In today’s ever-changing digital landscape, small- and mid-size businesses (SMBs) are always seeking ways to streamline finance and operations, enhance process efficiency, and stay competitive. As a Managed Service Provider (MSP), you play a crucial role in guiding your clients through this operational journey. One of the most impactful ways to provide support is by helping them transition to a modern, full functionality Enterprise Resource Planning (ERP) system. However, many MSPs hesitate to engage in conversations about ERP implementations because of perceived complexities and a lack of expertise.
The reality is that implementing ERP systems for your clients can be easier than you think, and the benefits far outweigh the challenges. According to a Panorama Consulting survey, 47% of organizations improved most business processes with their ERP investments. By positioning yourself as a trusted ERP solution advisor, you not only help your clients achieve their business goals but also drive growth for your own MSP business. Read on to find out how to effectively engage your clients in discussions about the value of implementing an ERP solution.
How ERP systems help your SMB clients grow
Adopting an ERP system can transform and modernize operations for SMBs, addressing critical areas that often limit growth, inflate costs, and increase risk. As an MSP, this means you must be prepared to guide your clients toward ERP system readiness from both a technical scoping perspective and a business perspective. Understanding and addressing the following benefits of an ERP system can help you deepen relationships with your clients, secure more business, and continue to build your credibility as a trusted advisor.
Increase efficiency: One of the most significant benefits of ERP systems for SMBs is streamlined operations. According to a study by Panorama Consulting, 95% of businesses noted process improvements after ERP implementations. This includes growing and scaling their operations more effectively by optimizing resources, reducing waste, and improving overall productivity. A report by Aberdeen Group found that companies using ERP systems saw a 22% improvement in operational efficiency, which translates to cost savings and a better return on investment.
Improve security: Another operational area where ERP systems can make a critical impact for SMBs is security. In today’s digital age, data breaches and cyber threats are a constant concern for businesses of all sizes. ERP systems offer robust security features that help protect sensitive data and ensure compliance with regulations such as GDPR, CCPA, and HIPAA. By implementing an ERP system, SMBs can enhance their security posture and mitigate the risks associated with data breaches.
Strengthen financial health: ERP systems provide real-time insights into financial performance and can unify data that has previously been managed across disparate systems. This improved financial visibility can help SMBs manage cash flow more accurately while gaining insights into revenue patterns and predictability to more effectively evaluate their financial outlook. With more accurate reporting and data alignment across financial solutions, SMBs can make more profitable decisions.
Why MSPs hesitate to have effective ERP conversations
Despite understanding how to discuss the benefits of ERP system adoption, MSPs often still miss this high-impact opportunity to meet their clients’ financial solution needs. The following are common challenges that can create uncertainty, resulting in hesitancy to initiate conversations with clients about ERP implementation.
Limited expertise in ERP implementation or support: While most MSPs are comfortable scoping the licensing for ERP systems, developing the expertise and capacity required to successfully implement and provide ongoing support for these projects can seem daunting. Yet limiting your ERP solutions offering can hinder your ability to fully meet your clients’ evolving financial and operational needs—both for initial ERP implementations and ongoing system expansions and integrations—diminishing your role as a trusted business advisor and increasing the risk of client churn.
Difficulty assessing ERP readiness: MSPs are adept at addressing clients’ business needs related to their tech stack, easily leaning into discussions about AI Readiness or the latest in cybersecurity protocols. But when it comes to ERP readiness, MSPs often don’t feel comfortable in the role of subject matter expert (SME). Lack of ERP implementation and support expertise can make it challenging to know what common pain points to listen for during discovery conversations with clients, as well as how to effectively explore those topics and position the right ERP solutions.
Keep reading to discover how to overcome these common challenges and start effective ERP conversations.
Three prompts to assess client ERP readiness
The first step in evaluating ERP readiness is actively listening to your clients’ current situation and following up with conversational questions that uncover fundamental business challenges an effective ERP system could support. These three prompts can help you quickly learn more about your clients’ ERP readiness:
1. Spreadsheet sprawl: How are your clients currently managing financial data and processes? Are they using spreadsheets to track critical information? Does that hinder collaboration because data is siloed or owned by a single employee? While spreadsheets inherently are not the issue, they are subject to human error and cannot effectively support long-term business growth.
Deepen the discussion by asking:
- What data are you tracking today with spreadsheets?
- Who across the organization relies upon that data?
- What would happen if the owner of that data/process departed the business?
- How would/has an error in that data impacted the business?
- How does using spreadsheets impact your ability to grow and scale the business?
2. Data “murkiness” and insufficient insights: How do your clients speak about data integrity, data consistency, and real-time access to integrated data insights? Are you hearing about challenges with data quality, redundancy, and lack of data integration across key systems? These are all strong indicators of ERP readiness.
Deepen the discussion by asking:
- Can you tell me more about that (data challenge)?
- How does that (data challenge) impact your daily operations?
- Where is this costing you hard dollars today? (e.g., lost revenue)
- Where is this costing you soft dollars? (e.g., reduced productivity)
3. Manual processes and system limitations: Are your clients negatively impacted by manual processes? Do they move data between systems, manually generate reports, and lack the ability to automate repetitive tasks? Your clients may also mention challenges with an outdated financial system that no longer effectively supports the needs of their business. Manual processes and system limitations reduce overall productivity and are often pervasive in areas such as accounting practices and inventory management as SMBs advance their business maturity and profitability.
Deepen the discussion by asking:
- How many hours are spent manually entering data and moving it between systems?
- What is the wait time between inputs to outputs and reporting?
- How many people/systems are involved at each step?
- In what areas are your current processes/systems negatively impacting productivity?
- In what areas are your current processes/systems limiting your ability to grow the business?
These conversations open the door to new opportunities to support your clients as their trusted ERP solution provider. Now that you’ve uncovered their business needs, it’s time to move the conversation forward to identifying the right solutions.
Strategies for initial ERP solutioning
ERP systems are transformative for SMBs because they streamline systems and processes across multiple functions of the business. However, selecting and implementing an ERP system can feel complex and complicated for both the SMB and the MSP. Use the following strategies to explore options with your clients and help them move from readiness to initial solutioning.
Understand the need for change: This is your opportunity to act as a trusted advisor and showcase deeper value within your partnership by understanding your client’s need and willingness to make a change. The following questions are examples of how you can approach the conversation in a thoughtful and meaningful manner:
- Looking at this business case, how would implementing an ERP system today positively impact your entire business in a year?
- What will be the impact on your business a year from now if you do not implement an ERP system?
- How could adopting an ERP system have a positive impact on your company culture and people operations?
- How would this strengthen your competitive position and company valuation?
Asking insightful questions can help reveal the desire and the need to make a change.
Identify ERP solution offerings for SMBs: While there are multiple ERP systems available for SMBs, keep these core considerations in mind when making a recommendation:
- Specific and proven platform designed for SMBs
- Ability to support the client’s current business state
- Ability to scale as the client’s business evolves and grows
- Cross functional capability
- Real-time data and insights
- Security protocols
- Ease of implementation
- Ongoing support
- Systems integration
For many SMBs, Microsoft Dynamics 365 Business Central is a hidden gem with well-documented benefits. Business Central is a scalable solution that works seamlessly for SMBs at every maturity stage, from start-ups to scale-ups. Business Central provides comprehensive business management, connecting finance, sales, service, and operations within a single, easy-to-use application that integrates with Microsoft productivity tools such as Outlook, Excel, and Teams.
Build a business case: After you have invested time in initial discovery conversations, start building a business case to demonstrate the return on investment (ROI) from implementing an ERP system. This will help prepare your clients to move forward and inspire the change to a new ERP system.
Many SMBs aren’t aware of the hard and soft costs associated with manual processes and outdated systems. Use this as an opportunity to provide them high-value insights into the hidden costs of:
- Multiple, disparate systems
- Inadequate system features and tech debt
- Manual, duplicate processes that reduce productivity and employee morale
- Human error, compliance issues, and security breaches
Additionally, help your clients understand the expected revenue gains and cost savings. According to a study by Nucleus Research, businesses using ERP systems experienced an average ROI of $8.71 for every dollar spent. Companies also reported a 20% reduction in operational costs and a 30% increase in production efficiency within the first year of implementation.
Acknowledge timing and price sensitivity: Preparing a business case, offering initial recommendations, and facilitating a high-value conversation allows you to highlight the costs associated with a new ERP system, but always within the context of expected cost savings and increases in revenue from productivity gains. You’ll also quickly assess the potential timing of a project—as well as any price sensitivity and budget constraints. Having these insights is not only essential for an ERP system implementation; it also gives you deeper insight into the types of services your MSP can provide to meet your clients’ ERP needs within their timelines and budgets.
Pax8 can be an extension of your team
Whether it’s your first exploratory conversation around ERP systems or a recurring business need to support multiple clients, Pax8 is here to help you guide clients toward adopting an ERP system.
Pax8 Professional Services brings proven ERP system expertise and extra bandwidth to your team, working with you to provide comprehensive Business Central implementation services and ongoing support for your clients. With a proven approach and affordable fixed-scope and fixed-price options tailored to meet the needs of SMBs, partnering with Pax8 Professional Services ensures that you remain in the driver’s seat while delivering exceptional value to your clients.
