In this interview, Ranjan Tayal, Senior Vice President, Ramco Systems, discusses the meaning and significance of Services Resource Planning (SRP).
What are some of the main challenges faced by the services industry when adopting traditional ERP platforms?
In today's highly competitive global market, the services industry face multiple challenges, ranging from the use of multiple standalone applications for the daily operations; effective planning and execution, as well as project tracking; optimized utilization and resource visibility; lack of control over project expenses and cash outflow; and maintaining a seamless flow of information between HR, timesheets, and finance/billing.
Additionally, organizations in services and staffing largely grow through mergers and acquisitions ("M&A"). Each acquisition represents a different customer model that is not only regionalized but also heavily customized. This means that the acquiring parent company must be able to manage the complex customer models and associated Service Level Agreements (SLAs), of every acquisition. In Staffing, for instance, proliferating customer SLAs impedes the flow of information between timesheet and revenues collected. This information gap spawns off the following complexities:
- Multiple disparate systems with no capability to interact
- Data integrity issues in Management Information System reporting
- Inadequate decision support system
- Lack of customer involvement in timesheet approval and invoicing process
What are the main differences between services and the manufacturing sector which make it difficult or inefficient for the former to use a traditional ERP platform?
The services sector is very different from the manufacturing sector. While the manufacturing industry is asset-centric, the services sector is project- and people-centric, making project accounting and management, as well as human capital management, essential for its success. Client interactions in the services sector is continuous, unlike in the manufacturing sector. Another difference is the variation in billing models, which can be based on milestones, timesheets, staff attendance, or process outcomes. Each customer may have one or more such billing models, based on variables such as fixed price, time and material, output, outcome and service-level agreements ("SLAs"). This variation and complexity in billing is unique to the services industry, which requires a comprehensive enterprise solution tailored to address these native needs.
Why hasn't the global software industry, which has had decades of experience with ERP, identified this as a bottleneck and done something about it earlier?
The services sector operates on fluctuating margins and high revenue volatility, making it difficult for software providers to offer a specific solution or product catering to the dynamic needs of this industry. Many leading businesses could not manage services in-house and started outsourcing heavily around the late 1990s. Ever since then, the services industry has grown drastically. As stated, SLAs are a major drive for billing in the services sector, which in turn is based on billing milestones, process outcomes and staff timesheets. The sheer variation in volume, value and process while generating customer invoices created a need for complex IT articulation. This became a possibility only after the advent of services ERPs, which can be hosted on the cloud, thereby reducing the total cost of ownership ("TCO") and helping the industry cope with fluctuating margins and revenue. While ERPs were traditionally designed for material requirements planning, there was never a product that linked employee payroll, timesheet and revenue - which form the core of operations in the services sector.
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