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The Importance of an ERP System for Professional Services Firms

As a manager or an executive at a professional services firm, have you asked yourself any of these questions in the past year?

  • Is there a way that I can see this month’s billable hours altogether and in real time?
  • How can I maximize talent utilization better and allocate project resources more efficiently?
  • Am I tracking project costs vs. revenue in the best way?
  • Is there a better way to measure performance, cost, and timelines across all projects in real-time?

If any of these questions sound familiar, it might be time for you to consider upgrading your company’s backend systems to an enterprise resource planning system (ERP).

The Problem: Manual and Siloed Systems

There are many moving parts in the typical professional services business, and many challenges as a result.

While there are plenty of tools for solving each challenge, such as project management software for keeping track of client deliverables and time-tracking tools for counting billable hours, each tool addresses a narrow range of needs and fails to fully integrate with the other systems within the business. The result is a hodgepodge of solutions that fail to bring a complete picture of the business or properly work together for the added synergy needed for advanced automation and efficiency.

There is a solution to this larger problem, however. That solution is ERP.

How ERP Helps Professional Services Companies

ERP is company-wide software that handles backend processes-end-to-end and serves as the nerve-center for a business. By collecting data in one place, ERP enables greater levels of efficiency, automation, process standardization, visibility and analytical decision-making.

When ERP was first developed for manufacturing businesses and multinationals, such solutions were expensive and hard to use. But modern ERP is cloud-based and affordable, which is why their use has expanded to all industries and businesses of all sizes. This includes professional services firms looking for efficiency and an edge.

At a stroke, ERP addresses many of the issues that professional services businesses face.

Optimized Staff Scheduling and Allocation

Professional services are all about people. Scheduling these people and making sure they are fully utilized so there are enough expert personnel to handle client needs but not too many on staff is an ongoing challenge.

ERP addresses this staffing optimization need through complete, real-time visibility of both client project needs and the current allocation of personnel to meet those needs. With demand planning capabilities and accurate visibility into current personnel utilization, professional services firms can get the right mix and know when to bring on added resources without waste.

Accurate Time and Expense Tracking by Project

Keeping track of billable hours per person, assigning them to the right project, and breaking down and allocating expenses per project is historically an onerous part of a typical professional services business.

When a professional services firm uses an ERP for time tracking, however, keeping track of billable hours becomes easier and allocation to the right client project becomes automatic. Personnel can have the system automatically log time spent to the correct project, or enter it in the system via mobile device for faster manual logging. 

Automated Invoicing and Collections

Generating invoices based on work performed and ensuring these invoices are paid in a timely manner can be a considerable job for a professional services firm.

With a centralized ERP system, professional services businesses can automatically issue invoices based on work performed, even when invoice calculations and conditions vary on a client basis. The payment status of these invoices also can be tracked and addressed automatically by the ERP system, ensuring that time to payment is within the expected range and no clients fall behind or fail to pay. Invoicing and payment just happens.

Thorough Customer Relationship Management

Personal services businesses are all about relationships, and relationships depend on tracking people interactions and ensuring that all data about a customer or potential customer is accurate and in one place.

Comprehensive customer relationship management requires a full view of both the business and the interactions with a customer, something that ERP delivers but not tools that exist in a silo. Since all data flows directly into the CRM module of an ERP, and this module integrates with every other part of the business, professional services firms can collect and access complete customer records and build automations around it.

Complete Project Management

With multiple clients, and often multiple projects per client, professional services firms need to stay highly organized in order to juggle multiple deliverables, timelines, tasks, team allocations and project resources. Maintaining visibility for effective management in this environment can be hard.

Project management is much easier when everything is tracked within an ERP, however. By serving as a single source of truth for the entire business, an ERP solution helps businesses manage projects much more effortlessly because many of the variables are already captured by the system. Advanced automations built into the system can also reduce the burden of project management for professional services firms juggling many projects at the same time.

Insight into Changing Business Dynamics

Client needs and the specialized industries that professional services firms work in are often dynamic and changing. Professional services firms need to spot these changes early so business models and resource allocations can shift accordingly.

Spotting trends within a business is only possible with good visibility. That requires a complete, real-time picture of the dynamics of a business, something that ERP and only ERP can truly deliver. With all of the firm’s data, and automatic reporting and analytics built in, ERP helps professional services businesses see the forest from the trees and make faster adjustments as business dynamics evolve.

Professional services firms can run without having an ERP system in place. But they won’t run nearly as well.

Learn more about how ERP can help improve the efficiency and visibility of a professional services business.

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