Why are ERP consultants needed?

In a blog on the ITtoolbox site, Steve Phillips comments that companies are moving away from using external ERP consultants in favour of using in-house expertise – Why ERP Software Consultants Cannot Save The Day.

His view is:

The ownership philosophy is about controlling your project destiny and built on some fundamental principles. … 1) It is possible to take internal responsibility for project management. 2) It is possible to develop and/or acquire internal software expertise to the point outside application consultants are rarely needed. 3) It is possible to become much more educated and less reliant on the false sense of security an army of consultants can bring. 4) It is possible to realize ERP benefits by developing better software and business process solutions with fewer outside consultants. 5) It is possible for internal personnel to do up to 70% of what many pay consultants to do.

Except for item 4, in my experience, I haven’t found any companies that can do what he suggests. I suspect it is a function of certain factors – a primary one being the size of the organisation. But I also believe that business maturity, and the availability of knowledge and experience play a significant part.

In the South African market, most businesses fall into the small-to-medium (SMB) category. Employees in SMB companies tend to take on more than one role (debtors and creditors, pre-sales technical and sales, production planning and management) which leaves them little time to focus on issues which are not directly relevant to the job they must do. So finding time to acquire software expertise is difficult or requires after-hours learning. In time, and if a person stays in the same job, they might become “more educated and less reliant.” However, given their time constraints, it is highly unlikely that people will have the time or knowledge “to do up to 70%” of what a consultant will do.

Also skills and expertise are in short supply in this country, so someone who develop technical skills may easily find themselves moving out of their business job and into a technical or consulting role. Similarly, project management requires experience and time to spend on it, which senior staff in SMBs (e.g., finance managers and directors) rarely have. Companies will tend to have a less senior person overseeing the project, but all the details and work that goes into project management has to be done by someone with the background and time allocation to do it – in other words, a consultant.

In the South African context, therefore, most average companies (not large ones over 1000 people) do not have the people, skills or time to take on an ERP implementation themselves. The cost of bringing in consultants outweighs the risks of failure in trying to do the project in-house.

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7 thoughts on “Why are ERP consultants needed?

  1. Hi Simon,
    I agree with some of your points and although I know nothing about the S.A. market I think there are some global ‘standards’ which apply. Firstly, one can certainly find a way to agree with the possibility (using Steve’s term for each item) that his principles could apply. But beyond that I agree. Most companies can’t do it. A couple of many reasons include:

    1) They don’t have the specific expertise to implement. The problem that occurs however, and the one I believe articles like Steve’s are really at their root trying to address, is that organizations somehow believe that if they hire a cadre of consultants to take on the project that relieves them of their responsibility. There is nothing further from the truth! The reason many implementations fail is for exactly this.

    2) They hire cheap consultants who’s experience is primarily being in the same room when an implementation went on in thier previous company. To that they use the ‘less senior person’ you mention to oversee the project. The most important consultant to bring on is the Project Manager!

    One more thought. You mention 1k emps being a large company. I think of organizations with 1 – 5k emps as being medium size and that is the first level I’d even consider an ERP. A company with less than 1k emps usually shouldn’t be taking on such an initiative.

    Bryan deSilva
    Improvizations
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    • Hi Bryan
      Here is SA we have companies with less than 500 staff implementing ERP, with the systems that cater for that size of company – MS Nav, Accpac, SAP Bus 1, Syspro

  2. “It is possible” differs from “It is better”.
    Yes, any company can do it but, no, it is not a good idea. Consultants bring in experience, best practices and new ideas to change your business. When you do it alone, it is hard to promote change and results tend to be mediocre.

  3. Gentlemen,

    You all seem to have a defeated attitude and lack of resourcefull thinking. On the other hand, it might be about “billable hours”. Many, including myself, have defied this “convention wisdom” and fear mongering for years (in places a lot worse than any of you have described).

    I have one question: Would you agree (or disagree) that an organization that can do ERP correctly with a lot few consultants would be better off? This is a simple agree or disagree answer. If you disagree, tell us specifically why.

    Steve Phillips

    http://it.toolbox.com/blogs/street-smart-erp

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