Should PSA Software be Closer to the CRM, the HCM or to the ERP?

Posted by Joseph Longo, PSA Principal, OpenAir Specialist at Oracle NetSuite





There’s been a lot of discussion regarding the alignment of a PSA solution relative to other enterprise solutions. Should the PSA be tied to the CRM? Should it be built out as part of the HCM? Or should it be closely aligned with the ERP?

Let’s look at the pros and cons of these three views:

PSA and CRM

Undoubtedly, a services organization should be aware of the deal pipeline for purposes of human resource planning, scheduling, forecasting, etc. (There are many other reasons, including enhancing the sales value proposition, but that’s a discussion for another blog.)

The solution is quite simple: integrate the PSA with the CRM, as many people do. Integration has become so common that it’s a checkbox item. Even without this integration, most services organizations will readily track the deal pipeline through external means. A simple, weekly pipeline report emailed to the head of services can often check most of the boxes for this requirement.

The reality is that in most organizations, professional services groups are already constrained by headcount budget, and/or skills availability. No matter how deep the pipeline, the head of services typically won’t get all the resources they request. CEOs and CFOs recognize that adding human resources can reduce overall company margins. They can also be concerned that the pipeline may not eventuate or continue at this pace. Resource availability can trail the demand.

Result: Plan the services headcount around the sales pipeline, but don’t expect to have all your headcount needs fulfilled. Betting your career as a services leader on the sales pipeline may lead to continued frustration.

Best Practice: Integrate with a CRM, but avoid building your PSA entirely on that CRM. It’s only part of the solution.

PSA and HCM

The corporate HCM is a thing of beauty. Anyone can to go there to identify precisely how many people the company has, their background, their skills, the projects they’ve worked on, and their availability, right? Not so. Other than the core demographic information, it’s harder than it seems to maintain PS-related information in an HCM software system.

There’s an inherent conflict between what the HCM owner wants (typically the HR organization) and what the PS organization needs – a level of depth and detail that HR has no interest in managing and maintaining.

Result: the PS organization keeps a shadow resource inventory system, typically in spreadsheets, because they don’t have the control over the HCM solution. Life gets really hard for the PS leadership as they try to juggle a corporate solution with their home grown solution.

Best Practice: Maintain the employment records in the HCM as the system of record, while maintaining the PSA’s resource management records as the system of reference, enhanced with up to date services data that’s relevant only to a PS organization.

PS and ERP

Why align the PSA with the company financials? Simple: your job depends on it. While a PS leader can be forgiven for a shortage of resources due to budget constraints; or lack of visibility across the resources due to not having good resource management tools; he or she is always held accountable for the PS finances: billing, revenue, margins and financial forecast. Errors in any of these will create chaos.

Result: Systems that are dependent on manual input for generating charges will necessarily create issues. Typical use-cases are delayed, inaccurate or disputed billings. When a public company misstates earnings due to a revenue recognition error on the PS side, the results will impact the senior leadership.

Best Practice: The PS organization needs a stand-alone engine that supports the automatic generation of financial transactions, accurately, on time, with a high degree of specificity and auditability. Anything less represents a comprise for the both services and the financial organizations. More than any other area of control, the PS financials require the highest degree of risk mitigation.

Why NetSuite OpenAir

NetSuite OpenAir represents the best of breed order-to-cash solution for services organizations. OpenAir’s Resource Management functionality is second to none, and as such, it’s been adopted by leading services organizations globally. OpenAir Resource Management keeps getting the lion’s share of investment to maintain that leadership position.

OpenAir’s Billing and Revenue Recognition Engine provides natural-language syntax for codifying services agreements. It handles the simplest to the most complex agreements quickly and easily without the need for special training. The engines’ built-in logic automatically generates the transactions needed for invoices and RevRec. Nothing in the industry comes close to OpenAir for services financial management.

OpenAir integrates with all the popular CRM and HCM systems. Integration with Salesforce.com is out of the box. Integration with popular HCM systems has been achieved many times over, making it a standard part of the deployment. Additionally, platform companies offer off-the-shelf connectors for businesses that want to create a corporate data bus between OpenAir and multiple enterprise applications.

When should a services organization trade the advantages of a best-of-breed solution for a 3rd party platform? When the services organization is not critical to the success of the business. In all other cases, OpenAir is the necessary solution and the only one that can guarantee that a services organization has all the functionality needed for it’s critical business processes today and into the future.

To learn how to address your billing challenges, contact us for a complimentary services value assessment.

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