by Arup Maity, Xamun Founder and CEO
There
are tons of papers written on the benefit of ERP implementation in manufacturing.
The benefit is an accepted fact in the industry, which does not need more convincing.
ERP comes in different variants to suit the requirements of different sizes
& types of businesses. Even small to
medium manufacturing and distribution operations have implemented certain
levels of automation of their value
chain to be dependable and profitable.
Yet,
when you look at companies engaged in services, especially in the creative and professional services
sector (referred to in this article as knowledge services industry), level of
automation is limited to Excel sheets
and email. Some may have invested in stand-alone systems to help with
specific functions like accounting and record keeping in human resource
management. Others may have tried using project collaboration systems or online
sales tracking. However, these point solutions are not connected to each other
most of the time. This renders companies exposed to classic operational risks
that have been identified and eliminated in the manufacturing sector over the
last 20 years or more.
This
also makes you wonder, how come the ERP software companies did not try to sell
a version of their system to the service companies? Why did the sector resist
in using integrated systems for operations management that have several obvious
benefits? In fact, several consulting companies developing and implementing ERP
systems to manufacturers have not
even tried automating their own organizations yet.
After doing
some research, the following are some of my findings that explain why this
sector shuns the concept of automation:
- The value chain of knowledge services, which produce digital output with no physical raw materials, is very different from those of manufacturing where a lot of effort goes into optimizing the supply chain and inventory level. Typical ERP systems are of little use in this segment, and to cater to this sector a complete rethinking is required
- The cost structure is also very different in the IP based output. The first copy costs the most, and the incremental copy is of marginal cost. The biggest assets include the company’s brand name and track record, and largest contributor to the company’s expenses is its people.
- Most knowledge service organizations are very
lean with very little headcount on the support side of the organization. There
is an effort among to deploy almost everyone in some or other billable project
whenever possible. This makes it difficult to implement a long rollout as
required in typical ERP implementations.
- The number of users varies, depending on active projects
and participants across partners, employees, consultants & client side
members. The traditional practice of charging for a fixed number of user
licenses in not practical in this kind of organizations.
- Knowledge
services companies are usually lightly
capitalized compared to manufacturing and usually resistant to ideas of big
capital investments in systems.
The
above factors made it difficult to build and sell integrated automation
solutions to knowledge services companies, despite the obvious benefits that
everyone is aware of.
Instead,
a large number of these types of companies invested in process standardization
through certifications like ISO9001 and
CMMI. Organizational process certifications are expensive and are quite
labor-intensive, requiring hundreds of hours in identifying and mapping
different parts of its operations. The objective of getting certifications is
to standardize operations, so the best practice and successes are repeatable consistently across projects and
teams. Also, investments are made into certification of individuals in
their areas of expertise to adhere to best practices, for example PMI certifies
PMP for project managers, agile SCRUM master certifications, six sigma belts etc.
However,
without automation and integration
across different key operations, it’s very
difficult to sustain the process standardization. Sooner or later some team
or individual veers off the defined course and only gets to be corrected after
the damage is done. Lack of automation reduces
transparency and increases the risk coming from lack of compliance, which
sometimes are even mandatory in certain professional practices.
Majority
of companies that invested in process certifications are those involved in outsourcing locally or offshore.
The investment in time and money on those certifications were to help reduce risk and also as a selling point to customers who, most
of the time, are much larger in size and exhibit higher process maturity than
the selling organizations. Some fortune 500 companies have already made
certifications a requirement for their vendors. There are substantial investment/subsidy from governments and developmental
organizations in developing countries for ISO and CMMI certifications for the companies involved in or aspiring to get
into outsourcing. However need for automation
across the operation has not received enough attention yet, probably due to
the above-mentioned reasons.
Recent technology shifts coming from cloud and enterprise mobility are
changing the game and are dissolving the
barriers to implanting automation for this segment. The following are some
of the answers to the challenges as discussed earlier:
- Integrated solutions specific to the creative & professional services industry needs are getting rolled out over the SaaS (Software-as-a-Service) model. The three key functions of Project Management, Sales & Account Management, and People & Skills Management integrated across the organization over an easy-to-use social layer make an ideal platform for these businesses.
- SaaS removes the requirement for capital expenditure and makes it easier to adopt automation under operational expenses, which can be directly attributed to the specific projects.
- SaaS and Cloud models allow an organization to extend the systems across the organization to employees, consultants and also across the globe. It offers much needed flexibility to assign and remove access/license to extended enterprise participants as per project needs.
- The ability to easily implement the solution across the organization without major training and roll out pains (unlike in ERP implementations before), is typical of SaaS & Cloud systems. Nowadays, you can get your organization start using in days if not in hours
- Cloud
powered systems accessed over mobile devices enables users to be on the top of
the operations without getting tied
down to corporate network and other
limitations & IT department costs.
Small to
midsize companies can straight away adapt to the best practice and attain
process maturity simply by using such a system across their operations, minus
the cost and hundreds of hours spend for certifications that they usually incur.
Easy visibility of project and collaboration with client’s representatives can
give the much-needed confidence for business relations, even if stakeholders
are working across the city or across the world. The integrated operations
automation approach to boost SMEs towards world-class service delivery can be
easier and more cost effective, if done using an appropriate system.
With all
the above realities in mind, to empower SMEs in the knowledge services sector,
we have developed Xamun, the only system you would need to managing projects,
clients and people. We built it after learning from our own experiences in running
similar operations over a decade. We believe that through the use of Xamun, leaders
in the knowledge services sector can get better control and lower operational risk
when managing people and get the freedom to choose where to work from.
Ultimately, Xamun enables growth and profitability for your company and a more
fulfilling life in general.
