ERP? Or a niche solution that’s a better fit? It’s a tough call, says Malcolm Wheatley.
When Belper, Derbyshire-based boiler manufacturer of Vaillant Group began a programme aimed at cutting lost productive time, it found that information technology quickly identified just how extensive the causes of that lost time were.
One significant source of lost productive time, for instance, was supplier-related downtime, caused through late deliveries or non-conforming parts. Lost time due to skills shortages was another cause, with the flipside of this being lost time spent on misaligned or ineffective training. Absence, too, was a problem, with gaps on the plant’s production lines being filled by costly temporary agency personnel.
“Make sure that the business case reflects the full costs and challenges of integration. A niche solution puts you on a treadmill in terms of integration, and an ERP system can work out cheaper” – Peter Thorne, Managing Director, Cambashi
Armed with information about where the problems lay, management then set in place lean improvement programmes to tackle the various issues that the findings had raised.
As a result there’s been a 33% reduction in downtime caused by suppliers. An 80% drop in lost time due to skill shortages and absence levels are down 31%, from 4.1% to 2.8%. An additional 30% reduction in costs for temporary staff has come in the wake of the above improvements.
Overall, in fact, nonproductive time has been turned into productive time, generating a 47% increase in productive hours from an unchanged number of employees, leading to a 33% increase in production volume. What was the information technology that guided Vaillant management to these improvements? Not the business’s world-class ERP system, but a workforce management application from specialist vendor Kronos.
“Kronos is a ‘best-of-breed’ niche application that gave us exactly what we were looking for, with no compromises,” says Vaillant continuous improvement manager Allan Harley. “It was also fully compatible with our ERP system – so we’ve got the best of both worlds.”
Vaillant is not alone in seeking this middle ground. Kronos operations director Simon Macpherson says that a continual stream of customers is beating a path to its door, looking for real-time workforce management information. And they want it delivered from a tool that’s quickly deployed, and which will complement an existing ERP system.
“Kellogg’s, Nestlé, Caterpillar: they’ve all got major ERP systems, but have come to Kronos for workforce management,” he says.
It’s a statement that cuts right to the heart of the ERP versus ‘best-of-breed’ niche solution debate. Undeniably, ERP systems have expanded their application footprint: from human resource management to purchasing, and from supply chain management to manufacturing execution. And consequently today’s ERP systems can offer a high level of functionality. But will it ever be enough to be a one-stop-shop?
“Saying that SAP can do everything that every manufacturing business wants would be wrong: there will always be a need for niche solutions to deliver specific capabilities” – John Hammann, Industry Principal for Manufacturing, SAP
Many manufacturers hope so. They want an ‘out of box’ system, perhaps with pre-built ‘best of class’ industry-specific business processes and custom implementation methodologies. One solution, from one vendor, that stretches right across the business.
But life isn’t quite that simple. Niche best-of-breed solution vendors have fought back against attempts to expand ERP’s traditional remit and today’s solutions offer even better functionality. In addition, improved integration technologies have made it easier than ever to join disparate systems together into a functioning whole.
Niche solutions bring risk and additional costs, to be sure, but their appeal to manufacturers is simply put: a tool virtually guaranteed to be ideal for the task in hand, without compromise.
And the range of niche solutions on the market is enormous: forecasting, shopfloor control and scheduling, maintenance, supply chain planning and execution, and transport route scheduling, to name just a few.
Making the right choice
So which approach is better? Ask this question today – as opposed to ten years ago – and the answers are surprising. The dogmatism that once characterised the ERP versus best-of-breed debate has been replaced by a refreshing sense of realism. No longer do niche solution vendors suggest that integration issues can be ignored, and no longer do ERP vendors dogmatically insist that ERP will solve all problems. When it comes to advanced planning and scheduling, for instance, Sage ERP X3’s inbuilt capabilities aren’t necessarily the best solution, recognises Steve Tattum, Sage ERP X3 product manager.
“We don’t deal with the complexities of multiple constraints, multiple supply chains, or sophisticated supply chains,” he says. “In other words, we can schedule on labour availability or tooling, but not both – and if that is a requirement, we have no hesitation in pointing people at our partner Preactor.”
SAP, too, is refreshingly candid about where it draws the line between inbuilt capability, and when it’s best to go to a niche solution.
“Saying that we can do everything that every manufacturing business wants would be wrong,” concedes John Hammann, SAP industry principal for manufacturing. “There will always be a need for niche solutions to deliver specific capabilities. Take manufacturing execution: we have some MES capabilities, but also integrate well with third party providers when our inbuilt offering isn’t enough.”
Indeed, points out Jeremy Harford, managing director of Mestec, a specialist provider of factory floor productivity solutions, ERP systems usually don’t have the ‘placeholders’ to actually store the highly granular manufacturing data that MES and similar systems require.
At Crawley-based aircrew flight simulator manufacturer, Thales Training & Simulation, for instance, a Mestec Manufacturing Smart Box touch-screen system is providing unparalleled visibility into factory floor operations, boosting duedate performance while helping to cut costs.
“For every simulator we’re building, we can call up a dashboard and see its exact status,” explains assembly and installations manager Rob Betteridge. “Before, gauging progress was something of an art: now, we know where we are with pinpoint precision.”
“The identification of non-productive work and unproductive time is very important to us, and we’ve never previously had the ability to do this before,” adds operations director Paul Arnold. “Now, we know exactly where we’re losing time – and can tell if the root cause is supplier failure, or issues within our own manufacturing organisation, such as engineering changes.”
But if niche solutions offer richer functionality than out-ofthe- box ERP, it’s functionality that comes at a cost – and not just the cash cost of the software licenses involved.
“Within ERP, we deal with asset management up to a point. But if companies need more, then we’ve got Infor Enterprise Asset Management, which provides functionality that most ERP vendors won’t have the bandwidth to develop” – Phil Lewis, Business Consulting Director, Infor
“If you’re contemplating going with a niche solution, make sure that the business case reflects the full costs and challenges of integration with ERP and any other systems,” advises Peter Thorne, managing director of analyst firm Cambashi. “A niche solution puts you on a treadmill in terms of integration, and an ERP system can work out cheaper.”
“The more niche solutions you have, the riskier it is to knit them all together from a contractual point of view,” adds Paula Barrett, a partner in the technology practice at law firm Eversheds. “If something goes wrong, or gets delayed, to whom do you have recourse? That’s not to say, don’t do it – but do go into it with your eyes open.”
That said, integration is less of a challenge than it was, thanks to advances such as web services, XML, and inter-operability standards. Increasingly, too, ERP vendors offer middleware layers and ‘connectors’, to facilitate integration.
Some ERP vendors make it even easier: Epicor’s ERP solution, for instance, has been completely re-written around Service-Oriented Architecture principles, precisely to make integration easier, points out director of marketing Malcolm Fox. Acquisitive Infor, for its part, now has a foot in both camps, offering both ERP and a clutch of leading niche applications.
“The more nice solutions you have, the riskier it is to knit them all together from a contractual point of view. That’s not to say, don’t do it – but do go into it with your eyes open” – Paula Barratt, Partner, Eversheds
“Take asset management,” says Infor business consulting director Phil Lewis. “Within ERP, we deal with it up to a point. But if companies need more, then we’ve got Infor Enterprise Asset Management, which provides functionality that most ERP vendors won’t have the bandwidth to build into their products.”
The reality is that in future, integration is going to be more likely than not, argues Peter Walker, country manager at integration solutions provider Information Builders.
“There are an awful lot of very attractive niche solutions out there that aren’t even offered on-premise, but which are only available through the Cloud, or on software as a service basis,” he notes. “Almost by definition, integration as a business need isn’t going to go away – so manufacturers need to engage with it, rather than fear it.”
So is there a conclusion? In the end, it seems to be that integrating niche solutions is probably worth the pain, if the resulting gain is strategically important enough.
“A business’s unique selling point or competitive edge isn’t always going to be reflected in an off-the-shelf mainstream ERP system,” says Sally Waterston, director of business and IT consultancy Waterstons. “When that’s the case, an application that’s been designed for your particular industry or requirements has obvious attractions.”
But don’t make the mistake of thinking that you’re more unique than you really are, warns Neil Ferguson-Lee, solution architect at Microsoft Dynamics implementation specialist eBECS.
“Every company thinks that it’s different, but that doesn’t mean that they should go for a niche solution without careful consideration of how strategic that requirement really is,” he sums up. “Interfaces cost money, they need to be maintained, and they have an impact on the rest of the organisation, and on the budget.”