Enterprise Resource Planning for Services, and Professional Services Automation: Where Do You Draw the Line

Since the late nineties, it has been evident that the enterprise resource planning (ERP) vendors that originally serviced the needs of manufacturing organizations have slowly extended their functionality to service the needs of non-manufacturing industries also. By the year 2000, when many of the major ERP implementations for the manufacturing industry had tapered off, tier one ERP vendors, such as SAP and Oracle, had refocused efforts to market their integrated solutions in the greener pastures of service-oriented vertical markets, such as the health care sector, the public sector, and service based businesses. Simultaneously, professional services automation (PSA) solutions appeared, and best-of-breed vendors such as Changepoint (today Compuware) and Evolve (now part of Primavera's PSA offering) were developing project- and service-oriented functionality. These PSA solutions were aimed at providing the missing pieces linking back-office solutions (typically provided by ERP or accounting vendors) to project management systems, which remain the heart of most professional services organizations (PSOs).

In today's market, ERP vendors are aggressively focusing their efforts on providing the project-oriented functionality once provided by the original PSA vendors. In addition, unlike best-of breed solutions, they provide a fully integrated back-office system. This raises the following questions: Is the PSA concept outdated? Does ERP for services better reflect the marketplace?

From a vendor's point of view, the answer to those questions depends on which side of the fence you stand. ERP vendors will likely prefer the "ERP for services" moniker, which showcases the broad application of their offering outside PSOs such as governmental and health care organizations. On the other hand, best-of-breed PSA vendors will probably embrace the PSA label, and continue to focus their efforts on their unique understanding of the professionals services market—or, as history has proven, change their focus altogether by adopting a project portfolio management (PPM) approach in order to broaden their potential market.

The main difference in functionality between PSA and ERP for services is the back-office component. ERP for services applications provide functionality for both the transactional (or operational) components, and the project-oriented components of service organizations. However, PSA typically refers only to project-oriented functionality, specifically for PSOs. As a result, there are two categories of vendors for service organizations:

1. Best-of-breed PSA vendors: These vendors typically market hosted solutions to smaller organizations. Their main target markets are professional services firms, architects, engineers, high-tech firms, as well as any other type of business which provides billable project-oriented services.

2. ERP for services: These vendors are typically traditional ERP vendors, and provide a fully integrated solution with integrated back-office functionality. Since they provide their clients with complete operational and transactional functionality, their offering is broader in application. In addition to project-oriented organizations, ERP for services provides fully integrated operational functionality for non-project organizations, as in the health care sector.

ERP for Services
Service Industries	Overlap	PSA Components
Health care components	Human resources	Portfolio management
Distribution components	Procurement	Project management
Government components	Financials	Time and expense
Higher education components	Customer relationship management	Resource planning
Financial services components	Business intelligence	Project costing and billing
Hospitality component	Knowledge management	Project accounting
Nonprofit components

When evaluating solutions for service organizations, it's important to identify the particular organization's business strategy. Smaller PSOs tend to prefer best-of-breed PSA solutions that can integrate with their existing IT infrastructure. Typically, smaller service organizations have a financial package from vendors like Microsoft or Sage that serves as their back-office component, and they will purchase a PSA solution which provides capabilities for extensive time management, expense reporting, resource planning, portfolio management, and project management. Although this option ensures a lower total cost of ownership, the level of integration between PSA solutions and financials modules varies depending on the existing applications within an organization. Furthermore, PSA vendors will provide out-of-the-box integration with only some financial systems, customer relationship management (CRM) packages, and project management tools. In addition, the level of integration (including the level of field mapping, real-time processing use, and batch processing use) will vary from application to application. Consequently, identifying the right solution for an organization's particular infrastructure can be challenging.

For organizations seeking an integrated PSA solution, ERP vendors provide the complete back-office functionality critical to running any service organization. Although this ensures a seamless system for service organizations, it must be noted that many vendors likely will not provide the same level of functionality as their best-of-breed competitors. In general, ERP vendors tend to be stronger on the financials and project accounting side, and weaker in providing core portfolio management and resource planning functionality. Aside from Microsoft Dynamics SL (formerly Solomon), most ERP for services vendors typically target the mid-market and the enterprise market.

ERP for Services: Moving beyond PSA

ERP for service organizations can be divided into two categories:

1. Project-oriented organizations
2. Transactional or operational organizations

Project-oriented organizations fall under the PSA umbrella, and demand the typical business components offered by PSA solutions. However, ERP for service organizations also provide functionality for purely operational or transactional purposes. Vertical markets, such as health care, higher education, government, distribution, hospitality and nonprofit, all fall within the ERP for services category by virtue of delivering primarily transactional services. These markets demand standard back-office functionality (such as human resources and financials modules) to interface with their industry-specific needs. Consequently, numerous ERP vendors have developed integrated systems which offer end-to-end solutions to various vertical markets.

A Dynamic Answer to Enterprise Resource Planning for Services

Although revenue for Microsoft Business Solutions hovers around the $1 billion (USD) mark (only 1/40 of Microsoft's total revenue), Epicor has strategically carved out a significant niche in the Microsoft enterprise resource planning (ERP) market.

Epicor, a Microsoft BackOffice certified company, has built nearly a $400 million (USD) business by being early adopters of .NET technology and one of the first enterprise applications to have 1,000 customers running on Microsoft SQL Server (for the first time in its history Epicor surpassed the $100 million (USD) mark in the fourth quarter of 2006). In addition, strategic acquisitions of Scala Business Solutions in the global mid-market sector and CRS Retail Systems, Inc. in the retail industry have established Epicor's growth in the ERP market. The Scala acquisition has solidified Epicor's global presence in over 140 countries around the world.

With the Scala channel and the aggressive Microsoft-centric technology road map, Epicor has filled a gap within the Microsoft Dynamics family of products. However, it remains to be seen how Microsoft will respond to Epicor's growth. Will ERP for the services market experience another acquisition? Or will Epicor continue on its own path, chipping away at the Microsoft ERP marketplace?

In ERP for the services industry, Epicor has established its presence and its fully integrated offering in the upper mid-market (user organizations with revenues between $250 million {USD} and $1 billion {USD}). In the Microsoft world, where Dynamics SL caters to small services organizations and Dynamics AX competes in the mid-market services sector, primarily through Microsoft's industry builder initiative partnership with Foliodev, there is significant room for Epicor to dominate this space. Epicor delivers a complete ERP solution for larger services organizations targeting the architecture, engineering, construction, Marcom, management consulting, accounting, and software industries that require strong project accounting, resource planning, and time and expense capabilities. With the combination of its customer service model, market expertise, and comprehensive functionality critical to larger services organizations, Epicor delivers a Microsoft-centric ERP for services offering where the Microsoft Dynamics product line falls short in delivering a complete ERP system for services organizations in the upper mid-market.

Epicor's emphasis on customer service has and continues to fuel its growth and success. More than any other mid-market ERP player (except for Microsoft) Epicor has an impressive 15 support centers around the world, consisting of 250 specialists that provide support to clients in 20 languages. In today's marketplace, features and functions play partial roles in the selection process of buyers evaluating ERP solutions. More frequently, ERP players focus on value-added capabilities, such as the quality of their support and customer service, as critical differentiators in the marketplace. In fact, many smaller vendors leverage their higher quality customer service and industry expertise to differentiate their offerings when competing against the tier one ERP giants (such as SAP and Oracle) in the mid-market. During Epicor's user show last October, an overwhelming majority of clients expressed that Epicor delivered excellent customer service by ensuring timely responses and resolution of user issues. Consequently, Epicor has capitalized on its leading customer service approach to gain market share from large tier one ERP vendors.

What's New in Epicor for Service Enterprises?

Epicor for Service Enterprises 8.1.1 focuses on delivering expanded capabilities in the customer relationship management (CRM) and project modules, together with new capabilities in account management. To better serve the upper mid-market in the services industry, Epicor has tuned performance in a number of key areas. Over the course of 2007, Epicor is planning on delivering new capabilities in resource management, multisite, and collaboration in order to better meet the demands of mid-market services organizations with multiple locations.

Epicor has overhauled its resource management module for the upper mid-market services industry including enhancements that streamline its ease of use, develop a resource workbench for capacity and resource planning, and offer off-line capabilities in Excel. Similarly, Epicor is aggressively pursuing its development strategy in the resource management module to grow market share in the mid-market services industries where resource management capabilities are core to the business. Furthermore, the enhancements will serve larger customers with international operations, delivering new features to address multi-company requirements, multiple tax issues, multiple currencies, multiple sites, global resources, and varying business rules in order to manage the diverse data of global services organizations.

Epicor has also simplified the collaboration between its system and Microsoft Office applications, such as Word and Excel, by quickly searching and dragging information from the Epicor task pane to fields in Microsoft Office. Moreover, Epicor users can save these documents to the SharePoint server, and then initiate a workflow process to create a transaction in Epicor along with the necessary document link managed by SharePoint server, thus ensuring improved collaboration and tracking of data. The addition of Epicor IW will improve the efficiency of an Epicor organization that is a power user of Microsoft Office applications, and that is looking to reduce multiple data entry and to streamline Epicor's interoperability with Microsoft Office.

Product Strengths

Epicor's biggest strength lies in its strategic technology partnerships with Microsoft. This partnership enables Epicor to deliver complete functionality on the popular Microsoft platform. Epicor's commitment to Microsoft technology also enables its clients to fully take advantage of Microsoft's technology road map to deliver a service-oriented architecture (SOA) framework. In fact, Epicor's current SOA offering is based on a Microsoft .NET framework, which is easily adaptable to client environments running on a Microsoft platform. Epicor's use of Visual Studio leverages Microsoft technology to assist organizations in their SOA strategies in the customization, reuse, and integration of the Epicor system within their existing infrastructures. Additionally, Epicor's tight integration with Microsoft Office (through its IW module) and Microsoft Project provides above average collaboration and project management integration for project-oriented organizations in the services sector. Consequently, services organizations with Microsoft shops can optimize their productivity with Epicor for Service Enterprises.

Epicor's focus on delivering a competitive best-of-breed professional services automation (PSA) solution provides the advantage of offering comprehensive project management and time and billing functionality, in conjunction with complete back-office capabilities critical to running a successful, billable services organization. With respect to features, Epicor offers above-average resource management capabilities with its resource workbench module, assisting organizations in managing the resources that drive their businesses. Moreover, its Microsoft-centric solution is ideal for Microsoft shops that are looking to maximize the collaboration between Epicor and such Microsoft solutions as Dynamics GP for accounting, ProClarity for business intelligence (BI), SharePoint for collaboration, and Microsoft Project for project management. As a result, for an organization seeking a fully integrated ERP system, Epicor's solution delivers fully integrated PSA capabilities (including complete project accounting) on a single platform.