Deadline squeezes. Skills shortages. Shifting parameters on high-stakes projects with zero room for error. These are some of the biggest hurdles facing technology businesses now, says the Forbes Technology Council.
Why do technology companies need ERP?
Here’s the short answer: Only modern ERP solutions provide what high-tech businesses need to grow and deliver highly successful projects to customers with rapidly changing expectations in a rapidly evolving digital landscape.
That is, ERP’s automated efficiency, resource management proficiency, precise time planning and tracking, quality assurance protections and granular financial KPI tracking cannot be found in any other single platform at the same level of impact and ROI.
In this article, we’ll cover what you need to know about ERP for tech companies in depth:
- Why do technology companies need ERP systems?
- What return can a tech company expect from its ERP investment?
Why do technology companies need ERP systems?
When you’re delivering software or systems that can make or break your clients’ businesses, risk management must be stringent. Yet many high-tech companies struggle to retain a large enough resource pool with the right skills. Moreover, slow, inefficient project planning and time tracking makes it difficult to execute projects soundly.
Fortunately, ERP fixes these issues, and more, in one fell swoop.
Retaining the best resources anywhere in the world
Technology organizations are operating in a tough market with skills shortages and competition from tons of companies vying for the relatively few qualified candidates out there. According to Monster’s Future of Work special report, 49 percent of tech sector respondents are creating new jobs in 2021. To be prepared, tech companies need nothing short of expert-tier resource forecasting and scheduling.
Enter ERP (Enterprise Resource Planning), which knits together detailed overviews of your resources’ schedules and availability, pre-defined activities they can perform and all project timelines, giving you a complete picture of who and when you need to hire. Need to figure out cost and sales figures for various resource roles? Professional Services ERP systems like VOGSY drill down into estimated vs. actual budgets and margins from any project deliverables past or present and see resource allocations, hours, costs and sales rates.
With advanced ERP, you can precisely forecast job roles even before opportunities are won by adding placeholder resources with defined job functions, skills, availability and billable hours. So you can not only see who and when you should hire, but also potentially maximize the profitability of your resource choices.
But there’s more to the picture when it comes to retaining top-quality talent, which brings us to real-time collaboration.
Working in real time
First, ERP lets you pinpoint the skill sets you should bring onboard. Then, it gives you the freedom to utilize those talents anywhere in the world thanks to the ability to collaborate in a virtual setting in real time.
What this means for you is that you don’t have to limit your skills search to local respondents. All you need is Google Meet and an ERP system that centralizes all project and client information, documents, emails, statuses and communications. With modern ERP solutions, one of their strong suits is organizing information and project work breakdown structures in such a way that all workers’ project roles are clearly communicated across the organization and can be referenced and tracked at every step.
In fact, regardless of whether you operate mainly in-person in a brick-and-mortar office or online, ERP’s ability to promote data transparency and real-time collaboration is equally important to take down information silos between Sales, Project Delivery, Accounting and everyone from the c-level to the producer level.
Which, of course, is critical to ensuring that project execution goes off without a hitch, schedules don’t get delayed and results are on point.
There are, of course, some ERP systems that do real-time collaboration better than others, which you can learn about in our 2023 PSA Buyer’s Guide (PSA = ERP for services firms like technology companies).
Control of project timelines and profits
Managing high-pressure projects while keeping up with changing customer requirements and expectations is something tech companies deal with every day. But if they’re expecting great results with under-performing software tools in the areas of time planning and tracking, they’re leaving a lot to luck.
ERP has the power to make planning out and monitoring foolproof project timelines quick and much easier. Once you’ve solidified scheduling with ERP’s precision resource planning functionality, automated deliverable milestones update you on project progress and Gantt charts provide timeline tracking in a holistic and highly visual context. There are even ERP tools like VOGSY that alert you when timelines are in trouble.
Then there’s budget and margin. Your margin is going to tell you whether your projects and the way they’re budgeted and resourced can not only sustain your business, but help grow its profits. With ERP, budget and margin are tracked in real time, and diving deeper into the estimates vs. actuals like hours, cost and sales rates on completed projects can shed light on what you can anticipate for profits on future projects and how you can replicate the most profitable ones.
Use ERP to enhance QA in your delivery processes by adding QA steps to your projects’ work breakdown structures and ensuring optimal service delivery.
You should, for example, add activities to project deliverables that are specifically about QA and assign resources who specialize in QA. You can also create project milestones about these QA deliverables to help project managers easily keep track of their progress.
ERP can also reinforce QA by increasing the efficiency of procedures like approval flows, automatically sending quote, invoice, timesheet, expense and supplier invoice approvals to designated approvers. As well, email integration facilitates client sign-offs and time stamps help you track when specific actions were performed.
On top of this, ERP can provide centralized document management, help with correct time keeping with easy, automated timesheets and generate real-time reporting across your business. All of which will assist you in delivering timely, high-quality projects.
An integrated system
The many different software tools tech companies use can add complexity to the business. Yet they’re often indispensable. For project managers, planning and managing projects and their deliverables, timelines and budgets would not be practical without project management, collaboration and financial reporting tools. Meanwhile, developers are issue tracking with tools like Jira and potentially a broad array of development tools to build, test and debug systems.
The real trouble sets in where there’s a lack of integration between software tools running different processes in different departments. The result? Massive information silos that create isolated workflows and hurt collaborative team practices, which in turn can damage project results. Furthermore, silos will impede leadership’s view of the business overall. Patching together aggregate reports can delay analysis—and decisive action.
How does ERP handle this? By:
- greatly reducing the number of tools your teams use by incorporating their functionalities into its core offerings, and
- integrating with the remaining core software systems your teams are using.
ERP for professional services industries like the tech industry not only integrates with tools like Jira, QuickBooks and HubSpot, but can also run project operations from the proposal stage through invoicing, all deliverable, budgeting and time tracking processes included. These ERP solutions are also known as Professional Services Automation (PSA) software, which makes services businesses as efficient as possible and enables teams to work together more effectively, in real time, to achieve more. It ensures reporting is more accurate with data shared between teams and systems and also happens to deliver the best ROI for services firms.
What return can a tech company expect from its ERP investment?
Your ERP solution should deliver a substantial ROI that multiplies by a number of factors, including:
- Forward resource planning that improves hiring decisions: ERP gives you knowledge of your hiring needs so that you can act well in advance—and well before it’s too late. Planning opportunity projects, both from a revenue and margin perspective, as well as the related resource requirements, coupled with resource capacity planning views, soft bookings and placeholder resources all contribute to a strong understanding of exactly who you need on your team, for how long, for which projects and at what rates for better profitability and predictability.
- Streamlining your services operations: One system that can cover your business from end to end will take your software subscription costs down, the impact of which you can start to see within your next software subscription billing cycle.
- Time savings with ERP: Automating time-consuming processes and drastically reducing rekeying allows for more time spent on billable activities, which will help you bring your bottom line up.
- Accurate data from automated, real-time reporting: ERP’s ability to do this for you means you don’t need to rely on the fastidiousness of individual team members to avoid punching wrong numbers into data sheets. As you may have had the pain of experiencing before, such mistakes can throw off decision-making and cost your organization dearly.
- Controllable QA: You can build QA measures into the work breakdown structure of a project to be sure that the delivery process is watertight. This will help your teams avoid oversights and missteps that can give rise to costly redos as well as unsatisfied customers on delivery (and unsatisfied customers are less likely to return).
ERP makes a sound, if not necessary, investment for many reasons:
- Understanding when and where you’ll need resources in the future with ERP’s forward project and resource planning using soft booking and placeholders, which can help your tech firm grow
- Increasing productivity, efficiency and accuracy of reporting with centralized workflows and project, client, employee and company financial data
- Delivering projects on time and on budget combining timelines, budgets, margin, resourcing, external costs, timesheet information and invoicing
- Increasing project profitability
- Increasing employee billability with precise and flexible resource planning in current projects and more robust forward planning
- Less manual admin work, which means less time wasting
- Accurate, reliable data—ERP makes reporting faster with less manual work in spreadsheets, reduces errors and, since it goes across your quote-to-cash chain, provides insights to all actors in the chain as well as company-wide performance reporting
Don’t have time to waste on lengthy PSA hunting? Download our free 2023 PSA Buyer’s Guide and get a simplified checklist to compare any solution and pick the one that fits your technology business.