ERP skills gap may open with moves to the cloud

Organizations must decide between using internal experts or outside consultants as they implement ERP systems. Experts say a combination of both may be the best option.

When implementing ERP systems, companies face an age-old dilemma — should they build out on an internal ERP skills bench or rely on outside consultants? This decision is not being made easier by the ongoing shift to cloud-based ERP systems.

While the quandary remains the same, the optimal mix of internal and external ERP resources has changed. Manufacturers in the midst of major ERP upgrades find themselves turning to third-party partners for technical assistance while developing inside expertise for business processes and change management.

In many ways, it’s a complete 360. In traditional ERP implementations, manufacturers called in the third-party consulting guns to help with the request for proposal and software evaluation. More importantly, they handled the programming and customization of the ERP software to map it to the organization’s business processes.

However, the ability to customize software for specific business processes has been vastly reduced, or eliminated completely, with the rise of cloud-based ERP and hybrid installations. This creates an entirely different dynamic that is altering the role of third-party consultants.

The balance of focus for internal ERP skills and resources has typically centered on the more technical aspects of how the software is maintained and integrated, according to Eric Kimberling, CEO and founder of Third Stage Consulting Group, an independent ERP consultancy.

Now that SaaS has taken much of the technical complexity off the table, it reduces the need to have that internal technical competency that you had 10 or 20 years ago.

Eric KimberlingCEO and founder, Third Stage Consulting Group

“Now that work is still relatively important, but it’s not as important as the human organizational and change management side of things, as well as operational business processes,” he said. “The focus is now on soft skills.”

The cloud, and specifically SaaS ERP, has taken responsibility for much of the infrastructure — think servers, networking and storage performance — off the plate of internal IT and put it squarely in the domain of the ERP vendor or a managed service provider partner.

“Now that SaaS has taken much of the technical complexity off the table, it reduces the need to have that internal technical competency that you had 10 or 20 years ago,” Kimberling said.

Instead, internal IT needs to focus on soft skills, including how to change business processes to ensure ERP software can handle the needs of the business and how to address the people side of transformation, he added.

Take the long view

When thinking about staffing for current ERP implementations, including major upgrades, manufacturers need to think well beyond the initial project timeline and consider what their needs will be going forward, according to Darshan Shah, senior vice president of delivery at Itelligence North America, a full-service SAP solutions provider that targets midmarket customers.

For example, customers need to determine whether they want to be fully self-sufficient with ERP or be continuously reliant on third-party providers, Shah explained. Those that want to drive the ERP post-implementation should consider bringing more dedicated ERP experts on board and possibly establishing and staffing an internal ERP center of excellence.

“To what extent do they want to run the ERP implementation? That decides on the number of people on the project and whether they develop the skills in-house or hire from the outside,” Shah said. “Customers that are successful in the long run think through the type of people they staff by determining whether they are looking for help just for the project or actually want to use them to fit into the long-run phase where they’re getting benefits from the ERP software.”

Know the business

While manufacturers should draw on third parties for cloud expertise and infrastructure assistance, the internal ERP team should also be steeped in knowledge about the business, including core processes and industry dynamics.

Given the specificity of industry requirements and trends, it can be difficult to find consultants and third-party providers that have both cloud infrastructure expertise and domain expertise in manufacturing segments, according to Josh Greenbaum, principal at Enterprise Applications Consulting, a consultancy specializing in enterprise software.

“A lot of consultants might be cloud experts, but they don’t know your business,” Greenbaum said. “It’s difficult to find that perfect combination with people that bridge both worlds.”

In the same vein, manufacturers will need to retain internal expertise in both legacy systems, which will likely remain in place for the foreseeable future, as well as gain enough competency in the technology so that they aren’t totally reliant on third parties. At the same time, it’s important to cultivate and include the internal experts in how the business works if you want to ensure successful ERP implementations, according to Greenbaum.

“You’ve got to cherish your business experts,” he said. “When it comes to transforming your company, they know more about what needs to be transformed than anyone else.”