 
Insulating Yourself from ERP Slowdowns by Choosing the Right Industry Focus
ERP consultants are always looking for "skills insulation." Skills insulation is anything that can give you an edge on your peers when it comes to maximizing your opportunities and rates. During an economic downturn, skills insulation is even more important. When markets are good, skills insulation might mean a difference in rate, but when markets are sluggish, this skills edge may be the difference between finding work and being stuck on the bench.
One of the best tactics for ERP skills insulation is developing more industry-specific ERP expertise. Even in a down economy, some industries have more economic staying power than others. However, choosing the right industry focus is not always easy. In this article, I'll share some tips from B2B Workforce National Sales Executive Brian Trout on finding the right ERP industry niche.
The content in this article applies to all ERP consultants, but in order to get a complete handle on ERP industry opportunities, you'll need to know which industries your ERP Vendor excels in. That's why there is an additional article in this newsletter by Charles Benson that goes into more detail on industry solutions on the Oracle side. If you want a closer look at which industry solutions are hot on the SAP side, check out my SAP career questions in this newsletter. The first question goes into detail about which industries are hot and which are not on the SAP side.
"Skills insulation" means changing the supply and demand equation
I find the concept of "ERP skills insulation" compelling because it reminds us that ERP consulting demand is not about one market in particular, but a number of smaller submarkets, each with their own supply and demand fluctuations. As Brian explains it, the key to skills insulation is breaking away from the ERP pack and finding that narrower niche. "No matter what the economy is like, when it comes to determining your market viability and how to maximize your rates as an ERP consultant, one key aspect is: do you have specific tools or skills, most of those industry-related, that get you into a smaller, narrower pool of the overall labor supply chain," says Brian. "So, for example, if you're an Oracle or an SAP consultant, the more you have either niche tools and/or focused industry vertical skills, then the overall labor supply chain for your skills is narrowed down to a much smaller subset, which inherently provides you with more consistent demand in that industry vertical and consistently higher rates as your experience grows."
Do an industry skills self-assessment
Brian's recommendation is that each ERP consultant should do a self-assessment of their skills and figure out how those skills can be mapped into particular industries. "If you really want to have a more informed view of the demand for your skills," says Brian, "You've got to decide whether you're part of what I would term 'the mass populous' for a segment of the supply chain, say an Oracle Financials consultant, or if you are you part of a narrower subset that has an elevated compensation schedule, such as the industry specialization we referred to earlier. Ideally, you want to leverage the fact that you have deeper experience around certain business processes that are unique to certain industries or proprietary in nature, as well as experience with the software tools and environments that are pre-built to address those industries."
Why industry experience can set you apart
To understand why the right industry specialization can set you apart, it's important to remember that for many years, ERP consultants moved to industry to industry configuring products without as much concern for mastering an industry's processes. But as customer expectations around consultant industry knowledge increase, those ERP consultants who have that knowledge now have an edge. As Brian put it: "In the heyday of ERP in the '90s, you could look at overall business processes independent of industry specialization and say, 'I'm a specialist in supply chain or finance or HR, or the technical underpinnings of those areas.'
"But times have changed. The larger ERP vendors have undoubtedly taken feedback from customers and looked to build more and more tailored applications to meet vertical industry needs, precisely to take away market share from best-of-breed software players in various industries. As they've done so, consultants have started to pick up on those vertical industry solutions. Those that have been consistent in their focus, and worked with the solutions that have taken hold and gained market momentum, have found themselves with a valuable edge in the ERP consulting market."
So what's the best approach to ERP industry specialization?
When it comes to ERP industry specialization, not all industries are created equal. Obviously, the Aerospace and Defense industry is in better shape than the airline industry, dogged by high fuel costs and corporate travel cutbacks. So what are the criteria by which to choose an ERP solution?
Brian suggests considering these four factors:
As Brian puts it, "When you combine the uniqueness of an industry subset product with an industry vertical that is expanding and has a healthy economic climate and a strong level of product demand, that's where you get the maximized return of having these industry-specialized skills."
To see how these criteria are applied, I asked Brian to detail the factors in the Aerospace and Defense industry that make it appealing as an ERP specialization. "From an overall industry health perspective, A & D is an industry that is seeing a lot of funding right now," says Brian. "When you consider the retooling of DoD contracts, and when you take into account that the money infused into the federal sector feeds a lot of this A & D work, you can see that this industry meets the criteria for 'skills insulation' so far. Also, there's clearly some unique business processes and very specialized reporting demands in A & D. Also, since many customers are funded by public sector entities, you have a much more stringent reporting infrastructure, combined with a very complex discrete industry manufacturing process. So you have a very engineering intensive environment with strong needs for vendor collaboration. When you put all these elements together, that becomes an industry solution that is very insulated from a labor standpoint when you are able to master those capabilities."
Not all industries received the thumbs up from Brian. He noted that despite the depth of functionality in ERP automotive solutions, the industry is in too much of a slump right now to be a viable niche. Healthcare has a different problem: it is a pretty sturdy industry in a recessionary period, but ERP vendors have not had much success versus best-of-breed solutions that are designed to address strict regulatory requirements. Another interesting industry in terms of ERP acceptance, Brian noted retail as one that has evolved from a rocky beginning. SAP, for example, initially had difficulty providing the level of functionality needed in that space and suffered some bad PR as a result, but in recent years, major strides have been made based on a continued R & D effort. These days, retail is a viable area for ERP specialization, and SAP can boast high profile project wins like WalMart and Target. Of the other industries Brian and I discussed , utilities was another winner that Brian noted in terms of being somewhat recession-proof, and also having that mix of industry-specific business processes and a decent level of ERP acceptance.
Next steps for consultants: how do you select an industry?
So if you have an interest in gaining more ERP industry specialization and you have Brian's methodology in mind, how do you choose the right focus area? Brian recommends this approach: "If you have some broader ERP skills, what you want to do is take a checklist across those industry segments and say 'OK, what kind of industry solution fits into the overall skill framework and product framework that I'm working in?" Whether it's Oracle or SAP or another, you want to look at that vendor's offering in that industry space and assess how comprehensive and competitive it is. Most importantly, you need to determine whether your prior background provides you with a natural transition point to get into that industry solution. If you've got strong answers in those areas, that's probably a solution you want to target."
Brian also made the point that some industry solutions are very regionalized, such as oil in the south, and automotives in Detroit. Regional variations in industry needs are important to take into account, especially for those who are travel-conscious. Brian also cited SAP's IS-Oil solution as an example of a product that has reached a level of market maturity that supports senior level consultants but is not ideal for consultants who are new to that industry. So in addition to the factors we've already discussed, where an industry lands in the ERP growth curve and where its hot spots are located are other key factors to consider.
Conclusion
ERP industry specialization requires smart choices. Hopefully this article has made a good argument for an ERP industry focus but has also served as a reminder that not all industries are worthy of pursuit. It's good to remember that being a great ERP industry specialist means not only learning the configurable functionality of your vendor's industry solution, but mastering the unique business processes that are integral to that industry as well. It's not always easy to break into new areas in a tight market, but if you get the chance to take on new industry solutions in today's ERP market, it may make sense to take a temporary hit on rate or choose a less-than-ideal location in order to pick up those skills. To paraphrase what I always say about ERP consulting, when you pick up the right industry skills, the rates will eventually follow.
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