Not all software and solutions available on the market are created equal. Enterprise Resource Planning (ERP) and Professional Services Automation (PSA) software can vary significantly, as can the companies that offer them. Many software companies perpetuate the belief that an ERP solution must be clunky, intimidating, and expensive. As a result, many small and medium-sized consulting firms are wary of ERP systems. However, by choosing the right tool and taking the right steps for a successful implementation, they set the stage for a genuine transformation.

When consulting firms deliver projects or engagements to clients, another layer is added to the ERP onion. Many firms try to force-fit a generic solution that just can’t accommodate the dynamic needs of a project-based business. When you use a true project-centric ERP, every transaction is tied to a general ledger account, an organization (department or business unit), and a project. This layering results in precise financial reports, project status updates, resource planning, etc., and ultimately, provides the greatest return for your ERP investment.

Let’s agree at the outset that there is an investment associated with the type of comprehensive solution I’m suggesting (as compared to an almost free online accounting tool), but there is an even greater cost associated with the status quo.

Benefits of ERP for Consulting Firms

ERP systems provide consulting firms with improved efficiency and productivity. By integrating various business processes into a single system, an ERP eliminates duplication of effort and streamlines workflows. Automating tasks such as invoicing, project management and client communication allows consultants to focus more on strategic activities that drive business growth. Benefits include:

• Efficiency and Productivity: Streamlines processes and automates tasks, freeing time for strategic activities.
• Visibility Data Management: Centralizes data for accurate, real-time information and better decision-making.
• Project Management: Enhances resource allocation, time and expense tracking.
• Financial Management: Improves budgeting, forecasting and cash flow oversight.
• Client Management: CRM options provide better client relationship management and service delivery.
• Regulatory Compliance: Ensures compliance through proper record maintenance and audit trails.
• Collaboration: Facilitates better team communication and document management.

The visibility across the business provided by an ERP allows for better decision-making and the ability to pivot quickly when projects or market conditions change, resulting in better performance across the firm. But don’t just take my word for it. The most recent industry research shows that the firms with better visibility perform remarkably better, with increased utilization, higher revenue and greater profitability.

Exploring the Different Types of ERP Systems

When selecting an ERP system for your consulting firm, it’s essential to explore the variety of systems available. Broadly classified, ERP systems can be on-premise, cloud-based, hybrid, or project-based.

• On-premise ERP: These systems are installed locally on your company’s hardware and servers. They offer full control over the IT infrastructure but require significant upfront investment and ongoing maintenance.
• Cloud-based ERPs: Often referred to as SaaS (Software as a Service), they are hosted on the vendor’s servers and accessed via the Internet. They typically offer a lower initial cost, scalability and ease of updates.
• Hybrid ERP: These solutions combine elements of both, providing the flexibility to have specific applications on-premise and others in the cloud.
• Project-based ERP: These are tailored to meet the unique needs of specific industries that are heavily project focused, including consulting. These systems often include specialized modules for project management, resource planning and time tracking.

When considering different ERP types, evaluate their capabilities against your consulting firm’s current business processes, technical requirements and long-term business goals, ensuring they can effectively handle the complexity of your services and client relationships.

Selecting the Right ERP Solution

Selecting the proper Enterprise Resource Planning (ERP) solution is crucial for improving business operations within a consulting firm. I recommend kicking off the selection process by defining your unique business requirements. Shortlist ERP systems that align well with your business goals and processes. I strongly suggest starting your journey by investing some time to build your own checklist.

#1 Build a Checklist

Remember, you are searching for a solution to solve unique problems in your business. Some issues are apparent, but many are not. 

Examine each system’s track record. The right solution should have a history of successful implementations, preferably with extensive experience in the consulting industry. Weigh the software’s technical requirements against your current capabilities and consider the long-term return on investment.

#2 Choose a Partnership

Once upon a time, software was something that we bought and used—end of story. That was before cloud computing and SaaS (Software as a Service) became the industry standard. Software is now almost a living creature, with frequent updates and upgrades provided as part of the package. This is why the ERP selection process is more important than ever. You are not just buying a tool anymore; you are choosing a partner. During the selection process, you will evaluate features and functionality. Spend at least as much time evaluating the companies that provide these solutions. Look at their websites to get a sense of their culture. What does this solution provider value? Look at blogs and articles published by the company, sign up for sponsored webcasts and attend events if you can. The aim is to gain a genuine and deep understanding of what this company is putting out into the world. Do they demonstrate thought leadership? Do they understand your industry and your pain points? Choosing a partner, you are aligned with will pay off as you scale and grow in sync with the developments they put into their solutions.

When you make the best selection, you will co-exist in a mutually beneficial symbiotic relationship.