system.
You may, for instance, want to examine the profitability of your business. You look at the financial statements and compare revenue and expenses to determine the profit. If you then want to increase your profits, you simply cut cost or generate more revenue, right? We all wish it were that easy!
So, how do project-based firms go about it? They “peel the onion” by looking at the individual projects. If you have the ability to view the next level down, you can spot the particular projects that are not as profitable for the firm and consider what action to take.
Was it a fixed-bid project yet more hours were spent on it than intended? Did the client make changes to the project that were not accounted for in the original pricing? Did the demands of the project require that a more seasoned (expensive) employee be deployed? Keep peeling that onion to understand what’s truly going on.
You can also identify the project managers who lead more profitable projects and have them share their advice and best practices.
Because a project-based ERP tracks every aspect of the project, you’ll have the ability to do this type of analysis on the entire project lifecycle. What does the pipeline of new projects look like compared to the current backlog? What does future hiring look like against the current resource gaps on key projects? What does resource utilization look like compared to employee engagement or burnout? You get the idea.
A project-based ERP system, as opposed to a generic ERP, gives a firm unparalleled visibility to win, manage, deliver, and measure great projects. Give us a call when you are ready to learn more.
About the Author
As Vice President of Product Marketing, Brian has spent the last 22 years working with organizations to show them how ERP systems and technology can streamline their business processes and make their projects successful. Connect with Brian on LinkedIn.
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