Neil Davidson, Vice President of enterprise at software vendor Deltek, sheds light on how cloud technology can support business transformation in the professional services sector.
Transformation is essential in today’s business environment, but in no industry is it as pronounced as within the professional services sector where knowledge and skill are the core commodities, competition is fierce, technology evolves at an almost unfathomable pace, and profit levels are always top of mind.
This means that firms spend a lot of time revaluating business strategy to ensure they are heading in the right direction. The problem is that when a company is required to be as flexible, agile and cutting edge as services firms are, it becomes very difficult to build concrete blueprints for success. This is where cloud technology can play a crucial part.
Forming the heart of many strategies, use of cloud infrastructure encourages businesses to take full advantage of the positive business environment of today. It shouldn’t be whether companies should move to the cloud, but rather when and how a cloud solution will best support business transformation and growth.
The good news is that no industry is moving to the cloud faster than that of professional services. In 2014, IDC figures identified almost 24 per cent of firms as cloud adopters and this will only have increased in the last year as 74 per cent indicated a desire to transfer even more infrastructure to the cloud. Additionally, Gartner has stated that at least 30 per cent of service-centric companies will move the majority of their enterprise resource planning (ERP) applications to the cloud by 2018.
Fortunately, those in charge of making these business decisions are spoiled for choice as the number of cloud products available is overwhelming. In many ways, this is what makes asking the right questions even more important. In fact, according to Gartner: “You should never assume that adopting cloud applications will magically provide value; it’s essential to link business objectives to your ERP strategy to ensure value is realised, whether adopting on-premise or cloud applications.”
It must be acknowledged that the cloud is a liberating force. It allows companies to transform the way they work. Limiting up-front investment and freeing up working capital for other investments means that for firms looking for agility and the ability to transform, the cloud is the driving force. No longer do they need to rely on generic and inflexible solutions to run operations when specialist project-centric systems built for the rigours of their industry and hosted in the cloud are available.
The reality is that professional service firms need agility to deal with the rollercoasters of project life cycles and new business. They need guarantees of reliability in order to deliver projects on time to the expected standard and ensure working capital availability in order to respond to market movements. Planning for tomorrow in a world of unknowns is a serious predicament so flexibility and scalability should be at the forefront of any analysis when looking at cloud technology.
After professional service firms have established a base line for what needs to be considered comes execution. This is where firms review the current state of the business, the direction the company is moving in, its financial state and the margin, cash flow, and growth objectives for the coming years. All this combines to paint the picture of what a firm needs to remain competitive and determines which technology solution forms the lifeblood of the transformation strategy.
However, it’s also very easy for firms to bite off more than they can chew when it comes to determining what solutions to implement. Making sure firms are not taking on too much also needs to be a key aspect of the consideration phase. For Fieldstone Architecture and Engineering, the catalyst for change was when it found itself falling behind on its planning capability. “We were previously only working with whatever standalone systems we had available in Microsoft Office,” says Fieldstone chief executive Ryan Rasmussen. “It was a struggle to piece together everything we could to keep the company together.”
Instead of shifting its existing set-up to the cloud, Mr Rasmussen realised this was the perfect time to search for a new solution, which was a cloud ERP system engineered to integrate project, resource and financial management. It offered all the benefits associated with cloud including a shift from capital expenditure to operational expenditure, no installation or maintenance costs, and maximum efficiency and improved performance.
Ultimately, it is essential that a cloud system focuses on providing business value, not just being part of business operations. So when choosing a business or ERP system that sits at the heart of a transformation project, it is important to select one which is capable of combining both project management and accounting functions because they are very much interlinked within the professional services industry.
The logic is obvious. Costs need to be tracked during the lifetime of a project. If a project is veering off course, managers need to be able to see this. Those tricky incidentals, such as recruiting freelancers to cover scheduling clashes, can be easily monitored if the ERP does both.
Additionally, a sophisticated cloud ERP system will automate many time-consuming business operations. For example, there are at least 15 ways of recognising revenues, from retainers, time and materials, fixed fee, billing in days, billing in hours, and so on. A strong ERP system will include these options as standard.
Naturally, none of this is easy to do with standard tools. Mixing and matching Gantt charts with generic workflow tools and finance packages is possible, but ill advised. Fieldstone’s Mr Rasmussen recalls: “When we were relying on Excel and QuickBooks, we were really limited from a visibility standpoint.” He says that moving to a specialist cloud-based ERP system allowed his team to collaborate more easily, and for management to make truly informed decisions on manpower and strategy.
Other areas to benefit include compliance and regulation which are easier to manage with specialist ERP tools. For example, a £20-million piece of work to design a bridge will involve a compulsory risk analysis and your system must enable this vital step. Yet, for a £20,000 short project the analysis may not need to be so in depth. An intelligent ERP system will ensure appropriate governance based on risk and project value.
It then becomes essential to elect a partner rather than simply a software vendor, one who can assist in aligning business strategy and organisational performance to cloud adoption and usage plans. It is not enough to be a simple software provider; the key elements of speed, control, agility and innovation, as well as all facets of the business, need to be supported by cloud infrastructure.
Moving to a cloud ERP system offers all of the above benefits, plus the standard plus-points. There is no hosting or upkeep cost, all updates are introduced seamlessly and access is revolutionised. Which is what Swedish software developer Keylane (formerly Mantacore) discovered when it moved from a mish-mash of generic software packages to a Deltek cloud ERP system.
“We wanted a pre-configured, cloud solution that supported multi-company and multi-currency,” says chief operating officer Henrik Svärdlång. “We’re using the software right off the shelf, because the best-practice business processes that are in the solution are exactly what we need as a consulting firm.” Mr Svärdlång chose Deltek in part because of its reputation in the project-centric ERP field. Deltek has 30 years’ experience developing industry-leading ERP software used by the likes of Grant Thornton, Atkins and COWI.
Once the realm of smaller companies looking for scalability, the economies of scale, risk mitigation, financial gains and efficiency means the cloud is a focus for firms of all sizes, and at the heart of transformation plans. It enables professional service firms to solve business-critical challenges with modern technology solutions that, with the right partner, are custom built to respond to any requirements. Add in all the other benefits and its clear why professional service firms are so keen to make the move to the cloud.