The Evolving World of ERP
The software continues to offer new features that may help your company.
If you’re like most companies, you already use ERP software. While enterprise resource planning software is commonplace at most manufacturing companies, the way it is used may not be. Consider that what worked yesterday may not be the best option for the future. “Everything needs to be faster and more efficient,” says Jay Deakins, president of Deacom Inc. (Wayne, PA). “It’s a survival thing. Companies need to be able to provide more product for less money. And a lot are looking to ERP to make that happen.”
According to research from Gartner Inc., the ERP software market was expected to reach $24.9 billion in 2012. Companies know that they need to monitor and automate their business, and it can be difficult without the right software.
“In a manufacturing company, the money is made or lost on the plant floor. So if you look at ERP, ERP systems are only there to support the plant floor,” says Randy Flamm, president of IQMS (Paso Robles, CA). “Accounting systems have to be good, but they are not going to make you money. The money has to be made on the plant floor. That’s a key point. Our people, when they go in to demo software, make that very clear.”
So the right software is obviously important, and it can help to know what’s available today. Though it can be difficult to wade through the flood of information on mobile, the cloud, and software as a service (Saas), it might be time to learn more. According Nick Castellina, research analyst, enterprise applications of the Aberdeen Group (Boston), 48% of the best-in-class companies have the ability to access ERP on mobile devices, and another 30% plan to implement it in the next 24 months.
Consider mobile. On the manufacturing floor it can be possible to make millions of dollars worth of bad product in minutes, so the benefits of easy-to-access information seem clear. “Traditional ERPs work in days, months, quarters, years,” says Mark Symonds, CEO of Plex Systems (Troy, MI). “When you’re tied to the shop floor as we are, we work in minutes, seconds, hours.”
But mobile can mean many things: a manager notified about problems on the line from anywhere in the building or an executive checking the latest numbers during a business trip to China. While some may consider laptops mobile, others say that devices that always have access unless you turn them off—and increasingly, it seems that people aren’t turning them off—is the real meaning of mobile. This can be interpreted as something that infringes on personal time, but in some ways, it just does it differently, says Cindy Jutras, president of Mint Jutras (Windham, NH). She offers the example of a parent at his or her child’s soccer game. The parent may now see something on his or her smart phone and then be able to answer the question or investigate the problem from there, rather than having to leave the game and head to the office.
You may also be familiar with software as a service (Saas). While using Saas doesn’t necessarily mean that a company will be best in class, it does correspond with easier implementations.
And then consider the cloud, the Internet-based software option. With this method of software delivery, customers will get automatic updates. The software is always changing and staying current, so it never gets out of date. “It’s like having a new car all the time,” says Glenn Nowak, IQMS vice president of sales.
Plex Systems’ Jim Shepherd, vice president of strategy, says he was just talking to a customer about how Internet-based systems are much easier for employees to understand and use—so they actually will use it. They don’t have the kinds of problems that ERP systems might, where only small percentage of employees are using it, or just use it part of the time, and they have their own private system. “We just don’t see that,” Shepherd says. “People are comfortable with it. In that organization, the only person who doesn’t use our software is the janitor.”
Get the Most Out of ERP
But software delivery methods are just part of the picture. The software content itself is also important. Jutras says the number one way to see if you are getting the most out of your ERP software is to measure. Set goals and see if the software is getting results. “Measure where you are against the goals,” Jutras says. “It could be reducing operating or administrative costs. It could be metrics like percent complete, on-time and complete delivery, customer retention. Everyone has their own specific hot buttons.”
“The top performing organizations are more likely to measure usage of individual employees, and what functionality is having the biggest impact on the organization,” says Castellina. They can check on several aspects of the business, and see where they may be faltering.
But if measuring is the right thing to do, customization might not be. One trap companies often fall into is thinking that they are a special case. Jay Deakins says horror stories of ERP implementation often start from companies customizing all over the place. Consider that the software vendor deals with ERP software every day, while the customers may just work with two or three in their career. Deakins compared this scenario to that of a home improvement project: When building a deck on your house, you know how to do it once it’s done. But the process can be easier if customers understand that issues will crop up that they didn’t think about, and they should just be ready to think of a remedy to help their process. “When you talk quality, it’s process, process, process,” Deakins says. “That issue is to a large degree why we are in business. It’s all about quality.” Companies often buy software when the company doubled in size and need to create new processes when one person can’t handle everything any more.
And as the business changes, it is important for employees to accept change. Though change can be difficult to adjust to, the ERP software should change your business practices. Otherwise, why bother? But, as Jutras explains, there are two kinds of change. One is the positive type that can improve business. The other has the potential to be positive, but is the result of changing business conditions or environment. This is when it helps to have an adaptable ERP solution that can handle different conditions.
Implementing a new software should be about what it can do to improve business, and adjust to changing business conditions. For example, companies might be considering bringing manufacturing back to the United States, and their software needs to flexible enough to allow this.“You don’t want to be at a place where it makes economic sense to bring it back onshore, but your business system is constraining you from moving,” says Malcolm Fox, Epicor’s (Irvine, CA) vice president of product marketing. “Get the core functionality up and running quickly, but then tweak it and modify it with subsequent use. Some people spend too much time upfront and end up with something un-implementable.” Still, he acknowledges that changing the software can be difficult because the business is still in motion: “It’s open heart surgery on a patient that’s running around.”
And, in some ways, the running around is never done. “When implementing a new ERP system, if it does provide you with these tools, you should expect that your ERP implementation is never complete,” says Fox. “An ERP implementation will constantly evolve. Your ERP should be freeing up your organization to move in whatever way it needs to.”