One of the first questions I get asked when talking to a prospect or client about Prophet 21 support with our Application Management service is: “Why can’t I just use my own internal team for this?” The simple answer…you can! That is the strategy for support that almost every company on Prophet 21 uses, whether they have 10 users or 500. I think the question behind the question is a little bit different: “How am I going to allocate limited resources in a way that maximizes business value?”
Prophet 21 Support with Limited Resources
The typical scenario I see with any ERP deployment for a small business is that a Champion gets appointed to work with the ERP vendor through implementation. That person then becomes the in-house go-to resource for the system. The best people for this role are those that have a deep understanding of most aspects of the business. They know something about sales, warehousing, purchasing, and accounting. They have a great personality and they enjoy learning.
You probably know who this person is in your team. Now here is a real question…If you have a person on your team that is that good, and knows your business that well, do you really want them tied up working on your ERP system? Is that the best use of that person’s capabilities? Top tier A players are rare. They are hard to find, and even harder to keep. When you have an A player, the best thing you can do is keep them engaged in things that add a lot of value to your business. When these folks are in roles that add real value, your profits increase, your business runs better, and your number of restless nights goes down, period.
Support Strategy 2: ERP Managed by IT
I have worked with some of the finest IT people you will ever meet. These are the cream of the crop in their field, and they know how to get things done. There is no question that a strong infrastructure, built to best practices, is the foundation upon which ERP is built. System performance is one of the first things users will take issue with, so it is important to get that part right.
That said, ERP is not IT. ERP is about business, it just happens to be software. Asking the IT department to provide Prophet 21 support is not automatically a bad strategy. It could be a very good strategy. It really just depends on people. Managing Prophet 21 requires knowledge of software, databases, and some amount of programming. If your IT team has this kind of in-house capability, then you may be on the right track. However, if your IT department was built around the idea of desktop support and break/fix for the network, you may find that they are frustrated trying to provide Prophet 21 support as a business application.
Outsourcing Prophet 21 Support
Outsourcing technology is becoming more and more mainstream. In a small business environment, this is almost a necessity. Even in my own small business I outsource technology. I use software as a service for email, ticket management, accounting, pretty much everything. If I can automate or speed it up by outsourcing it, I do it. The reason for this is simple: I only add value to my company when I am engaged in work for a customer. I have to maximize the amount of time I can spend on client work. By automating or outsourcing everything else, I get to spend more time with customers, keeping my costs lower and my engagement higher.
That was the idea behind our Application Management service for P21. The 4 best people I have worked who are responsible for Prophet 21 support in their organization are
- Former Quality Manager: knows the business from the top down. Great with process management.
- Former Office Manager: 15 year veteran of the company, understands perfectly how to get things done and keep customers happy.
- Former Customer Service manager: again, knows the customers and the business inside out.
- Owner of the company: personally manages the pricing and data in Prophet 21
I love working with these people. As a vendor, it is a joy to work with consummate professionals who know how to get things done. As a former COO of a large distributor, this is painful to read. What I see when I read this is that companies are taking the people best suited to take care of their customers and business, and sticking them in roles to manage a computer system. I don’t get it. So I developed a service that was designed to combat the misapplication of valuable resources.
A Different Kind of Support
What if 5 companies pooled their resources…That made a lot more sense to us.
Application Management is not a new concept. There are companies all over the world providing it for large enterprise packages like SAP and Oracle. Even the software vendors themselves are jumping on the change to get more recurring revenue from their existing customers. The problem here is that it is simply not affordable for the small business owner. We saw things a little differently. Over the span of my career, I consistently saw the same gap in the business over and over again. There was not a good bridge between business and technology. That is the problem we wanted to solve at Atlas, and we wanted to do it economically.
Enter Application Management as a means of Prophet 21 support. Whether you have 10 or 500 users on P21, it is the same software. There is no P21 “light” version. The same complexities, configurations, settings, and customization options exist for every Prophet 21 customer. So how does a company with 10 users get as much out of the system as a company with 200 users? The average base salary of an ERP administrator is over $80,000 per year. Add in health insurance, taxes, vacation, and other benefits, and you are looking at an all-in cost of over $100,000 per year.
We didn’t see where 1 small business could financially justify paying $100,000 per year for Prophet 21 support and administration. However, what if 5 companies pooled their resources and each spent $20,000? That made a lot more sense to us.
Can Outsourced Prophet 21 Support Work?
As with most significant business decisions, it depends. We think there is definitely a fit for Application Management in many companies. It is a question of value. Are you better off keeping your team engaged only on the business? If so, then there may be a fit for outsourcing Prophet 21 support. If your plan is that person A will spend 50% of their time on the business and 50% on Prophet 21, then application management may be right up your alley.
Think of it this way. The average gross profit margin of a distributor is usually around 25%. If you are in a 10 user P21 deployment with this your annual cost for application management would be about $18,000 per year. This equates to about $72,000 in sales at 25% margin.
Ask yourself, if Prophet 21 support was outsourced, and my team was fully engaged in the business, could I sell an extra $72,000 a year to cover the cost? We think the answer is yes.