Pros & Cons of Hiring or Contracting an ERP Consultant

You have a great team, but sometimes you need more expertise in a certain area and while your Payroll Specialist is brilliant, maybe ERPs aren’t their strong suit. So, what do you do? Search high and low for a full-time ERP-focused employee with the right experience? Bring on the temporary services of an ERP consultant (contractor) who can jump into the thick of it?

There are definitely perks to both but figuring out what’s right for your business or project isn’t always clear. That’s where we come in. With years of experience doing both full-time recruiting and temporary staffing in the ERP ecosystem, we’re going to explore the temporary-staffing option, and specifically, the advantages and limitations, to help you decide.

What’s a Consultant Vs. a Contractor?

Before diving into the pros and cons, let’s make sure we’re clear on the terminology we’re using: a Consultant is a professional who provides expert advice and guidance in a particular area of expertise. A Contractor is a professional who works for you, but is not a permanent member of your team (They usually work for you on a time/materials or per-project basis). Super simply put: Contractor = Guest worker. Consultant = Specialist. OK.. Let’s dive in, shall we?

Many businesses bring on an ERP consultant on a temporary basis for a specific project or task. These consultants are referred to as “contractors”. Contractors can be extra hands or strategic guidance when a team needs additional support, either on-site or remotely. Typically, contractor consultants are ideal when you need a specialist to handle a defined job for a set period of time—whether that’s implementing a new ERP solution, third-party solution integration, or managing the logistics for any type of ERP project.

That said, these contractors can offer expanded expertise and strategic guidance to help shape the direction of a project or solve complex problems by providing their experienced advice. You might engage an ERP consultant in this way to assess your business processes, recommend improvements, or help your company through a period of digital transformation.

The Short Term Perks of Hiring an ERP Consultant on Contract Basis

These experts bring a lot to the table, with specific knowledge of ERP systems like Acumatica, Sage Intacct, Microsoft D365, and NetSuite, especially when you need someone who can hit the ground running and tackle a particular job quickly. The big advantages to bringing them in short-term are:

1. Their Flexibility

If you have a quick project or a temporary gap in your team’s skill set, ERP consultants are the perfect solution. As mentioned, you can hire them for a specific task or timeframe, which means you’re not tied to a long-term employment agreement. Once the project is complete, your obligation ends, and you can move on without worrying about ongoing salaries or benefits.

2. Highly Specialized Expertise:

Hiring outside consultants is common in most industries. Whether it’s a software developer with niche coding skills or a marketing expert to run a specific campaign, consultants offer expertise that might not exist in-house. Since they’re focused solely on their specific tasks, they often deliver fast and efficient results.

Client Story: One of our ERP consultants worked on contract with a manufacturer & retailer of vehicle racks that was suffering through high-volume, time-consuming data imports. The consultant optimized Acumatica import scenarios to reduce import times by an impressive 90%. This dramatic improvement not only saved time but also enhanced operational workflows, making sure that data was processed in the correct order.

Not only were they the right person to handle the task, their experience was pivotal in refining how data imports were handled, completing what otherwise would have become a major system integration project. This saved the client time and money that might have ended up being thrown at the problem later if it had gone unnoticed.

3. Cost Savings (in the Short Term):

Although ERP consultants typically charge higher hourly or project-based rates compared to full-time employees, you’re saving on long-term costs like benefits, payroll taxes, and other employee-related expenses.

This makes hiring a contractor appealing when your budget is tight, or you need help with a one-off project. So always be mindful that while the upfront costs might seem high, in the long run, contracting a consultant can be more cost-effective for temporary needs.

4. Reduced Administrative Hassle:

Hiring full-time employees involves a lot of administrative work—payroll, benefits, training, and tracking of compliance with employment laws. ERP consultants are self-employed, meaning taxes, insurance, and other administrative tasks are a “them problem”. This reduces HR’s administrative burden significantly and allows you to focus the hire on the actual work at hand.

The Long Term Perks of Hiring an ERP Consultant as a Contractor

At other times, businesses need long-term assistance with digital transformations or system process overhauls. In these cases, bringing in an ERP consultant to guide your business strategically with their years of experience is a great option. This type of consultant typically works contracts and positions across multiple industries or for a range of companies, which allows them to bring valuable insights and advice, providing perks like:

1. Strategic Expertise and Fresh Perspectives

Their experience lets them offer strategic solutions to a company’s problems. Whether your business is going through a digital transformation or you’re looking to optimize operations, an ERP consultant can offer high-level advice based on their experiences in similar roles across various companies.

Client Story: One of our consultants helped a vacation rentals client out of a financial snafu. Julian Schrenzel, our CEO, shares that the client had “leveraged Acumatica ERP to develop General Inquiries (GIs) and custom reports that provided critical visibility into average costs.” Because of their experience with the ERP, the consultant saw that $1 million in product cost had been unintentionally applied, saving the client a lot of headaches. Julian continued, “This consultant also created GIs to calculate landed cost percentages as a function of total product costs, which allowed the team to quickly diagnose and address falling profit margins. In the time they were there, their expertise was key to streamlining financial reporting and directly contributed to more accurate cost tracking and decision-making.”

2. Cost-Effective for Complex Projects

Remember that when engaging an ERP consultant contractor, you get their ability to solve complex problems efficiently. While the upfront investment may be higher, our clients often find that consultants’ contributions lead to long-term cost savings. Whether it’s improving processes, reducing inefficiencies, or avoiding costly mistakes, a contractor’s guidance often pays for itself over time.

Client Story: We had an ERP consultant working with a building materials supplier who was using Acumatica, and they were there to develop nested GIs to streamline inventory management as part of an MRP light process. Julian shared, “While working away, our consultant discovered major setup issues where customer parts were incorrectly used as internal part numbers, which was causing problems for their inventory management. By executing a month-long plan to migrate all customer part numbers, create new internal company part numbers, set up customer cross-references, and update all customer-facing forms, they vastly improved inventory accuracy and overall operational efficiency, ensuring smoother manufacturing processes.” Definitely an improvement that’s going to pay for itself over and over again.

3. Objective Insights

Sometimes, being too close to the problem can cloud judgment, so your outsourced ERP consultant can bring an unbiased, third-party perspective to your organization. They are able to identify issues that internal teams might miss due to familiarity or organizational blind spots—”can’t see the forest for the trees,” and all that. Their objectivity is often critical in overcoming business hurdles or spotting areas for improvement.

The Drawbacks of Hiring Consultants on a Contract Basis

So far contracting ERP consultants sounds like a dream. So, what’s the catch, right? Hiring them can bring significant advantages but it’s essential to recognize that they also come with their own set of challenges that you need to be aware of, depending on how you operate:

1. Initial Costs Can Be High

Like we said, contractors often command high fees for their specialized expertise. Sometimes that initial investment can be daunting, especially for small businesses or startups with limited budgets. It’s crucial to weigh the potential benefits against the costs to make sure that hiring an outside expert aligns with your financial plans.

2. Limited Institutional Knowledge

What they command in specializations they lack in in-depth knowledge of your company’s culture, processes, and challenges. A full-time employee develops a certain familiarity with how your business operates. Some ERP consultants lack that, which can result in suggestions that are not fully aligned with your organization’s unique needs. So, try to mitigate that by asking the right questions and find someone willing to put in the effort to get to know you a bit better.

3. Temporary Nature of Engagement

Once a project’s contract is complete, the consultant typically moves on, which can lead to a gap in knowledge transfer. If you don’t have a solid plan for implementing their recommendations or integrating their strategies into your team’s knowledge, you might find it challenging to maintain the momentum they’ve created.

4. Risk of Dependency

Relying too heavily on external expertise can hinder the development of your internal team’s capabilities. If your organization becomes too dependent on outside expertise, it can stifle innovation and the growth of your in-house talent.

A great way to manage that is by using your consultant to train and upskill your internal team on the new initiatives and systems put in place. Balancing external insights with internal capabilities is crucial to fostering a strong, self-sufficient organization.

When expanding your ERP team, choosing between engaging a consultant on contract and hiring a new employee depends on your specific needs and goals. The long and the short of it (get it?) is this; contract ERP consultants:

• offer flexibility and specialized skills for short-term projects, allowing you to scale without a long-term commitment. However, their independence may challenge team integration and continuity.
• bring extensive expertise and an objective perspective for more complex, long-term projects like digital transformation and the ensuing change management. They are ideal for addressing complex challenges, yet, their temporary nature and potential high costs can be a barrier for smaller businesses and may mean there is more to consider and negotiate for those long-term engagements.

Hopefully this helps you to evaluate your situation thoughtfully. Looking at everything discussed, consider your current needs, budget constraints, and long- or short-term objectives. With careful planning, you can work through any drawbacks and leverage the strengths of an ERP consultant contractor while building a strong internal team and position your business for success.

So, as you ponder your options, remember that we know a thing or two about ERP experts skilled in a wide variety of modern ERP software. Get in touch with one of our representatives and we can examine your goals and come up with a strategy to work the best fit into your business plans.