Originally published - March 3, 2008
For many software users and vendors, enterprise resource planning (ERP) systems are well-known software solutions that deal with the many facets of manufacturing. Some industry-standard classifications of ERP solution suites suggest as much: discrete, engineer-to-order, distribution, mixed-mode, and process manufacturing—each of these categories addresses the broad scope of activities essential to the production of various types of goods and the processes involved in getting them to the buyer.
However, it may not be clear to many users (or more importantly, potential users) how the name "ERP for services" relates to the scope of this solution’s functionality.
So how do you know if ERP for services is your ticket to managing your resource needs? And what functionalities
do fall under the rubric of "ERP for services"? And, if your business is in the services sector, is the selection process for ERP for services more difficult than that of other ERP suites? If there are any hurdles involved in choosing ERP for services software, you need to know how high those hurdles are, and how your company can jump over them without tripping up and falling on its face.
ERP for … Which Services, Exactly?
Organizations in the services industries provide their clients with billable services rather than manufactured goods, and they are generally involved in project-based activities. Service organizations include but are not exclusive to
- educational and charitable organizations
- media and telecommunications
- commercial enterprises such as restaurants, and other businesses providing recreation and amusement
- organizations involved in health care and social assistance
- financial and legal organizations, including insurance, real estate, banking, and investment
- IT services providers and IT consultants
Organizations in service industries generally do not need to acquire and allocate vast inventories such as ore, lumber, carrageenan, or copper wire. But attention to resources, and their availability, is no less important to the services sector. Cost, people, and time are the key resources that businesses in services industries need to consider when determining their requirements, in order to provide the highest possible quality of service—and the highest possible level of profit.
Service organizations must manage and track all expenses related to time and people in order to remain profitable (or, in the case of not-for-profit organizations, so that they can stay within budget). To manage people, time, and finances, ERP for services solutions target the functional needs of two streams of service organizations: those that are project-based, or those that are transaction-based.
Project-based service organizations or professional services organizations need diverse project management functionalities as well as other front- and back-office capabilities. Transactional service companies have little or no need for project management capabilities, and would be better served by solutions with back- and front-office functionalities that address the companies' industry-specific needs.
- Accounting modules help address back-office financial management needs, including budgeting, financial analysis, reporting, compliance, and general ledgers.
- Customer relationship management (CRM) solutions can include opportunity management, enterprise marketing automation (EMA), campaign management, partner relationship management, customer service and support, customer accounts, sales management, and sales analytics, to help meet the needs of transactional services organizations.
- Human resources (HR) functionalities deal with the people and staffing needs of both project- and transactional-based services industry organizations. These HR functionalities may include hiring, skills set and competency mapping, project tracking, and training.
- ERP for services marketed for either project- or transaction-based companies may also support functionalities from business intelligence (BI) software, document management systems (DMSs), as well as security features for document or data management or for Internet-based functionality.
Jeepers, Creepers—Where’d You Get Those Functionalities?
"ERP for services" may resist being pinned down for another reason: the dreaded "brand creep." This phenomenon, which involves a product's gradual shift from one branding image or identity to a new one, can also be called "product scope creep," "feature creep," or even "featuritis," depending on the software programming or design or the marketing situation in question (in the IT industry, the evocative "software bloat" has been used to describe a similar phenomenon).
ERP for services, a relatively new addition to the ERP spectrum, has been "creeping" into the picture as some traditional ERP vendors are making efforts to appeal to non-manufacturing markets. One example can be found in
Oracle, a well-known ERP vendor: the vendor now offers its
E-Business Suite, as well as the JD Edwards EnterpriseOne and
PeopleSoft applications, to meet the diverse demands of services industries.
ERP for services may seem, to the uninitiated buyer, like an unwieldy agglomeration of functionalities from ERP and from
project portfolio management for professional services automation (PPM for PSA). ERP for services is not a rebranding of either traditional ERP solutions or of PPM for PSA. The functionalities of the solution suites, however, are easily confused—and not always clearly branded. This makes it all the more important that prospective buyers of ERP for services solutions take sufficient time to research vendors and solutions, as well as to determine the needs of their companies from both internal and industry perspectives.
So, what is the real difference between ERP for services and PPM for PSA? To summarize, both PPM for PSA and ERP for services provide functionality in three key areas: CRM, financials or accounting, and HR. ERP for services is more or less an ERP for manufacturing suite, without the manufacturing functionality (such as
bills of materials [BOMs], manufacturing processes and flow, and manufacturing projects). In ERP for services solutions, these manufacturing functionalities are replaced with project management and
project portfolio management (PPM) capabilities, particularly for solutions that are meant to address project-based service organizations. How exactly PPM for PSA differs from its alleged "rebrand," ERP for services, may have as much to do with what a given vendor wants to offer as with any qualities or characteristics inherent to the solution itself.
Additional reason why it’s crucial that you know exactly what your business requires from a solution—and that you carefully compare solutions to see which one best meets your selection criteria.
Is an ERP for Services "Best of Breed" Really Just a Badly-behaved Mongrel?
Depending on the vendor's target market, the functionalities in an ERP for services solution may cater to a specific services industry. How many features or functionalities come from a given back- or front-office module or suite—for example, whether an ERP for services solution includes all possible modules or functionalities from CRM, or is limited to a few (sales process management, lead management, or client contract management)—may also be at the vendor's discretion. Generally, solutions that are very broad in scope and that come prefabricated with a specific set of modules or functionalities are implemented "out of the box." Essentially, users take what they get, whether or not they really need every single functionality the solution offers.
Some buyers or users have attempted to "find their way out of the box," so to speak, by combining best-of-breed modules into a composite solution (whether it consists of one or many modules). Users can pick and choose modules or functionalities from amongst the offerings of any vendor on the market, and implement those modules or functionalities piecemeal, or integrate them with a legacy system. Users particularly concerned with a solution meeting the specific needs of their industries often opt for this best-of-breed approach.
However, the term "best of breed" may also be misleading. For many unsuspecting potential buyers, "best"—as a superlative—denotes the highest-quality or most successful software (the "breed") available. Vendors using "best of breed" to market any product lines no doubt like this misconception, as it allows their products to be construed as better than every other solution available. Potential software buyers should be aware that "best-of-breed" does not exist in isolation, and does not (in fact, cannot) exist independently of a business's needs—which is to say that "best" really refers to the solution that is best for a given user, and not the solution that is the best for
all users. Any organization, in the services industry or any other, has far too many criteria for one solution to suit its needs perfectly.
But increasingly, vendors are getting wise to these selective—and increasingly select—user audiences. Approximately eight or ten years ago, vendors started providing what were then called (and are still sometimes called)
pre-integrated solutions, claiming they provided disparate functionalities in one trim and easily implemented package. Pre-integrated solutions resemble the best-of-breed composites in their appeal to the specificity of an industry, but provide the convenience of an out-of-the-box implementation (at least, in so far as the time that doesn't need to be spent choosing modules or functionality).
Epicor's Senior Living Solution (SLS) is one such pre-integrated ERP for services solution that seems to combine the best-of-breed with the out-of-the-box approach (though in fact, on the company's web site, the solution is categorized under PSA). This SLS ERP for services solution has been assembled expressly for the growing needs of the aged care services sector. It includes key functionalities from CRM, HR, and financials software, as do most ERP for services solutions implemented out of the box. But it also offers functionalities that allow users to manage government funding, and a singular
Waitlist Management module that (among other things) matches residents with suitable accommodation.
On the surface, such best-of-breed/out-of-the-box solutions seem to eliminate the hassle of integration. Such solutions targeting highly specialized industries, such as the growing aged care market discussed above, may become highly sought by services organizations. But, in the end, getting
your "best" of the "best of breed"—so you don't end up with an ankle-biter that trips you up on its short leash every time you take it for a walk—depends on how well you define your needs before you go looking for a solution.
Which is Best for You: ERP for Services Out-of-the-Box or Industry-specific Best-of-Breed Solutions?
Whether you need an out of the box or a best-of-breed depends on three main considerations: your budget, your functional requirements, and your industry.
- ERP best-of-breed services solutions are targeted for small to medium businesses (SMBs); solutions that are implemented out of the box may be too large in scope for smaller businesses.
- You can build your own best-of-breed ERP for services solution to focus on the specific needs of your industry.
- ERP best-of-breed solutions can be more flexible, as they can have as many or as few functionalities as the user requires or wishes to install or implement.
- ERP for services solutions implemented out of the box provide broad back-office functionality that can be integrated into almost any industry.
Whichever solution you implement, one key benefit of any ERP for services solution is its potential to augment visibility, streamline and automate business activities and workflows, and increase the accuracy of the information you need to make critical decisions.
But any benefit will be difficult to achieve if you don't have a clue where to begin looking for an ERP for services solution. There's no reason to shoulder the entire responsibility of software selection all alone. And in fact, there are many reasons why any lingering crisis of identity over ERP for services should have you running for help:
- Compare and contrast the functionalities of a best-of-breed, a pre-integrated, or an out-of-the-box solution in order to determine which best suits your needs.
- Determine whether your organizational needs would be better suited by an accounting ERP for SMBs or by an ERP for services solution.
- Evaluate whether a solution is what it says it is, or if it offers the functionality it claims to offer—or whether it is a creepy, bloated version of its former, functional self.
- Compare the functionalities of vendor solutions that claim to be PPM for PSA with the functionalities of ERP for services.
- Determine which vendor will provide the implementation services you need.
Thorough research and a meticulous comparison methodology will help ensure that you choose a solution that is right for you, whether best of breed or out of the box. And, a careful software selection process can help ensure you don't end up with a mongrel solution that pees on the rug and chews up the furniture—the last thing you need is to waste time and other resources enrolling your new ERP for services to obedience school for dysfunctional, unmanageable software (in other words, asking the vendor to come back time and time again to tweak the solution to better fit your requirements).
About the Author
Jane Affleck joined the TEC writing and editing team in August 2007, shortly after completing her MA. As a research analyst, she is a contributor to the TEC blog, and has had one previous article published with TEC on customer relationship management (CRM). Prior to joining TEC, she worked as a freelance writer, editor, researcher, and teacher for over ten years.