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Why ERPs are failing service businesses

16 July 2021

MAINSTREAM ERP providers don't cater for service. It’s just a fact, most ERPs were designed for manufacturers and focus on finance, not service. And those service staff are left struggling with day to day operations knowing the decision-makers will never agree to replace their system. But, you don't necessarily need to change your ERP says Gary Jones, head of sales at Service Geeni.

“Managers and Directors need to start caring more about the tools they give their staff. Your ERP may deliver great financial data, but most service companies aren't giving enough consideration to the limitations of ERP software and the impact it has on an employee's ability to deliver the service your customers expect.

What people need to realise is that the tech is out there and you CAN get the best of both worlds by integrating your ERP with a service management system. The finance team can continue getting brilliant secure data reporting from the existing ERP system, combined with an add-on that will ensure you’re delivering first-class service. You need to enable your greatest asset, your staff. Although in my experience, unless you’ve been living under a rock for the last 5/10 years – most service businesses know this, yet some still do nothing. This could be because they're concerned about the cost and time to implement a new system, but more often it’s because they’re frightened about integrating two systems and the risk that carries.”

Gary adds that this is an old-fashioned excuse. Integrations work and it’s about time service managers realised that. The directors relying on the ERP system for great financial reporting are only going to be on the back of Service Manager's to do better when actually it’s the system that’s designed for them that’s stopping managers being able to improve service and profitability!

Integration specialist, Keith Rigg joined Gary Jones on a recent podcast discussing the fears people associate with API integrations and how to overcome them. Keith Rigg has been working for Jitterbit, an API Integration platform, for the last 3 years, helping companies connect SaaS, on-premise and cloud applications and instantly infuse artificial intelligence into any business process.

Keith Rigg explains that "this fear of API Integration is born from past experience and how integrations used to be primarily code-based. With this, came a lot of problems including the length of time it took for a project to come to fruition and the likelihood and frequency of it going wrong".

He says: "People are even more cautious when they’re thinking about integrating an ERP system because of their financial data requirements. The business might be a PLC and need to report their profits to investors, so the last thing they’ll want to do is jeopardise financial reporting.

"It’s only right that people are protective of their systems, but service management businesses can’t let that stand in the way of innovation. Today there are very safe and reliable ways to achieve efficiency and have an optimised cost model. Providing that you do things the right way; bring in a solution that’s vendor supported and have the correct support frameworks in place, then you can be agile and achieve massive efficiency gains. You can do all this with risk mitigation in mind but doing nothing isn’t an option. If you stand still, your competition will move forward and you will only end up being left behind.”

Gary Jones explains that to improve revenue (what the people at the top usually care about), service managers need to push for a system that will enable them to improve the service they’re providing. First-time fix rates (FTFR) are critical for any service business that wants to increase customer retention and therefore profit. The reality is Service Managers lives will just get worse if they settle for the limitations of an ERP that doesn’t help them manage the core service of the business, so everyone fails.  

If you can’t track first-time fix rates, then you really have no chance of improving profitability

FDs working in the service industry need to understand the link between service operation efficiency and profitability. And if the system doesn’t capture and support the active use of this level of data, it's almost impossible to improve service delivery and customer satisfaction. So, those top-level financial reports are still going to show poor numbers.

What the people at the top (The C-Suite) don’t consider is how many people in the business are just making do with the system they have – when actually there’s a resolution to the problem. You don’t have to replace your ERP; you just have to integrate your financial information with a system that can cater for service delivery. That way you get the best of both worlds.

Whether we like it or not, we all care about service. Think about the last time you complained and 8/10 times it will be linked to service, not product failure

With ERPs being primarily finance-driven, the information within the system is only looked at from a profit and loss perspective. Therefore, the focus is always on cost and profits, not service efficiency, but whether we like it or not, the two go hand in hand. We all care about service. Think about the last time you complained and 8/10 times it will be linked to the service you received, not product failure. A bad service can result in losing loyal customers and make it very difficult to retain any new ones.

Whilst Directors and board-level executives might think everything is fine, it’s often the case that everybody else is suffering from the lack of system functionality. Both parties do care but are usually blinded by the cost and time of implementing new technology and their concerns about integrations.

The irony is that whilst the focus is always on financial reports and not service, it's service delivery that's driving profits for service businesses. Finance directors need to start giving a damn about the service they provide because it’s what makes you the big bucks! If you switched the focus around by bolting in a service management system, you could quite easily improve operations and increase profits. You can’t have the excuse that your ERP system doesn’t help you, it’s time to make a change – 3rd party integrations are commonplace now and they don’t fail like they used to. If you’re stuck in that mindset, you will get left behind. So, do the opposite and we’re pretty sure your finance team will be left thanking you.

Learn more about Service Geeni at www.servicegeeni.com or follow them on social for more industry insights and news.

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