Consulting firms constantly face the challenge of optimally aligning staff while delivering projects on time profitably. Meanwhile, non-billable administrative tasks like resource management, invoicing and business planning eat up time and attention. While important, these tasks mean lost revenue or foregone personal time. An ERP can minimise administrative tasks for consulting firms while gaining valuable insights to improve realisation rates, project profitability and client satisfaction.
Why do Consulting Firms need an ERP?
1. Strategic Alignment
Consulting firms face stiff competition to attract high calibre staff, and therefore need to provide a good working environment for their employees. By streamlining processes across firms, an ERP ensures that projects run smoothly and safely – a key factor in maintaining morale and secure productivity. In addition, employees can be made more aware of the strategic objectives of the consulting firm, such as analysing client performance or aligning sales and marketing alignment.
2. Sustainable Growth
Significant resources are often invested in setting up an ERP. Thus, attractive functionalities need to be demonstrated to ensure a return on investment. Benefits expected include increased sales, improved cash flow and easier planning. An ERP helps consulting firms target and deliver their goals, showing clients that the company has the ability to develop and deliver more complex projects and add on new work. An ERP is also a good way for consulting firms to control their profitability through better contract management, faster accounting processes, and consistent process execution.
This is a key component of an ERP. Automating business processes can result in improvement in service and efficiency. Smaller consulting firms need to provide multiple products and services to maintain profitability. Hence, process automation can help in maintaining a good client relationship through quality products and services. Moreover, automation can drive employee productivity, contributing to profitability and building competitive advantage.
4. Cash and Revenue Cycle
ERPs for consulting firms provide good financial visibility. More precise financial bookkeeping allows better revenue recognition and forecasting, contributing to improved cash flow. Improved cash flow and forecasting allow engineers to better manage cash flow and provide an opportunity for greater cash management and investing.
5. Data Security
ERPs for consulting firms should prevent data loss and data leakage through reliable backup and recovery. It is important to protect client data and customer information, especially for small consulting firms that have fewer resources for IT security.
6. Easy to Use and Simple to Configure
Consulting firms need to focus on their clients and projects. This requires their ERP to be easy to use and simple to configure. It is also important to consider the company’s culture and philosophy in the design and implementation of an ERP. Another key consideration is the choice of ERP software. Consulting firms should use a software with an open architecture to facilitate integration with other popular software.
7. Handles Multiple Business Processes
Consulting firms need multiple business processes that require automatic execution. Thus, their ERP should be able to manage the entire lifecycle of a project, from project proposal, bidding and winning to project execution and final results. An ERP should also be able to handle finances and expenses, staff (including payroll), and order processing.
8. Easy to Integrate and Customise
Most ERP packages have an embedded data dictionary, allowing seamless integration with other systems. Moreover, many ERPs are based on open architectures, and offer interfaces with other middleware and database products. This makes it easy to integrate the ERP with other software.
9. Reports and Dashboards
An ERP should have pre-built reports as well as the ability to develop custom reports. The reports should be useful in business analysis, decision-making and communication. Management information dashboards should also be built, allowing real-time tracking of the company’s progress and performance.
ERP for Consulting Firms Advantages
By adopting an ERP, consulting firms can gain the following advantages:
1. Simplified business transactions
2. Easy resource planning
3. More effective resource allocation
4. Optimised billing information
5. Improved project tracking
6. Increased production
7. Better cash flow
8. Increased revenue
9. Able to cover project profit
10. Able to cover other overhead costs
11. Project planning
12. More accurate bids or proposals
13. Better management of expenses
14. Improvements in operational efficiency
15. Offering more options to clients
16. Improved visibility into the business
17. Better visibility on projects
18. Better visibility on resources
19. Better visibility on sales
20. Better visibility on admin and operational work
21. Better visibility on project profitability
22. Improved customer service
23. Better staff connectivity
24. Better coordination on projects
25. Able to generate statistical reports
26. Able to generate historical data
27. Able to generate trend data
28. Able to produce profit and loss statements
29. Able to produce cash flow statements
30. Able to produce budget plans
34. Able to generate market research reports
35. Able to generate sales forecasts
36. Able to generate and present hourly statistics
37. Able to generate and present monthly statistics
38. Able to generate forecasts based on historical data
39. Able to schedule staff and work tasks
40. Able to control timesheet data
ERP for Consulting Firms Disadvantages
However, ERPs also come with some disadvantages:
1. The implementation of the ERP may require a change in processes and business procedures.
2. There’s a learning curve in establishing processes as well as customising the ERP to suit the business needs.
3. It requires the adoption of new hardware.
4. It requires additional training and instructions for employees on the new processes and software.
5. It requires us to deal with information that will be fed into the system in electronic form, and not in hard-copy. This requires additional work from the user.
6. It does not support existing paper-based reports and documents system.
7. It might require a new staff member to manage the ERP.
8. It can lead to disruption of work as some processes are modified to enable them to work with the ERP.
9. It can lead to the need for specific people with particular skills to manage the ERP.