ERP for the next decade

Posted on 8 Dec 2010 by The Manufacturer

Back in 2008, as recession started to bite, Reading-based SAS International — a world leader in the design and manufacture of precision-engineered metal ceilings — took a far-reaching decision to invest in IT as an enabler of growth. Malcolm Wheatley explores.

Established in 1968, SAS International had grown and prospered ever since.

Its products had found their way into many of the world’s most advanced buildings, including Chek Lap Kok Airport in Hong Kong, and 30 Saint Mary Axe (‘The Gherkin’) in London.

But growth in the years to come needed a better ERP platform than the one that the company was presently using, realised Louise Evans, IT manager at SAS. The company opted for Infor’s SyteLine, a system especially designed for medium sized companies.

Yet the project wasn’t just about replacing one application with another. Instead, SAS—described as ‘visionary’ by one Infor spokesperson—had very specific long-term objectives in mind, primarily relating to the customer-facing processes that would power its growth in the years ahead.

In short, the new system would bring together, on a single transaction platform, the company’s three separate manufacturing plants; its head office; and a new business unit in Dublin.

“The idea is that a customer can now place an order with us that involves work across several of our sites, and we can manage delivery time across the whole order,” said Louise Evans. “It streamlines the whole business process, and enables us to easily share information.” Yet, truth be told, surprisingly few businesses take such a long-term or strategic view of their ERP platforms. Many see ERP as little more than transaction ‘plumbing’, a way of generating the key documents and data points in their order-toinvoice process. But that long-term perspective is essential if manufacturers aren’t to find themselves saddled with a system that, a couple of years after implementation, simply isn’t up to the job.

An overseas expansion, for instance, isn’t going to be helped by the selection of an ERP system that lacks multi-currency and multilanguage support. Likewise, manufacturers on the acquisition trail will find hoped-for post-acquisition efficiencies to be elusive if they are saddled with a system that makes it difficult to deliver a single global instance, or which lacks the breadth of functionality to support anything other than particular niche industry verticals.

In short, then, manufacturers considering a new ERP system today have a difficult challenge to face.

First, what will their own business look like in ten year’s time and, second, what will the outside world, and its technology paradigms, look like as well? Yet one thing is certain: there are going to be surprises, and not least in terms of technology.

Manufacturers in 1990, for instance, couldn’t have foreseen the rise of e-procurement and e-commerce in the decade ahead. Today, technology is again redefining the art of the possible.

“The decade ahead certainly presents new possibilities, with cloud computing, Software as a Service and enterprise application mobility emerging as the new frontiers,” says Rajan Nagarajan, CIO and global head of the competency solutions group at business consulting and IT services company Mahindra Satyam. “While ERP systems have come a long way, they now have to contend with some very different emerging realities.” Advances in ERP functionality, for instance, are making a major impact on ERP’s return on investment. In almost every way, today’s ERP systems are a huge improvement on those that were around ten years ago: less expensive, easier and quicker to implement, and with a breathtaking range of functionality built-in as standard. In the decade ahead, this can only accelerate.

Broader technology trends, too, are discernible.

Some — even though seemingly strong — may not stand the test of time.

Cloud computing, for instance, may well revolutionise the delivery of ERP, eliminating at a stroke the data centres that manufacturers today must invest in. Or it may not: quite apart from the tendency of promising-looking technology paradigms to wither and die — remember Application Service Provision? — manufacturers may, not unreasonably, regard ERP in the cloud as a step too far.

Talk to those close to the ERP scene, though, and it’s possible to point to several broad areas of impetus that genuinely seem set to have an impact over the next decade. Not least, perhaps, because they are not solely technology-led: in every case, while technology has a bearing on them, there’s a genuine business requirement and benefit as well.

Agility, enterprise application mobility and business intelligence, in short, all seem poised to become important in the years ahead — with the latter involving significantly greater connectivity to plant-floor systems than is presently the case.

“Today’s businesses feature far more sophisticated and inter connected supply chains that span global boundaries, and require manufacturers to react quicker to change,” says James Norwood, vicepresident of product marketing at ERP supplier Epicor. “And as the last few years have proved, economic conditions can change rapidly effect, giving an edge to agile organisations that can respond quickly.” “‘Agility’ and ‘intelligence’ are two words which will drive manufacturing industry in the coming decade, and this will influence the demands that they place on ERP systems,” agrees Rajesh Dhekne, supply chain practice head in the manufacturing business unit at consultants Wipro Technologies.

In terms of business intelligence, for example, don’t look for static reports or staid ‘drill down’ screens, suggests Steve Tattum, product manager for Sage’s ERP X3 and specialist manufacturing applications. Instead, look for dynamic ‘dashboards’ that help managers quickly see — and respond to — issues that are facing the business. Look, too, for intelligence drawn from deeper within the enterprise than is presently the case: plant-floor devices and applications, warehouse systems, and bulk storage raw material hoppers.

“It’s far from unknown to see large expensive machines on the factory floor, with someone with a clipboard jotting down data to be typed into the ERP system,” says Steven Hargreaves, group product director at ERP provider Solarsoft. “And quite often, the challenge is under-utilisation of such machines, yet you don’t see this reflected in the ERP system, because the ERP system isn’t aware of it.” And look too for that intelligence to be two-way, as well. “We’ll see a much greater use of RFID and barcoding,” says Tattum. “Not just for data collection, but as a means of issuing instructions — the required colour of a product, for instance, or the test process that is to be followed.” Mobility is also set to become more important.

There’s been an explosion in terms of the affordability and number of mobile devices that can meaningfully display whole screens of information, notes Conrad Troy, a partner with consultants KPMG Performance & Technology, a division of advisory firm KPMG. The result: mobile workflow, and mobile enterprise applications, are at last a genuine possibility.

And they are likely to be genuinely addictive, too, reckons Rikke Helms, European vicepresident of Antenna Software, which has helped manufacturers as diverse as Coca-Cola, Ricoh, Carrier, Heineken and Toshiba extend ERP functionality to the mobile workforce.

“Companies always start with functionality such as equipping field service engineers with mobile access to the ERP system while they’re out on the road at customers’ premises,” she says. “And then they start to see the broader possibilities: if a field service engineer can communicate with an ERP system while he is on the road, why shouldn’t a chief executive be able to do the same thing from their iPhone or other similar device?” But if mobility, business intelligence and agility are individually set to be some of the drivers shaping ERP take-up and deployment in the years ahead, their impact is collective, as well. In short, they are also mutually reinforcing.

Agility is enhanced though application mobility, for instance: through no longer being tied to a computer on a desktop, businesses can react more quickly.

Likewise, agility and mobility influence the shape of a business’s approach to business intelligence.

Similarly, business intelligence helps a business to identify where and how it needs to be more agile.

Yet the reality for many businesses is that the journey will be uneven: sporadic leaps forward, punctuated by periods of consolidation.

Suffolk-based storage tank manufacturer Permastore, for instance, has seen its recentlyupgraded Epicor ERP system deliver a significant improvement in planning performance. But, going forward, while it certainly sees its priorities as agility, business intelligence and mobility, progress is very much on its terms, not the ERP industry’s.

“We’ve been thinking about wireless technology a lot, in terms of getting feedback from the factory floor more quickly, enabling us to make decisions on the basis of that information sooner than we otherwise would,” says operations manager Stuart Ransom. It’ll happen, he says—but only when the time is right.

“And next year, we’ll be barcode scanning parts as they come off the line,” adds planning control manager Ruth Joy. “We want faster information—but it’s got to be accurate.” Even so, Permastore will be well ahead of many other manufacturers. For it’s one thing to have functionality built into an ERP system and quite another to use it. The sober reality: many companies use just a small proportion of what ERP can offer.

London-based consultants A.T. Kearney estimate that most businesses use only around 30% of the ERP functionality that they’ve licensed and paid for.

No matter what the next decade brings, then, the challenge for many manufacturers will be making better use of what they’ve already bought.