How project-centric services companies leverage SAP for acquisition (pt. 2)

Many of the elements covered in Part 1 that improve scalability and promote the seamless running of a people business also create differentiation. When we talk about differentiation, we typically think of quality, service, and price. If you can lead in at least one of these and maintain parity with the other two, you are likely to be able to generate more volume and sales than your competitors - and because quality and price are not inherently impacted by ERP, we direct our attention here to service.

There are various facets to “service” that professional services companies need to be able to portray in order to build and maintain trust, including reliability (i.e., fulfill promises), speed & flexibility (i.e., how short is your lead time and how flexible are you), and availability (i.e., resources must be available in the event that they are needed).

The elements of SAP that most notably support “service” differentiation are:

• SAP’s robust forecasting engine that taps into the analytics engine, as well as the integrated nature of SAP itself, with the ability to pull data from all the various sources and present in a cohesive, clear, easy to use dashboard
• The practice of “management by exception” whereby if something is out of tolerance, the system brings it to your attention so that you can address it posthaste
• SAP’s resource management platform, in terms of having the right resources available – capable of tracking and managing the resources and having a very robust database of your people, what they can do, and what experience they bring

To recap, having the appropriate forecast strengthens reliability. Dealing with exceptions and eliminating unnecessary delays promotes speed. Also, making sure you have the right people to be deployed as the customer requirements change speaks to both flexibility and availability.

Protecting working capital and cash flow

From a cash flow perspective, the elements that concern leaders of professional services businesses are managing the fixed costs, especially as the business scales; dealing with the cash-to-cash cycle; and then handling the bench, because labor or the cost of human capital is by far the highest expense in a professional services firm. A heavy bench means that the company is potentially losing money.

So how does SAP help address that? First of all, with respect to the fixed cost piece, it's all about scalability. You may recall from the previous post that by taking advantage of the automation available in SAP, putting management by exception into practice, and utilizing the self-service capabilities of SAP, you are able to scale with people without inflating back office costs.

Case in Point: Illumiti worked with a professional services company that had thousands of mobile, global resources working all over the world. The company had a relatively small staff in the back office, and leaders were hesitant to scale up because every time they had hired more resources in the past, they needed more people in the back office as well. By implementing SAP for them over a five-month period, Illumiti provided the solution and tools—more automation, management by exception, better self-service capabilities—that enabled them to triple the size of their business without hiring a single individual in the back office.

With respect to the cash-to-cash cycle, it's all about integration. SAP is fully integrated, and as a consequence, the business can create controls such as “pay when paid” (not paying suppliers until the customer has paid) in case there is a supplier issue or supplier quality problem going on. This integration and full visibility end-to-end enables you to optimize that cash-to-cash cycle and identify the areas where cash is stuck.

In terms of managing the bench, it's all about utilization dashboards. So again, it's the forecast, it's the KPI dashboards, and it's the full visibility into your people in terms of who is available and who's got the right skills so you don't make a staffing mistake and keep someone on the bench unnecessarily.

SAP and Illumiti

SAP is the leading solution for professional services firms; it brings all of the elements we’ve talked about into one solution: the forecasting piece, the deep integration, management by exception, robust resource management, automation, KPIs and dashboards, recruiting and personnel development, and self-service and mobility. Companies that effectively embrace these elements are able to make better decisions, respond faster, and thrive with less back office staff. Smarter. Faster. Leaner.

Learn how SAP Platinum Partner Illumiti applies its own smarter | faster | leaner methodology to help professional services companies maximize performance and value at home and abroad: https://illumiti.com.