Selecting the wrong ERP system can be a very expensive mistake – not to mention a career-limiting one. Yet it’s very easily done.
According to research carried out by IDC Manufacturing Insights in conjunction with ERP vendor Infor, a third of manufacturers in Western Europe see no measurable benefit from their ERP system — hardly a ringing endorsement of ERP, given the cost and effort involved in selecting and implementing a system.
Yet it doesn’t have to be that way. Talk to manufacturers, consultants and ERP experts, and several common threads underpin the successful selection of a system that will deliver value.
1. Go for industry ‘fit’
North Wales-based KK Fine Foods has grown 700% over the last six years — a growth rate that chairman Graham Jackson credits Ross ERP with helping to achieve. Purpose-designed for the food industry, the system is comfortable with recipes, multiple units of measure, and ‘disassembly’ — manufacturing a variety of different products from a single raw material such as a chicken.
Better still, a number of ERP vendors these days offer ‘industry templates’, pre-configured with industry-leading best practice. “ERP versus ‘best of breed’ niche solutions is an age-old debate — but the arrival of industry-specific configurations of ERP is tipping the balance,” says Sanku Bose, global head of the ERP practice at system implementors ITC Infotech. “The cost of ownership is lower, support is easier — and you’re getting industry best practice ‘baked in’.”
2. Make sure it delivers actionable information
According to a recent survey of 700 manufacturers by analyst firm IDC, a common regret among buyers of ERP systems is not spending enough time investigating the reports and screens that a system provides by way of management information.
“The ability to get data out of a system is absolutely critical,” says Andrew Kinder, director of solutions marketing at ERP vendor Infor. “Does it provide, at a user level, the information that people actually need in order to do their job?”
Make sure, too, that critical information is truly real-time. “Management information limited to a stack of reports generated when the clock is stopped — such as at month end — isn’t true management information,” says Simon Charlton, sales director at global IT consultants Columbus IT. “Newer systems turn that approach on its head, notifying exceptions via ‘alerts’ — it’s a totally different paradigm.”
3. Future-proof your investment
According to Antony Bourne, global industry sales director at ERP supplier IFS, a mistake that many companies make when selecting a new system is to meet today’s needs, but not tomorrow’s.
“A manufacturer might consider moving into aftersales service, for instance — and then find that the vendor of their recently-implemented ERP system didn’t offer an aftersales service module,” he warns. “Make sure that the system you’re selecting meets such likely extensions of today’s requirements. You don’t need to buy it now — you just need to know that it’s there, and that you can buy it later if you want it.”
4. Don’t dismiss the upgrade option
Sometimes, manufacturers start looking for a new ERP system having previously dismissed the idea of upgrading to a more current version of their existing system — for reasons that may be no longer valid, or indeed, lost in the mists of time.
Kent-based premium sporting goods manufacturer and distributor Unicorn Products, for instance, carried out detailed evaluations of products from other vendors before deciding to upgrade to a newer version of SAP’s ERP suite.
“We came to the realisation that any package had issues, and that we’d simply be swapping one set of issues for another,” says managing director Edward Lowy. “We’d already invested a lot of time and energy mastering SAP, so upgrading what we’d already got was the better course of action.”
5. Server-based isn’t the only option
There’s a lot of hype about cloud computing, to be sure. But under the prosaic banner of ‘Software as a Service’ (SaaS), it’s already reality — delivering potentially significant savings in IT infrastructure and management costs.
And even mainstream players such as SAP are getting in on the act, with an offering called SAP Business ByDesign — a fully integrated business management software solution designed for midsize companies or small businesses that want the benefits of large scale business applications without the costs of a large IT infrastructure. NetSuite is another option, while Oracle on Demand offers a SaaS-based way to access Oracle’s Oracle E Business Suite.
“While there may be fewer ERP systems on the market these days, there are more delivery models to consider and evaluate,” says Rajesh Dekhne, practice head at the manufacturing strategic business unit of systems implementor Wipro Technologies. The moral? Expensive factory-based servers, in short, are no longer the only game in town.