Many enterprise IT vendors have what’s known as a co-sell program. In client calls, they promote not only their own products but also implementation services from a consulting partner. This helps build rapport with consultancies, which are a valuable source of leads. More importantly, bundling implementation assistance with IT products is often a technical necessity: many technologies are too complex for the typical company to set up on its own. 

One of the areas where this dynamic is most pronounced is the ERP segment. ERP platforms have massive code bases, can take upwards of weeks to deploy and come with user guides that run into the hundreds of pages. As a result, enterprises almost always partner with a consultancy to roll out such applications. But what exactly do those consultancy-supported rollouts look like? To find out, Boardroom Insight asked two senior ERP experts with an inside view of the industry. Bryce Wolf is the director of strategic growth at Unit4, a Netherlands-based ERP vendor that received a more than $2 billion valuation in 2021. We also caught up with ERP implementation expert Peter Frayn, a consulting director at RSM UK.

Custom code

Some ERP platforms ship in small business editions that don’t necessarily require a consultancy’s help to set up. However, the more feature-rich versions that target enterprises almost always require an external partner. The numerous vendor blog posts written on the topic explain that this is the case because large companies need to customize their ERP software for their needs. However, it’s usually not apparent exactly what kind of customizations are needed and what for.

Unit4’s Bryan Wolf explained with a few examples. One of the tasks for which companies most commonly use their ERP software is managing customer billing tasks. A consultancy charges its clients differently than, say, a retailer, which means it requires a different set of billing features in its ERP platform. That’s where the customization comes into play. “If you select generic ERP software, it may require a fair amount of customization to meet the niche needs of project-based work,” he explained. “In the professional services sector, those customizations could include timesheet management or role-specific dashboards.” Consultants use timesheets to track the number of billable hours they rack up in client projects. 

Besides an ERP’s billing features, the interface also has to be customized. Wolf explained that a consultancy might want to add “personalized views for project managers, consultants, or finance teams to streamline access to key metrics.” 

There’s a simple reason firms hire consultancies to carry out this customization: they don’t know the ins and outs of the ERP platform they’re buying. At the same time, the client firm still has a major role to play in the workflow. Its staffers provide project feedback through the so-called design authority, the person or team tasked with overseeing the ERP customization process. 

 “Any decision to customise should be subject to governance from a design authority or equivalent,” RSM’s Peter Frayn told Boardroom Insight. “Most companies do not have specialist in-house ERP developers, so naturally this is picked up by the consulting partner.”

To cut their consulting bills, companies can buy a vertical-specific ERP product optimized for their industry. An accounting firm, for example, could purchase a platform geared towards professional services firms that has a prebuilt timesheet management tool. That’s less tool the company has to build from scratch during the customization phase. “Implementing an out-of-the-box, industry-specific ERP solution means professional services organizations can accelerate time-to-value with their ERP implementation,” Wolf said. 

A strong start 

The customization phase of ERP rollouts is preceded by several steps, most notably the process of picking a software vendor and a consultancy. Companies should go about the latter two tasks with a specific business objective in mind, RSM’s Frayn said. 

“Often, the most important ERP success factor is not whether a client is already focused on a certain technology, but that they are clear on why they are undertaking the project and the broader business objectives they want to achieve,” he explained. “The most interesting relationships for us are when we meet organisations who want to change, for example to accelerate growth, reduce costs or move into new markets.”

All that begs an obvious question. Instead of finding an ERP platform and hiring a consultancy to customize it, why don’t companies just build something from scratch? The kind of large enterprises that buy the most expensive ERP products have plenty of in-house coding expertise. Moreover, there are low-code development tools that can automate some of the manual heavy-lifting involved in the task. 

According to Unit4’s Wolf, there’s more than one reason to go down the prepackaged software route. One, he explained, is speed: customizing an existing product takes time, but it’s still faster than building one from scratch. Plus, a vendor-provided ERP platform in its umpteenth round-number release is less prone to scalability issues and other bugs than a brand new custom platform.

“Prebuilt functionality from a SaaS ERP tailored to the industry enables faster deployment and reduces inefficiencies, such as delayed invoicing or missed revenue opportunities,” Wolf said. Then there’s the matter of code maintenance: companies building a custom ERP tool not only have to build the software but also maintain it, which raises costs. That’s not the case with vendor-provided software. “Unlike custom-built solutions, which often lead to revenue leakage and high maintenance costs, ERPs provide reliable support, regular updates, and a scalable foundation.”

The consulting side

The basic considerations that lead most enterprises to buy prepackaged ERP software instead of building their own have been the same for years. However, some aspects of the buying process are changing. “Over the past few years, we’ve seen the lines blur between pre-sales demonstrations and the traditional requirements gathering phase which starts ERP projects,” Frayn said. “To accelerate deployments, it’s important to work upfront with clients to understand and provide solutions to their business differentiators.”

One major focus of that early-stage client collaboration is the question of what happens once a company’s ERP system is up and running. The software has to be maintained over time, which means there are patches to download and custom code to refresh. Frayn said those details have to be considered during the ERP implementation process. The team overseeing the project “should consider how any development will be supported after going live,” he explained.

At the conclusion of the rollout process, many companies opt to maintain their newly deployed ERP system on their own rather than hiring a managed services provider. The prerequisite to doing so is building in-house ERP skills. Some of those skills can be picked up during the software implementation process from the consultancy that carries out the task. 

“It’s key to build a collaborative team with clients to deliver ERP projects as this fosters peer relationships, promoting the transfer of knowledge and establishing shared accountability,” Frayn explained. “In phased global deployments, it is common for consulting resources to ramp down in later phases to control costs as the client’s own resources build skills and experience.”

text

text