ERP: Navigating changing waters
- February 20, 2015
Choosing the right ERP system can be tricky
Enterprise Resource Planning (ERP) software for manufacturing has been around for a long time, but the market has now consolidated around a few big players (SAP, Oracle, Microsoft, IBM) and a collection of smaller vendors with specific, value-driven offerings. Choosing the right ERP system can be tricky, because you don’t want to be locked into an expensive, labour-intensive application, and you also want to keep the door open for future technological advances, particularly related to mobility and analytics.
“The evolution of the market around fewer, more dominant players unfortunately leaves less room for smaller, more vertically focused vendors to carve out a niche for themselves,” says Carmi Levy, an analyst with Voices.com, a London, ON, tech company. “That doesn't mean it's impossible, of course, but it means those who want to survive will have to raise their game.”
If you are looking to invest in ERP, you certainly want to go with a vendor who will be around for the long haul. That would seem to advantage larger software companies, but some niche ERP vendors have had great success because they are developed by people who live and breathe manufacturing. This can’t always be said for the major players, which are often sales’ driven organizations that are trying to be all things to all people.
“We exclusively sell Infor Visual ERP and Infor Service Management (ISM)–these products have traction with businesses because they are built for the industry that we sell to,” says Dan Telep, president & solution specialist at ERP That Works, in Maple Ridge, BC. “That means little to no customization and a more rapid implementation and training cycle. These products also continue to be developed and enhanced every year, which helps us keep current with industry trends and tools.”
That makes Infor sound like a good choice, but it still behooves a metalworking shop to look around and test out the market. It can get very confusing, with vendors making conflicting claims, and it can be difficult for even larger shops to perform a reliable evaluation. Here is where a third party assessment can prove invaluable.
“We are seeing a lot of companies ‘outsource’ their ERP selection to an impartial external consultant, rather than managing the process internally,” says Telep. “This has done a few things. It has helped prospects stay on course with regard to budget, functionality, and decision timeline. And it has also left many traditional ERP sales people feeling that they can’t control the sale.”
But, says Telep, that doesn’t change the fact that prospects want the same thing they have always wanted: efficiency and profitability through the effective use of technology and business processes. If a vendor isn’t afraid of a third-party consultant’s input, that may be a good sign, as it indicates that an objective evaluation is more important that driving revenue off a sales-driven agenda.
Making the call
One organization that can help out in this area is Top10erp.org, which has product comparison pages specific to systems by industry, manufacturing mode, and platform compatibilities.
“Manufacturers have extremely complex businesses, and there are a multitude of criteria required to sufficiently compare which ERP software products are worthy of consideration,” says Christina Morrison, general manager, Top10erp.org. “Comparisons should list objective criteria, which include price ranges and architecture, along with key features and capabilities.”
Morrison says that this then allows a manufacturer to narrow the search from the vast number of ERP solutions offered, based on what best fits the specific needs of their business. Central to Top10erp.org’s value proposition is its objectivity when providing decision support for what can be a very complex–and business critical–decision.
“If ERP was straight-forward and always successful, Top10erp.org wouldn’t be needed or utilized,” says Morrison. “To complicate matters, most previous ERP investments have not gone well for manufacturers, usually because of poor implementation, or simply because it was not the right system in the first place.”
The right choice can make a big difference for a small- to mid- size manufacturer up against bigger players. In many ways, the miracle of ERP is how it can help level the playing field, and provide shops with the tools to go head-to-head with their competitors, both domestic and international.
“In most cases an ERP solution will result in faster turnaround time to prep an estimate, efficient use of advanced scheduling and supply chain management, and proactive analysis of constraints and customer service issues,” says Telep from ERP That Works. “All of these are ways that help our customers win.”
ERP's big picture
If you are looking at ERP–either from scratch, as an add-on, or a change-out –then you need to be aware of the big picture. The future of ERP will be all about analytics, mobility, and customer relationship management (CRM). You may not think you need those things now, but you don’t want to be locked out in the future.
“With ERP applications, analytics are able to target data and provide value,” says Utsav Arora, a senior research analyst with IDC Canada’s Enterprise Applications and Services practice in Toronto. “But there is a skills shortage in this area, so a company can invest in an in-house resource, or take help from vendors, with partners also playing an important role.”
Ideally, an ERP application should automate as much as possible, because no metalworking shop wants to hire a raft of business analysts to figure out what’s going on. With mobile and tablet-based applications in high demand, both on the shop floor and in the field, reporting and tracking are easier. But these technologies also produce a lot of data, and few Canadian manufacturers know what to do with it all.
“Canadian manufacturers lag when it comes to business intelligence,” says Dan Telep from ERP That Works in Maple Ridge, BC. “Everyone produces data, but very few use it properly.”
But Arora from IDC says that Canadian manufacturers are investing in ERP precisely because they know the important role it can play. And that’s a good thing, because the overhead-intensive conditions within which Canadian manufacturers operate make them less able to absorb inefficiencies, and here’s where ERP can help – assuming they make the right decision.
Image: Production ERP