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Should you outsource ERP implementation?

Enterprise Software

According to recent research, the value of the global Enterprise Resource Planning (ERP) market is set to reach $61 billion by 2028. This reflects the corporate consensus that ERP software applications are invaluable for marshalling data and facilitating the free flow of communication between the various parts of a business, such as marketing, production, finance and HR.

ERP has evolved rapidly in recent years, with companies increasingly opting for super-efficient cloud-based systems over traditional, on-site solutions. Prominent examples of such agile business applications include Oracle NetSuite, SAP S/4HANA Cloud, and Microsoft Dynamics 365. By allowing all the salient information to be accessed through one interface, such applications can help a business work more efficiently right across the board, eliminating silos, reducing inefficiencies and allowing the company to grow without disrupting productivity.

But there’s a sticking point. Whichever ERP system you chose, it can only enable your company to minimise its digital footprint, foster seamless collaboration and reporting, and take a generally more holistic approach to challenges if it’s correctly implemented. And that leads us to the core question: should this task be outsourced, or handled in-house?


In-house implementation: the benefits and drawbacks

Let’s face it, there’s a certain peace of mind that comes from tackling tasks – any tasks – in-house. After all, the people handling the challenge in question are people you know and trust, and who have a vested interest in ensuring it goes as well as possible.  

When that task is implementing ERP, knowledge of how the business operates is key. And who could be more aware of every operational nuance than the very people who work within that structure? Their top-to-bottom awareness of how your different departments currently communicate, and which logistical problems particularly need addressing, means no time will need to be spent on briefing outsiders. Keeping track of the process may also be more straightforward, with informal catch-ups and more formal updates on the project status easy to arrange.

Of course, this approach is only viable if you happen to have team members with the requisite technical expertise. Not only that, they need to have the time to invest in the process, on top of all their usual responsibilities. Discussions will need to take place between these employees, their line managers and more senior staff, on whether the delegation is feasible and where there are other colleagues who might be able to backfill their positions during the ERP implementation.

Similarly, you’ll need to carefully and honestly assess whether you, or other senior staff, will have the bandwidth to oversee the project. From dealing with queries to approving decisions to chasing the team members, the management chores can really stack up, and it may interfere with your pre-existing day to day tasks.


Outsourcing implementation: the benefits and drawbacks

Why worry about doing a highly technical and difficult job yourself when you can get industry experts to roll up their sleeves and get on with it? That’s the thinking behind outsourcing the implementation project. Each ERP vendor boasts a sprawling, global ecosystem of partner firms, all offering a range of support services, including implementing and optimising the applications.

These partners have been vetted to ensure they meet the standards of the ERP vendors, so you’ll know they have the expertise and experience to level up your company. Finding the right professionals isn’t too tricky, as you can easily browse the ecosystems at the ERP vendor sites. For example, if you have your eyes on Microsoft Dynamics 365, you can browse partners near you here, while SAP’s approved ecosystem can be explored here.

The best firms will have worked with companies of all shapes and sizes, which means you should be able to relax and rely on them to get on with the task. There will be minimal to no disruption of your business, as your team members won’t have to relinquish duties to take on this project. Your own time can continue to be largely spent on your usual tasks, with the implementation partner managing every aspect of the project.

The main drawback is that, no matter how savvy and experienced the partner firm is, they are not “your” people. As outsiders, they’ll need to learn the structure of your business, right down to the smallest nuts and bolts. They also need to become familiar with your workplace culture, and how your team currently communicate.

As with any kind of outsourcing, getting updates and arranging meetings will probably be more time consuming than the in-house alternative. That said, vetted firms in vendor ecosystems are likely to take transparency and communication very seriously, and ensure they report in as much as possible.


A flourishing ecosystem

The bottom line is that many businesses, even large ones with abundant, skilled workforces at their disposal, will always prefer to put a project of this magnitude and importance in the hands of specialists. Taking this approach may be more expensive, but you’ll be less likely to encounter pitfalls and false starts. You’ll also know the implementation process will never be relegated below other, more immediately pressing tasks on your team members’ to-do lists.

Here at Hampleton, we’ve observed how the ever-increasing demand for ERP partner firms has created a secondary market which has seen much M&A activity in recent times. Indeed, the Integration Services subsector saw almost 29% of the transactions within the larger IT & Business Services sector in 2H2021. Notable deals included KPMG’s purchase of Oracle implementation partner Certus APAC, and Accenture’s takeover of Cloudworks, another Oracle implementation specialist.

These big ticket transactions highlight the skyrocketing demand for expert guidance on ERP implementation, and should be a reminder to business owners that streamlining your technology systems, and how your team members interact, is increasingly crucial to maintaining a competitive advantage in 2022 and beyond.


About Hampleton Partners

Hampleton Partners is at the forefront of international mergers and acquisitions and corporate finance advisory for companies with technology at their core. Hampleton’s experienced deal makers have built, bought and sold over 100 fast-growing tech businesses and provide hands-on expertise and unrivalled advice to tech entrepreneurs and companies which are looking to accelerate growth and maximise value.

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