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Navigator Business Solutions
By Curtis Campbell • December 13, 2013

Is It Time for a New ERP System?

The following was adapted from an interview with Bob Parker, GVP at IDC Manufacturing Insights.

Better-than-expected growth and demand has accelerated the ERP market, driven by pent-up demand for more modern solutions that leverage and incorporate embedded analytics, mobile applications, cloud, and social solutions to enhance work processes, drive down overhead, and provide businesses with more flexibility to enter new markets.

Q: How satisfied are small-midsize manufacturers and distributors with their existing business management systems?

A: At IDC, we do a TON of research, and we typically break it into dimensions.  One such dimension pertains to the product capabilities, and the other sheds light on the ownership experience, including costs.  When you think about functionality, how deep into an industry does the vendor go?  How broad is functionality into manufacturing and distribution?  When it comes to costs, how satisfied is your business with the costs as well as how much it is being used?

When it comes to functionality, typically a company remains happy because they simply don't know what else it "out there."  However, when it comes to the system keeping up with the speed of their business, which includes scalability, that is where businesses begin to score their systems lower, suggesting that it may be time to consider a new ERP system.

Q:  What are the options for midsize manufacturers and distributors to address these problems?

A: Prior to addressing any problem, a business must understand the need.  Further, it must understand how the current system created a barrier to implementing more modern business processes.  Small to midsize companies must address this "gap" so to develop a "really solid articulation of that problem for executive leadership." 

Once this is complete, a business must then look at what alternatives are available.  Businesses certainly can add on pieces and point solutions, or simply replace the whole system.  But, if this is done incorrectly, the problems the business was facing previously will still be there.  Further, a business can attempt to "quarantine" the existing business system and bolt-on various applications.  While this is a viable option for some businesses, this bolt-on approach can potentially magnify issues with various integrations.  

Q: What are the benefits of replacing an aging business management system?

A:  One of the benefits of replacing the system is that businesses can overcome information access issues.  As businesses seek to get more modern, businesses should look to where they need to extend their functionality, whether it is CRM, procurement, manufacturing, EDI, eCommerce, etc.  

There is also the benefit of lower cost of ownership.  IDC estimates that moving from some of the last-generation architectures to modern, scalable, service-oriented-type architectures can take out as much as a third to half of the cost of ownership.  These savings arise from reducing the amount of custom code that needs to be maintained by moving to more modern architecture.  

A modern architecture also makes the information much more accessible.  Yes, you can take out a third or half the cost of running your business system through modernization, but what's probably more important - especially from a business-leadership perspective - is that dissatisfaction with not being able to get to relevant information goes away.  You can now put the information to use in making better decisions as well as more timely decisions - not just corrective action but also the ability to see new business opportunities and capitalize on them.

You know the age-old saying that you use only 10% of your brain?  I think that small to midsize manufacturers and distributors only use 10% of the information that's available to them.  With current systems, business intelligence is no longer a bolt-in; its integrated out-of-the-box; enabling companies to make more timely, educated decisions.  

Q: What should small to midsize manufacturers and distributors look for in a provider of a new ERP solution?

A: First is the service-oriented architecture discussed previously.  Some providers of business systems have a nice interface now, but behind the scenes, they haven't updated the architecture.  So, make sure the providers systems is truly on a modern service-oriented architecture.

Secondly, integrated business intelligence should be part of the package.  It should be integral to any of the modules you are wanting to deploy.  Likewise, there should be a native CRM and procurement applications that seamlessly fit into the rest of the system.  In addition, there should be native support for mobile delivery of the applications, which the option to post transactions from mobile devices.  You should also be able to deliver that information to mobile devices to make consumption an "anywhere, anytime" proposition.

Third, consider the vendor by itself.  What kinds of training do they offer?  Are the software interfaces intuitive?  Can the vendor train and certify users?  Also, what does the vendor provide in terms of ongoing, and role-specific training?

Lastly, and perhaps most important, how well does the vendor understand your industry? Does the vendor profess to be well versed in manufacturing and distribution?  The vendor should understand far more than just accounting, and by understanding accounting, I mean more than just debits and credits.  Take materials planning and factory scheduling - does the vendor understand how to streamline these and other related processes?

Further, the vendor must give a business a sense that it also have a technology road map to support your business going forward.  Your business certainly doesn't want to find themselves treading water in 5-10 years.  You need to make sure that there is a clear path to new functionality and better technology - as they become available.

SAP is one such example of a forward-thinking enterprises that has more than just 5-10 years in their view.  In fact recently, SAP announced a revolutionary migration to their proprietary HANA platform, which brings best-in-class in-memory technology to even the smallest of SAP's customers; enabling them to process more transactions and run more involved reports in seconds versus minutes or hours.

To learn more, visit http://nbs-us.com/sap_cloud or call 877.395.4SAP today.