There are tons of papers written on the benefit of ERP implementation in manufacturing. The benefit is an accepted fact in the industry, which does not need more convincing. ERP comes in different variants to suit the requirements of different sizes & types of businesses. Even small to medium manufacturing and distribution operations have implemented certain levels of automation of their value chain to be dependable and profitable.
Yet, when you look at companies engaged in services, especially in the creative and professional services sector (referred to in this article as knowledge services industry), level of automation is limited to Excel sheets and email. Some may have invested in stand-alone systems to help with specific functions like accounting and record keeping in human resource management. Others may have tried using project collaboration systems or online sales tracking. However, these point solutions are not connected to each other most of the time. This renders companies exposed to classic operational risks that have been identified and eliminated in the manufacturing sector over the last 20 years or more.
This also makes you wonder, how come the ERP software companies did not try to sell a version of their system to the service companies? Why did the sector resist in using integrated systems for operations management that have several obvious benefits? In fact, several consulting companies developing and implementing ERP systems to manufacturers have not even tried automating their own organizations yet.
After doing some research, the following are some of my findings that explain why this sector shuns the concept of automation:
- The value chain of knowledge services, which produce digital output with no physical raw materials, is very different from those of manufacturing where a lot of effort goes into optimizing the supply chain and inventory level. Typical ERP systems are of little use in this segment, and to cater to this sector a complete rethinking is required.
- The cost structure is also very different in the IP based output. The first copy costs the most, and the incremental copy is of marginal cost. The biggest assets include the company’s brand name and track record, and largest contributor to the company’s expenses is its people.
- Most knowledge service organizations are very lean with very little headcount on the support side of the organization. There is an effort among to deploy almost everyone in some or other billable project whenever possible. This makes it difficult to implement a long rollout as required in typical ERP implementations.
- The number of users varies, depending on active projects and participants across partners, employees, consultants & client side members. The traditional practice of charging for a fixed number of user licenses in not practical in this kind of organizations.
- Knowledge services companies are usually lightly capitalized compared to manufacturing and usually resistant to ideas of big capital investments in systems.
The above factors made it difficult to build and sell integrated automation solutions to knowledge services companies, despite the obvious benefits that everyone is aware of.
Instead, a large number of these types of companies invested in process standardization through certifications like ISO9001 and CMMI. Organizational process certifications are expensive and are quite labor-intensive, requiring hundreds of hours in identifying and mapping different parts of its operations. The objective of getting certifications is to standardize operations, so the best practice and successes are repeatable consistently across projects and teams. Also, investments are made into certification of individuals in their areas of expertise to adhere to best practices, for example PMI certifies PMP for project managers, agile SCRUM master certifications, six sigma belts etc.
However, without automation and integration across different key operations, it’s very difficult to sustain the process standardization. Sooner or later some team or individual veers off the defined course and only gets to be corrected after the damage is done. Lack of automation reduces transparency and increases the risk coming from lack of compliance, which sometimes are even mandatory in certain professional practices.
Majority of companies that invested in process certifications are those involved in outsourcing locally or offshore. The investment in time and money on those certifications were to help reduce risk and also as a selling point to customers who, most of the time, are much larger in size and exhibit higher process maturity than the selling organizations. Some fortune 500 companies have already made certifications a requirement for their vendors. There are substantial investment/subsidy from governments and developmental organizations in developing countries for ISO and CMMI certifications for the companies involved in or aspiring to get into outsourcing. However need for automation across the operation has not received enough attention yet, probably due to the above-mentioned reasons.
Recent technology shifts coming from cloud and enterprise mobility are changing the game and are dissolving the barriers to implanting automation for this segment. The following are some of the answers to the challenges as discussed earlier:
- Integrated solutions specific to the creative & professional services industry needs are getting rolled out over the SaaS (Software-as-a-Service) model. The three key functions of Project Management, Sales & Account Management, and People & Skills Management integrated across the organization over an easy-to-use social layer make an ideal platform for these businesses.
- SaaS removes the requirement for capital expenditure and makes it easier to adopt automation under operational expenses, which can be directly attributed to the specific projects.
- SaaS and Cloud models allow an organization to extend the systems across the organization to employees, consultants and also across the globe. It offers much needed flexibility to assign and remove access/license to extended enterprise participants as per project needs.
- The ability to easily implement the solution across the organization without major training and roll out pains (unlike in ERP implementations before), is typical of SaaS & Cloud systems. Nowadays, you can get your organization start using in days if not in hours
- Cloud powered systems accessed over mobile devices enables users to be on the top of the operations without getting tied down to corporate network and other limitations & IT department costs.
Small to midsize companies can straight away adapt to the best practice and attain process maturity simply by using such a system across their operations, minus the cost and hundreds of hours spend for certifications that they usually incur. Easy visibility of project and collaboration with client’s representatives can give the much-needed confidence for business relations, even if stakeholders are working across the city or across the world. The integrated operations automation approach to boost SMEs towards world-class service delivery can be easier and more cost effective, if done using an appropriate system.
With all the above realities in mind, to empower SMEs in the knowledge services sector, we have developed Xamun, the only system you would need to managing projects, clients and people. We built it after learning from our own experiences in running similar operations over a decade. We believe that through the use of Xamun, leaders in the knowledge services sector can get better control and lower operational risk when managing people and get the freedom to choose where to work from. Ultimately, Xamun enables growth and profitability for your company and a more fulfilling life in general.
Take a 30-day trial of Xamun and see how it can help yourorganization by visiting www.xamun.com