Can traditional ERP manage a people-centric business?
by Goutham Bende | 6 min read
The way we address machines is completely different from how we address humans. Usually, machines are addressed as "that" or "it" or "this." For instance, we say, "This is working fine" or "That is making some noise" or "It is due for service." When there is a problem with a machine, we go, "We need to service this," or "Can you check what the fault is?"
When it comes to humans, we address them by name. We give them respect. We say, "Mr. Tom," "Mrs. Mary," "Ms. Anne," "Dr. John," or "Prof. Peter." We use pronouns like he, she, and him. Humans are clearly not things like machines. If there is a problem with humans, we don't service them. We talk to them.
Keeping in mind this basic difference between how we treat machines versus how we treat humans, we have to ask ourselves – can traditional ERPs, which are primarily designed for asset-intensive industries like manufacturing, address service industry needs, driven by people?
In this blog, we look at whether there is a need for an ERP solution specific to the service industry.
Traditional ERPs are more suited to asset-centric businesses
Machines and automation primarily drive the manufacturing industry, whereas people drive the service industry. Professional services companies like legal services, tax consulting, facilities management, or IT/ITES companies or BPO companies, or staffing companies are all people-centric businesses. People are the real assets for these companies. They are the ones generating revenue.
People-centric businesses come with their unique set of challenges. Engagements in these businesses tend to be quite complex, with multi-region presence requiring multiple skill sets. This translates into multiple bill rates and various engagement types like fixed bid, T&M, hybrid models, and so on.
Consider an example.
In India, a company, Finger Chips Ltd., wins a contract from Burger Corporation in Australia, which wants to develop a piece of software for its business. Now Finger Chips Ltd. doesn't have all the skills, so it identifies its subsidiary in Malaysia, Soft Drinks Bhd., as the right partner to outsource a portion of the job to them.
Finger Chips Ltd. should have the capability to bill Burger Corporation in Australian dollars. Soft Drinks in Malaysia should be able to bill their Indian entity, Finger Chips Ltd.
The billing rules can get complex. Some portion of this work can be time & material (T&M), while another portion could be a fixed bid contract. And it can get even more complex with billing rules like "cost + margin," where margin can be a flat fee or a percentage. Timesheet forms the crux of billing for time & material billing. To execute this contract, Finger Chips Ltd. might have to recruit additional manpower. To retain this talent, they will need a robust performance management system.
In this scenario, can Finger Chips Ltd. use a traditional ERP and still derive business value? While it is still possible, it might do that; how nice would it be to use an ERP designed for such people-centric businesses that smoothly takes care of all the processes?
Looking at the complexities involved, a services ERP covers the entire spectrum of recruitment, performance management, timesheet, leave, expense management, flexible billing engine, invoicing, and payroll. So, it is an ideal automation solution for people-centric businesses.
There is a need for a different ERP software for people-centric businesses because traditional ERPs cannot support them.
And while dealing with people, who are far more intelligent than machines, the people-centric ERP should match that intelligence. Think of people-centric ERPs in this way - instead of people having to sit in front of their systems and manually enter data, the transactions themselves are brought to the users on a device of their choice and time. Traditional ERPs may or may not have timesheets at all, which is the essential core of the ERP solutions catering to the people-centric businesses. However, new-age people-centric ERP, like Ramco SRP, allows users to use their email to log in to their timesheets. The SRP (ERP software for Services Industry) automatically sends an email to the user, asking them to book their timesheets with default options readily on display. All the user must do is enter the hours or create new entries, as may be relevant.
By expanding what an ERP automation software can do for its people, businesses can unlock greater business value by -
Key functionalities to consider in an ERP software for people-centric business
Businesses are increasingly focusing on people and enabling them with the right solutions, to leverage people’s expertise and experience in driving their top-line and bottom-line numbers. People-centric businesses prioritize solutions to help their employees do meaningful work.
This is why every people-centric business should embrace an ERP solution specifically designed for them. From responding to changing customer expectations, accommodating new regulations, and leveraging innovations, people-centric businesses can unlock opportunities faster than their competitors and spot potential problems before they arise with such a people-centric ERP solution.