Companies think twice before investing in an enterprise resource planning (ERP) solution. Project based ERP systems can do wonders for your financial and operational decisions, especially for those in the service industry who regularly manage clients.
The service sector is fast-paced and your organization is more likely to have an edge with an ERP solution with professional services automation (PSA) solution. A research study by ‘Services Performance Insights, LLC (SPI), a services-focused research firm revealed that organizations with an integrated ERP+PSA saw a profit margin of 35.7% while those without only showed 30.6%.
A system that integrates project data with business and financial data is a must-have for service companies.
Understanding Project-based ERP
The service business is people-centric and the bottom line of the company is dependent on how well your resources deliver. Hence delivering your services in a systematic and reliable manner is appreciated across the industry and will in turn pave the way to profitability.
To achieve this, project-based businesses require financial and operational functionality to easily manage their resources. A deep understanding and visibility of your projects will help improve decision-making and resource allocation to the right project. Also, having a clear-cut idea about your current project spend and the target will help organizations manage the project in an ideal way.
Together ERP and PSA can standardize your financial and project-based processes to make your organization more efficient. Through triggering approval workflows and automated billing, project managers and accountants can save time and effort.
A unified solution improves multiple areas of the organization leading to better reporting, actionable project insights, profitability, and also helps you track your progress against the organizational KPI (Key Performance Indicator).
Why are ERP and PSA necessary for service organizations?
Organizations that run without a unified ERP and PSA face the following consequences:
• Inability to Scale
When your business grows and your current system is unable to handle the huge workload, it is a key indicator that your business requires a combined (ERP+PSA) approach. Manual workloads, when automated consume large chunks of productive time that could be better spent on adding new lines of business.
• Poor visibility
Managing both projects and business from a centralized location is necessary when your organization runs on multiple spreadsheets or legacy systems. Manual workload increases leading to inaccuracies. Improper project reports or lack of clarity in key project details may ultimately impact your profitability.
• Dealing with workarounds
Dealing with workarounds is time-consuming and you are likely to engage with these if you are running your processes on a legacy system. If your accounting struggles persist and you find it hard to find a sustainable ecosystem that fits your business model, it is best to go for an ERP with PSA. Your focus should always be on project completion not finding workarounds that fit the requirement.
• Obsolete legacy systems
Businesses often prolong migration to an efficient system when they are comfortable with a legacy system. The obsolete legacy system is likely to cost you more time, effort and money to maintain.
Benefits of Project-Based ERP and PSA
A cloud-based ERP and PSA solution offers organizations unparalleled visibility, control and lowers the cost of ownership. Complete your projects efficiently and improve your profit margin with an end-to-end system that connects your financials and project data.
Top benefits of project-based ERP:
• The central database of a cloud ERP system manages all your key processes including costs, labor, billing, resources and links the data with your general ledger account. Thus, both project revenue and business revenue can easily be monitored.
• Through data automation, organizations can focus on building strategies and stay ahead of the competition instead of being clogged up with manual and administrative tasks.
• Provide better audit trails that can help locate the pain points of the business and seamlessly deal with regulations.
• Employees are able to make data-driven decisions with the help of embedded reporting and analytics.
• Automated billing improves cash management, leading to a faster close and revenue that is properly recognized.
• Improved support for multi-element contracts and invoicing simplifies the implementation of different business models such as fixed fee, milestone, time and expense, cost-plus and subscription-based billing.
Manage your projects with Oracle NetSuite
Oracle NetSuite is the #1 global cloud-based ERP that helps industries grow and scale easily. SuiteProjects is a Professional Services Automation (PSA) solution from NetSuite. Organizations can easily improve their project delivery and manage the project and finance teams through Suite Projects. Streamlining activities between these departments ensures proper accounting and billing throughout the project lifecycle.
NetSuite SuiteProjects combines general ledger, accounts payables, accounts receivables, purchase orders, and inventory management to improve visibility, productivity, and efficiency It also helps deliver projects on time and within budget with collaboration tools, standardized operations and real-time visibility.
Are you planning to implement NetSuite SuiteProjects for your organization? Jobin & Jismi is a NetSuite Alliance partner with more than a decade of experience dealing with NetSuite-related services.