Why Does Your Service Business Need Enterprise Resource Planning (ERP)?

Blog, HVAC

Last updated May 28, 2024 at 11:03AM | Published on Feb 22, 2024 | Blog, HVAC

Enterprise resource planning can help take your service business to the next level by unifying many elements of your daily processes. ERP software helps enable data access across separate platforms. It allows business owners to accurately manage their financial data to make sound and informed decisions. 

Learn how these platforms work and get best practices for implementation. 

You’ll also see examples of enterprise resource planning for your industry. Once you realize what a game changer this software is, you can use it for growth and increased revenue potential. 

Benefits of Enterprise Resource Planning (ERP) for Service Businesses 

Enterprise resource planning is a way to connect various computer systems across one company. The larger your service business, the harder it can be to know what’s going on in different departments or locations. ERP is a solution that brings greater connectivity and efficiency. 

Imagine your business as a series of farm silos. You want to know what each silo contains or how fast its contents are being used up.  

Right now, you have to walk to each silo, look inside, and take measurements. It’s time-consuming, and by the time you get the information you need, one of the silos may have changed. 

Now, say your silos are all connected by cameras and automatic measurement tools. You can stay in one place and see everything in each silo. You get real-time alerts if the grain in one silo is being depleted or refilled.  

That’s what using ERP is like for an enterprise-level business. Though on a much more sophisticated level, of course. 

There are multiple benefits associated with using ERP: 

  • Productivity increases. When different departments or branches can communicate better with each other, wait times and errors are reduced. 
  • Customer service improves with greater efficiency. Information can be distributed faster, and responsiveness creates trust and rapport. 
  • Reporting is more accurate. The right ERP platform can give you real-time data for things like inventory and scheduling. 
  • Decision-making involves a higher degree of confidence. Again, real-time data and greater connectivity let leaders plan backed by facts. 

FROM ONE OF OUR PARTNERS: 7 Reasons Why Field Service Automation Is Essential 

Overview of ERP for Service Businesses (With Examples) 

Service businesses face unique concerns in their daily operation. This makes them particularly well suited for ERP. 

Let’s look at some ways this type of comprehensive solution can be tailored to your industry: 

Enhancing Service Delivery and Customer Satisfaction 

An ERP system can be tailored for many types of home service businesses to link functions across the client life cycle. The right program will let you manage a range of items from one dashboard, such as: 

  • Customer relationship management (CRM) elements for prospects 
  • Connecting sales staff and technicians with the appropriate information 
  • Developing quotes and estimates for service 
  • Generating bills for vendors and customers (accounts receivable) 
  • Creating follow-up communication for repeat business 

Another important component of ERP platforms for service businesses is inventory management. For example, say your company specializes in HVAC. Most repairs and installations involve having the right parts for the job. 

Your ERP should be able to connect inventory in real time with sales orders and technicians. This way, you can ensure you have the parts you need before scheduling a call or giving a customer a project timeline. 

In turn, this reduces customer frustration and the risk of poor reviews. It also cuts unnecessary truck rolls and makes for better manpower allocation. 

Using ERP for Risk Management and Compliance 

Some home service businesses involve higher risk. Some may also have stricter compliance parameters than others. Electricians, for instance, fit into this category. 

You can employ your ERP system to reduce risks and ensure compliance through things like: 

  • Monitoring and communicating industry regulations 
  • Audit trails on past projects and aggregate statistics 
  • Training, certification, and continuing education 

Ideally, for training and credentialing, you want to link your ERP to your HR department. You can also use ERP to monitor data integrity and security against cybercrimes—another rising area of risk management worry. 

In 2023, there were 3,205 cases of data compromise in the United States alone, affecting over 350 million individuals. These cases cost businesses millions every year solely in liability damages. However, the money lost to diminished trust and reputation is thought to be far more. 

Leveraging ERP to Scale Your Business 

Reporting is where many enterprises see ERP shine. When your business makes growth projections and plans, you need hard data. The right ERP used appropriately, can give you that. 

If, for example, you were to scale a telecommunications service business, you would need information about: 

  • Emerging technology and the cost of implementation 
  • Customer demographics in your geographic locations 
  • Competitor market share in the areas you serve 
  • Performance of your branches in revenue, customer service, etc. 

Your ERP system can collect, synthesize, and report on that information for you. You will be able to analyze both past and real-time data to make decisions about growth based on facts, not guesses. 

Successful ERP Implementation for Service Businesses 

Implementation must be well-planned and tailored to your needs to make an ERP system work for your company. Here are some strategies you can use in setting up and deploying the system: 

  • Take your time in the discovery phase. This involves reviewing key workflows and talking to stakeholders. It also entails assessing potential challenges (see below). 
  • Build a detailed project timeline for implementation. Go step-by-step through the process and communicate with relevant parties what will happen. Perform periodic checks to ensure you’re on track. 
  • Prepare for difficult transitions. Be sure you have the experts you need for what is perhaps the most complicated phasedata migration. Expect to test with end users to ensure all the elements are working as they should. 
  • Plan your training carefully. Include administrators and IT as well as staff users. Consider that people respond better to different types of training. Examples are self-paced learning, group workshops, or online sessions. 
  • Create a support structure. Ensure it’s in place for as long as you need following ERP initiation. Many field workers will need tech support. Other users may need help with reporting or security components. Don’t forget that you’ll need training and support later for any significant updates or changes. 

The next section discusses some of the challenges in making some of these best practices a reality. 

Challenges Faced by Service Businesses (With Examples) 

Adopting enterprise resource planning for a service business is not without its hurdles. Some of the most common challenges include the ones below. 

Choosing the Best System for Your Unique Needs 

There are literally hundreds of ERP platforms available today. Selecting the right one for your business model and service niche can feel overwhelming. 

Start by deciding which basic type of ERP system best suits your company: 

  • On-premise: software installed on your own servers, thereby providing better customization 
  • Cloud:SaaS platforms that are usually subscription-based, allowing for easier scalability over time 

There are a few hybrid options as well, which you may wish to consider. 

Next, look at ERP platforms geared more toward your industry. An ERP designed for manufacturing or finance won’t typically adapt well to a service business. 

Oracle, SAP, and Microsoft are a few of the big names most people associate with ERP systems. However, there are a host of newer companies and even startups that might work better for you. 

The third step is to evaluate the features and costs for your shortlist of ERP providers. You want to match them to your company’s needs.  

For instance, inventory management for your plumbing chain might be essential. You want a platform that gives you more options in that area. 

You have to crunch the numbers to see where any given ERP system makes sense for your budget. Look carefully at any set-up or installation expenses, as well as regular fees. Those can add up quickly, so the system has to be worth it. 

A 2022 report found that the average ERP cost per user is $9,000 for a 5-year period. Say your plumbing business wants all 3,000 employees to use the platform. An additional $27,000,000 needs to be generated or reallocated to justify the expense. 

You could limit the number of users, but that defeats the purpose of all the real-time inventory and other data that helps employees in the field. It’s better to find a platform that both meets your budget and will pay off over time to get the desired ROI. 

Finally, be sure to look at customer service and reputation. Read reviews from enterprise-size companies to see how they have fared. Will the ERP business offer references you can contact? Who are your competitors using successfully? 

FROM ONE OF OUR PARTNERS: How to Keep Track of Invoices & Payments: A Comprehensive Guide 

Integration with Existing Systems 

No business wants to reinvent the wheel when implementing a new system. Therefore, your chosen ERP must integrate smoothly with your current platforms. This will result in the least disruption and let you get up and running faster. 

Which existing systems should you discuss with customer service for any ERP you are considering? 

  • Payroll 
  • Accounts payable 
  • Accounts receivable 
  • Field service management 
  • Fleet management 
  • Legal, regulatory, and risk management 
  • Customer relationship management 
  • Marketing and sales 
  • Customer service 
  • Human resources 
  • Supply chain planning and logistics 
  • Inventory management 
  • Communications and information technology 
  • Cybersecurity 
  • Business intelligence 

Depending on your service type and business structure, some of these categories will be more or less important. Or they may be bundled together. However, the end goal is to create a seamless merger between the current software and your new ERP system. 

RELATED ARTICLE: The Importance of a Cloud-Based Field Service Software 

Training and Employee Buy-In 

New technology can often face resistance from some employees. This includes those at the management level. Change is difficult for many people. Some have a blanket dislike of new methods. Others don’t like the time commitment and disruption of training. 

Common problems with implementing ERP in service businesses include: 

  • Poor training processes and support in the early stages 
  • Lack of encouragement from management 
  • Integration problems with existing systems (see above) 
  • ERP revealing internal failures or fraudulent behaviors 

For example, your home handyman service may have been using a lot of manual processes. These might have allowed technicians to pocket extra money from transactions. Or they permitted sales staff to falsify numbers. Your new ERP forces them to play by the rules. 

There are few solutions to resistance to better accountability other than to let it play out. You may have to make personnel changes or weather some pushback. 

For employees who simply resist change, there are ways to make a new ERP system more attractive. The key is to let them see how it benefits them, not just the C-suite or the company’s bottom line. 

Demonstrating personal benefit means ensuring that staff are thoroughly trained. There should also be support for the learning curve afterward. Make sure to put some focus on how ERP makes their day-to-day activities easier. You may even want to consider financial incentives for divisions that meet metrics. 

Top Takeaway Tips for Enterprise Resource Planning 

Finding yourself more interested in ERP for your field service company? Here are some final tips you can use as you move forward: 

  • Since field services are highly mobile, a cloud-based ERP system is likely the way to go. You want to find one that has a relatively short learning curve and is user-friendly for techs in the field. 
  • If growth is a prime goal, finding a scalable ERP is vital. Can the ERP platform you’re considering grow with you? How will scaling affect the cost of the software? Can you use it overseas with international branches if you go global? 
  • If budget is a concern, look for an ERP system with tiered pricing and a variety of service options. For instance, you could start with ERP for all your financial silos. Then, you can expand it to field service later. This also gives you a chance to try out a platform without a company-wide commitment. 
  • Are you not ready for full-fledged ERP yet? A great way to ease into it is to start by automating more systems. Field service management tools can help you control resources and customer accounts. First, get a handle on these aspects of operation. Then, you can eventually move into comprehensive enterprise resource planning. 

FROM ONE OF OUR PARTNERS: 5 Business Visibility Benefits of Centralizing All Your Data with a Field Service Management Tool