Wednesday, August 26, 2009

Optimizing ERP support staffing in smaller companies

I had an interesting analyst request today. An IT manager for a midsize company recently purchased our Computer Economics ERP Support Staffing Ratios report and wonders how the ratios would apply to a smaller business.

He writes:
We purchased the study "ERP Support Staffing Ratios". It was very helpful. Question - We are implementing an new ERP system, and bringing it up a little at a time. We are trying to get a benchmark for the minimum ERP IT support staff that would be required; regardless of the size of the user base.

Alternatively stated, if a company implemented a comprehensive ERP system, but only had 50-100 users, there is probably a minimum core staff the would be required to support it.
If you could take a look at the information underlying the study and try to shed some light on this for us, it would be very helpful. For example, what seems to be the typical (median) staffing ratio for the smaller user population groups?
Smaller firms are at a disadvantage
I responded that the report itself gives the answer, as the number of users per support staff member in small companies (under 200 users) is less than half of the number for organizations with 200 to 500 users. (Actually when you go to over 500 users, the number almost doubles again). In other words, there are tremendous economies of scale in ERP support staffing. In small companies, you need twice the number of support staff per 100 users as you do in midsize companies. (Buy the full report if you want the actual stats.)

Now, having said that, I would say, based on my experience, that when you get into the smaller companies, it all depends on what system you are implementing. I have seen or heard of MS Axapta or QAD sites of 50-100 users that are effectively managed by one full time IT person. But you rarely see that with Oracle or SAP, for example. Our report shows that Tier I systems simply have a bigger footprint, requiring more ERP support staff.

Think outside the FTE box
At the same time, smaller organizations should be thinking about outsourcing much of their ERP support. They simply do not have the scale to have a full-time apps programmer, plus a fulltime DBA, and a full-time help desk person. And these roles are not really suitable for a single person. A better approach would be to go ahead and staff the help desk but contract out the DBA work and apps work (e.g. applying patches or upgrades). Many small companies are too reliant on one or two IT staff members, and when they leave or become disgruntled it can be a real problem. If you get the right contractors, this also provides for better coverage and may actually provide for longer continuity of support personnel than relying on full-time employees.

The full report on ERP Support Staffing Ratios is on our website. A free executive summary is also available.

Related posts
ERP support costs: the offshore model


Phil Simon said...


Well said.

Many small companies are too reliant on one or two IT staff members, and when they leave or become disgruntled it can be a real problem.

I consider quite a few organizations failures waiting to happen in the event that a key member decides to walk. Documentation is often lacking and few people "on the bench" can pinch hit if necessary, what with current staffing levels.

Nash said...

Business processes for commerce applications are also of a very different nature than ERP and are becoming more complex as interactions with customers span multiple channels and touch-points.