Chapter 9
Six Ways Project-Based
ERP Can Make a Difference
In This Chapter
▶ Winning more deals
▶ Using resources more effectively
▶ Generating higher profits
▶ Boosting your revenue and cash flow
▶ Making compliance automatic
▶ Gaining visibility and taking control
You wouldn’t run a marathon in high heels, would you?
Of course not. And you wouldn’t run your business with the wrong tools, either. You should use ERP tools that have been designed specifically for project businesses. Project- based ERP helps you see what’s going on with your corporate and project financial information so you can make informed decisions. Figure 9-1 depicts a few of the values that a project- based ERP delivers to the business.
Higher Win Rates
When organizations can tell which projects and what type of projects are the most profitable, that information builds a basis for solid cost estimation and a track record of perfor- mance that drives efficiencies into your business develop- ment processes. This allows you to focus in on the business that is best suited to your skill set. That, in turn, increases your win rates.
Being able to identify and provide past performance informa- tion to your customer is a key differentiator in the bid cycle.
Higher Resource Utilization
Because your workforce is one of the biggest assets your orga- nization likely has, you want to make sure that this resource is being used effectively on revenue-generating work. You’ll go a long way toward making the organization profitable if you can see where your people are being used — and where they aren’t being used. After you have that information, you can make sure they’re assigned to work that is actually generating revenue.
Higher Profits
Today more businesses are competing for fewer jobs and projects, and that creates an atmosphere where pricing is as competitive as possible. Profit margins are tight. Setting the right prices for bids is the first half of the equation for man- aging profit margins. Visibility into actual historical project costs, performance, and risks/opportunities is critical to set- ting prices that will keep you in the running but won’t cause negative profit impacts for the organization in the long run.
The second half of the profit margin equation is ensuring that projects are well run. Manage projects proactively to ensure that they keep costs in line with revenues to maintain expected margins. Financial and project management software solutions enable organizations to create accurate forecasts that support profitable bids and ensure that projects — and changes to projects — are executed in a manner that maintains margins.
Increased Cash Flow
It takes you less time to get paid in a project-based ERP system because the time to create an accurate invoice dra- matically improves when your labor and materials costs are connected to the right level of your project. Transactions are validated for accuracy at the point of entry, making invoice creation more automated and predictable, with fewer errors. As a result, your customers are more likely to pay the invoice on time, which greatly accelerates the cash flow.
Automated Compliance
In project-based ERP, the accounting and business rules flow down to the project itself, making compliance more uni- form across the business. Generic ERP systems can’t always enforce the business and accounting rules upfront, which means any violations are caught on the back end of a transac- tion’s life cycle during reconciliation or audit. Project-based ERP systems built with compliance in mind have forms and reports (such as a Billing Format) that make life easier and take the guesswork out of compliance.
Visibility and Control
With existing siloed solutions, it can take days or weeks to pull together accurate information about schedules, costs, and profit by project or program. This leaves plenty of room for surprises in terms of missed deadlines, cost overruns, and backlogs that can jeopardize individual projects — and poten- tially torpedo the profitability of the entire organization.
Financial and project-management software solutions give the entire team complete and timely visibility into project and financial status, as well as risks and opportunities. Alerts proactively warn executives and project/program managers about potential cost overruns and schedule slippage without requiring them to wade through lengthy reports. This timely information reduces surprises and allows organizations to take proactive actions to address issues before they impact schedules, costs, or revenues and margins.