posted on 1/12/2011 12:57:21 PM
What do manufacturing companies need from their ERP systems in the changing global economy? The recent actions of software vendors may provide some clues.
Enterprise applications have long formed the information backbone of most manufacturing companies. The question is, just what does the enterprise need from its backbone these days? Can the current backbone work in the volatile “new normal” economy? What is important in ERP today?
There is no single answer to these questions. Each company’s views lead to questions about ERP strategy. Recent events concerning products from major ERP providers, however, can offer a glimpse into what might matter.
Add elements vs. replace system. Oracle’s announcements make it clear that for the short term, manufacturers will look at its Fusion offering for specific upgraded modules, not a full suite. Many ERP providers, including Consona, Infor, and SYSPRO, have long presented a module add-on approach to customers. Some manufacturers are also using add-ons to test software as a service (SaaS) or hosted software.
If, however, you are thinking about replacing your ERP system rather than simply adding on, there are two sound reasons for doing so: global needs and timely industry fit.
Going global. Sage Group has extended its reach to allow customers to more easily go global with its X3 Suite; Sage now has staff to support the suite worldwide. When an ERP package does not support global currency, language, and regulations, that can be a sound reason to replace it.
Quick-implement industry solutions. A poor fit for your industry (such as bill of materials in a formula-based business) is another worthy reason to replace an ERP system. Infor Global Solutions now has Express Projects, which is not just a pre-configured project industry template; it also includes rapid development for customer tailoring. Lawson Software has QuickStep systems for fashion, food and beverage, and asset management. CDC Software, IFS, Infor, and others have built an entire strategy around specific vertical industry solutions.
Product innovation support. CDC Software’s Ross ERP package now has an industry-centric product lifecycle management (PLM) module, as does Infor. Lawson has a fashion-optimized PLM. For SAP customers, Right Hemisphere’s 3D visualization is available in the ERP Complex Assembly Manufacturing Solution (previously available in PLM). Oracle has continued to move its Agile PLM forward, adding pharmaceutical-industry capabilities.
Reporting and analytics. QAD added business intelligence (BI) in a recent update, and Microsoft Dynamics did so with financials in Management Reporter. Some ERP providers have embedded BI into ERP applications, notably SAP AG and Oracle. Lawson’s Opportunity Analyzer is a structured engagement to align initiatives with metrics to achieve key financial goals.
Hosted ERP as OpEx. ERP via hosted software as a service (SaaS) (a.k.a. cloud computing) can shift expenses from capital (CapEx) to operating (OpEx) budgets. NetSuite and Plex Systems have this as their core business model. Those offering it as an option are CDC Software, Compiere, Consona, Epicor Software Corp., Global Shop Solutions, Glovia, Infor, IQMS, Lawson, Microsoft OpenBravo, and SAP. Beyond the move to OpEx, hosted ERP can often be implemented faster and at a lower cost, as well as expand data sets almost instantly. The key is that business processes must still change, and underlying data must be accurate.
So, what will your next ERP move be? New ERP system? New modules? Hosted SaaS? Or is your next investment elsewhere? Many companies of all sizes now need extra functions that are available from a third party, or in some cases from their chosen ERP provider.
Julie Fraser is president of Cambashi Inc., the U.S. arm of the industrial-focused analyst/consulting/market research firm based in the United Kingdom.