Experts in software are continually asked, “Is ERP dead?” But frankly, this question isn’t very useful. As the disruption cycle shortens, ERP software vendors are continually adding the features and functionality their customers need to succeed. While one ERP may be ineffective for your company, there’s likely another that could be very beneficial. For instance, many businesses that don’t find traditional ERP useful are looking towards project based ERP.
What is Project-Based ERP?
To start with a simple definition, project-based ERP is a relatively new approach to enterprise software that utilizes project management practices and features. Project ERP works to supply a more holistic overview of the company’s processes than what a traditional ERP would provide. This type of solution is a great ERP for a project-based company such as a construction company or project-based manufacturer. Some service-based organizations may also find the software useful.
How is Project-Based ERP Different from Traditional ERP?
While traditional ERP systems focus almost entirely on manufacturing and accounting, project-based ERP software provides a true end-to-end solution for project-based companies. Traditional systems are a great option for manufacturing businesses with uncomplicated processes. They offer the tools necessary to manage straightforward production and overall finances. But for companies with many departments and other moving parts, traditional systems don’t provide the comprehensive analysis needed to be highly competitive.
In fact, before the rise of ERP based project, many companies took to working outside of an ERP platform to put together reports on entire projects. Companies would use spreadsheets or other disparate systems to keep records of past milestones and timelines, order fulfillment strategies, and perform other kinds of complex planning.
Project-based ERP provides the capability needed to manage the tasks above within one system. Additionally, because so many different functions are managed by a single system, project based ERP can collect and analyze data on all these processes. This enables users to track metrics surrounding things like labor costs, customer retention, inventory turnover and more. Greater visibility into these indicators improves a project-based firm’s ability to plan ERP projects, assess progress and collaborate.
All that being said, many of today’s ERP vendors offer individual software modules focused on one specific aspect of your operations. This allows buyers to configure their ERP software to their needs, instead of buying an inflexible yet completely packaged system. Modular ERP systems enable companies to get exactly as much insight into their operations as they’d like. This means companies could configure a system to focus solely on manufacturing or they could adopt several modules for an inclusive system. ERP modules make the distinction between project-based and traditional ERP systems slightly less significant.
What are the Features of Project-Based ERP?
One of the biggest additions project based ERPs bring is an emphasis on people. This moves ERP away from a system that only focuses on the manufacturing of tangible goods to one that also includes services (and the people who provide them). Especially in the US, the manufacturing age has given way to an age where people — as the agents of sale and transaction — are critically important to every business. In order to better accommodate this shift, project-based ERPs contain several different components:
Project-based accounting allows users to see the financial state on a project level. These tools allow your accounting staff to record costs and revenues associated with different projects on a daily basis. This makes your financial reporting far more useful, providing in-depth insight into your operations.
If a project isn’t hitting its milestones on time, you can quickly look into your project-based accounting records and see if this project has been under-resourced. Or maybe you see it’s costing your company more money than the average project, leading you to reassess this venture. Project-based accounting helps you understand the financial health of your business on a more granular level, allowing you to hone in on your most problematic areas.
Human Resource Management
This component of project-based ERP typically is comprised of recruiting, training, payroll, and time tracking and attendance tools. HRM can be used to understand an individual employee’s history, but when incorporated into an ERP this tool can also show larger trends in human resources. These trends can be depicted in a number of ways, including visual reports such as graphs and charts.
This can aid project leaders as they designate workloads for specific projects. This tool can help users see if your team is especially busy during a certain time of year when they plan to take time off and can even provide labor forecasting. This visibility is incredibly useful during enterprise resource planning project planning and resource management. It can prevent your business from taking on too many new projects when your resources are tied up while reducing periods of low productivity.
Supply Chain Management
This type of ERP provides project-based manufacturing software to better manage an iterative supply chain. Instead of only focusing on production, newer ERPs provide end-to-end management of your supply chain for a more thorough understanding of your products’ lifecycles. First, contemporary ERP systems have advanced supply chain collaboration (SCC) software to make it easier to work together with your business partners. SCC provides all parties with a space within the ERP system to pool resources and communicate. Transmitting all essential information through a single channel helps prevent miscommunication and lost information.
Additionally, SCM capability can help users gain visibility of the entire supply chain. This is done with tracking tools such as barcodes, RFID tags and serial numbers. These tools provide insight into where inventory and equipment are at all stages of the supply chain. This can further assist with resource management, as you now have a very specific understanding of where your tangible components are being utilized.
In addition to real-time location tracking, project ERP software can provide analysis and forecasts. Demand forecasts are particularly useful for project-based organizations, as they support production planning and resource management.
Customer Relationship Management
Managing your customer relationships is essential for project-based businesses. Customer relationship management (CRM) tools supply users with complete customer data and history. This includes previous conversations, pitches and purchase history. Further, many CRM tools give customers a designated portal, enabling them to communicate with your team directly. Instead of trying to keep track of dozens of email threads, CRM customer portals allow your team to manage all customer-related issues and inquiries in one system.
Moreover, CRM software is especially adept at managing marketing campaigns if you choose the correct solution. The tools involved in marketing management allow users to create campaigns while tracking potential and current clients’ progress through the sales cycle. Understanding where your leads drop off and what kinds of clients tend to return is invaluable when it comes time to plan your next project.
The bulk of the benefit of project based ERP systems should come from the system’s ability to centralize and integrate different processes. However, some systems also provide common project management tools to further aid project-based organizations. One of the most popular is Gantt charts.
These are a type of visual report that communicates project timelines in relation to resources available, overlapping projects and milestones. They give users an idea of which activities need to be done in which order, who’s involved and what other tasks they’ll be working on concurrently. Project management tools also enable users to manage invoicing, billing, proposals and contracts to optimize the payment collection process. The best project-based ERP software systems should provide a great deal of flexibility in regards to these tools to accommodate different payment methods and schedules.
To find the right solution for your business, we suggest taking a look at our ERP Software Buyer’s Guide. It contains a lot of great information for buyers early on in their selection process, like a list of features, examples of implementation goals, requirements and questions to ask vendors.
In general, project-based ERP takes information out of its silos and puts it into centralized systems where it can be analyzed as a whole. Integration is key with project ERP, which may take previously stand-alone programs like a CRM tool and a manufacturing floor analysis tool and put them together for cross-departmental evaluation. The bottom line is that ERP based project provides a package of tools to help project managers work from start to finish and join enterprise IT functions together.
Do you think your business would ever implement a project-based ERP system? Or do you prefer a simpler solution which focuses on manufacturing? Let us know your thoughts by leaving a comment below!