It is no surprise that most ERP deals involve ‘growth companies’.  Organisations of between $50 million and $1 billion in annual revenue  - typically looking to either replace outdated ERP systems or jump into the technology for the first time - are driving a lot of the action.

The vendor community has responded quickly and ERP solutions tailored to this segment abound, making it a buyer’s market.  But one of the most striking facets of this market has been the realisation that growth companies demand more.

They demand more than the “standard” ERP that is already out there for all to use.  Growth companies, driven by speed, see the innovation within ERP systems but - like the vendor community that serves them - know that such innovation is quickly copied.  Although Infor will innovate to stay ahead, we recognise that a degree of similar innovation may be expected in the vendor community.

So selecting which ERP vendor to work with becomes about more than just the software.  Implementation has become the new battleground.  Selection begins from a point where a business has already matched the software to their processes as closely as possible.

While many companies often believe they are more unique than they are and that they can't change processes, industry leaders realise they need to be willing to look at change to match the design of the software once a solution has been chosen. Otherwise the project and business are headed for some very expensive customisations.

This makes the implementation team and the upper management support the most critical pieces in the jigsaw of a successful software investment. Will the implementation be supported from the top down and will the team be given the necessary authority to make change decisions?

The vendor must therefore have a number of successful implementations of the software, within that industry.  Expertise and familiarity with the specific issues of the end user business is vital.  Vertical expertise needs to be as precise as possible.  This is not just, say 'manufacturing', or even 'process' or 'discrete', but truly industry specific –'baking', 'brewing' or 'chemicals'. 

Ideally this needs to extend to the business models at work and specific geographies of the customer.  And of course, the vendor track record has to include bringing in previous, similar projects on time and on budget.

Speaking of which, at this early stage it is also important that the vendor has a local presence to avoid expensive travel related costs, and has the capability to deliver the highest quality/ lowest cost and risk implementation support through an in-house offshore capability and a strategic partner network.

Many of these growth companies often report that it is very important that users don’t feel threatened and overwhelmed when learning a new system - or changing how they may have been doing a certain task. A reference list that a potential customer can call and ask questions as to how the implementation went is often the first point to resolving this. Beware a vendor that cannot provide one.

Looking at the user experience, it is important that a vendor can show how process changes will be addressed.  Training - preferably delivered by the software companies’ own personnel - is a vital part of delivering a successful implementation.

This team should also have a thorough understanding of the end user business (going beyond just the procedures in use at the time).  The training needs to be backed by a team of experienced consultants who can match system functionalities with business needs.  Even better, these points of functionality fit should be part of the product already – straight out of the box.

All of these elements of “fit” need to be wrapped up in a vendor that is financially stable and is willing to commit to the success of its customers.   This commitment may be shown in flexible finance options (for both purchase and support) or in supporting both global and local levels of implementation.

Successful software investment is about more than just functionality and features.  The investment of time and resources in driving a winning implementation are just as – if not more - vital for businesses growing rapidly and aggressively.  Success is not a tick in a box – it is the ongoing improvements in performance that ERP enables: and to deliver these, vendors must bring the service sizzle and well as the software steak to the table.

Posted by Peter Taylor,

Senior Director: ICS EMEA

Social networks are here to stay.  From the first days of MySpace to the Hollywood film of Facebook and the billion dollar valuation of LinkedIn, if you are not networked, you are nobody. 

As these networks become ubiquitous, the B2B impact is being understood better.  The good news is that applying the principles of connection and collaboration to business problems and solutions has been an objective for businesses for years - and tools such as Facebook, Slideshare and Twitter have brought such goals within reach.  The consumer experience of technology has begun to change the expectations and the face of technology in the boardroom, on the factory floor and across the office

How?  These networks have given business software a template to build upon – an intuitive, simple interface that fits the technology round the user, not the other way round.  And business systems have been quick to copy what it has seen.

As a result, personalisation has grown up.  Facebook “Likes” and status updates have morphed into information customised to your role or job function, enabling easy progress tracking for major projects.

Just like Tweetdeck or Netvibes, users can exploit one sign on or one screen to work across multiple applications, and the data comes to them.  And just as the social networks offer easy search capabilities, users can exploit common navigation and commands throughout software such as ERP and SCM, right across a business.  Comments sections and widgets have become reporting, interactive charts and KPIs - all at the click of a button.

But why does this matter?  What does it do for a business? …

….It makes it easier and more enjoyable to connect and collaborate. 

….It makes it quicker to find the information a business needs and improves how the business can act on that intelligence. 

….It takes the transactional data from systems such as ERP and turns it into the intelligence the business needs to outpace the competition.

… and because faster, more networked businesses gain critical advantage. 

How? They can move quicker, with more agility than the competition.  They can bring wide groups of expertise together and the technology supports rather than constrains people.  And this wins business.

Features such as an interface, search, or navigation are no longer purely cosmetic issues.  They are the sources of those critical last few per cent improvements in performance.  Just like the hundredths of a second that separate sprinters at the finish line, it is these incremental improvements that will be the hall marks of the fastest – and the fittest – companies.

Posted by Andrew Kinder, Head of Product Marketing, Infor

Integrated business systems that talk to each other, that share data and enable trulyunified reporting – I know what you are thinking: “Pinch me..I must be dreaming”. But it is no longer a case of “dream on”.

Many think that manufacturing business systems are isolated disparate islands of information - and to be frank, if you are an end user in a manufacturer, past experiences have ingrained this perception. Having to move from one application to another to find the information you need. Not being able to search or report on data across different software.  And despite the rise of mobile phones and tablet PC’s, many of you still cannot work away from our desk as easily as you would like.  These all damage productivity, make it harder for employees to do thier job and cause delays in key processes.  And they all stem from a lack of integration.

Point to point integration via middleware - the initial answer to this - is notoriously difficult to install, time-consuming to implement, and cumbersome to maintain. Most worryingly, it pits the IT department and you - the business user - against each other.

Because applications from different vendors tend to be updated on un-coordinated schedules, IT departments either upgrade whenever an update becomes available - committing money and resources to a task that provides no business benefit, or they postpone upgrades as long as possible. This keeps costs low, but denies users the improvements that come with new releases.

So how can we achieve real connectivity - integration to pull the business and IT systems together rather than become a source of friction?

One option is ‘loosely coupling’ the applications, delivering secure integration and enabling meaningful actionable data to flow to the user. This can be based on an Enterprise Service Bus (ESB), which transmits common business documents between applications, based on OAGIS messaging standards. 

Picture a postal service sending purchase orders, sales orders or delivery notes around an organisation. Each document has a tag, written in a common language that explains what the document is and what it should do.   Intelligent workflow routes these documents whilst monitoring processes to identify and report on exceptions.

Users can then search for any data element: customer or contact name, invoice number, work order, etc. and these ‘keywords’ can be tracked across all the business applications in play at a company.   

Going one better, the system can notify users via email, SMS or even Twitter every time it senses a change. For example, it could alert the relevant sales person (in real time) whenever the company has accepted a purchase order from a given client, shipped goods, cut an invoice or received payment.

Intelligent integration also means the system can automatically display business intelligence, content, and messaging before the user even realises it would be helpful - by assessing where the user is, in the context of a given process. And integration makes mobility possible. Completing expense reports while standing in line waiting to board a plane, or checking order status when visiting with a customer from a phone, tablet computer or laptop, saves time and boosts productivity.

It is this boost in productivity that really defines why it is so vital for companies to look at the applications they are using – making sure they are tightly connected, working together and working together in the right way.  Business software that is more intuitive, interactive and that delivers more than the sum of its parts will drive growth and propel the business forward. And it is available today.

Posted by Mark Humphlett, Director Product Marketing, ERP

Having declared that everything you think you know about ERP may be wrong, our focus now moves to defining ERP as it should be for manufacturers, and how the technology needs to be reinvented to deliver value.  For inspiration I turn to an unlikely source - Škoda.

For decades Škoda was the butt of motoring humour as drivers ridiculed the jewel of eastern European technology.    However, following the takeover by Volkswagen, the perception of Škoda in Western Europe changed completely.  In the UK, a major change was achieved with the risky, ironic "It is a Škoda, honest" campaign, which confronted Škoda's image problem head-on.  If the technical improvement and product quality of the Škoda models available at the time - the Fabia and Octavia - were anything less than excellent, the campaign would have back-fired.

But by 2005 Škoda sold over 30,000 cars in the UK and for the first time in its UK history, a waiting list developed. By 2010, 762,500 cars were sold worldwide, a record for the company.  So what are the lessons here for ERP?.

Firstly there is the recognition that looks are important.  For Škoda, this meant face-lifting the exterior of the cars and a dramatic overhaul of the interior.  For ERP software it means a radical new approach to the user interface.

This is not just an issue of cosmetics.  According to Aberdeen Group, best-in-class companies spend 25% of the working week looking for information rather than the 40% spent by ‘laggards’[1].  In addition these pioneers see a 30% annual improvement in ‘time to decision’ rather than 7%. Businesses cannot make this kind of progress if they have an ERP system dogged by an obstructive interface that is not keenly aligned to individual roles.

Secondly there is the critical role of added services.  For Škoda, it is vital to ensure that dealers establish a relationship that will lead the customer to return to other brands in the Volkswagen Group when they wish to ‘trade up’.  For ERP, pre-sales, implementation and after sales consultancy and support are just as vital.  This is particularly critical in the SME market where the perceived interruption of implementing ERP is the number one barrier to uptake.  But regardless of the size of the end user business, services that show an organisation how to exploit and maximize investment in ERP can be just as critical as the functionality of the system itself.

Lastly there is the common ground of domain expertise.  Prior to the initial Volkswagen stake (itself some nine years before VW took full ownership) Škoda had begun closing the gap on Western European automotive manufacturers.  They had looked and learned so that by 2000, Škoda had a full understanding of the Western European market and could compete. 

Therefore if ERP is to deliver – for example by consistently achieving the 20% reduction in operational costs that Aberdeen identifies as a hallmark of best in class companies - it needs to be rapidly adaptable to a given industry or business; standardizing, streamlining and accelerating business processes quickly.

ERP implementations however, do not have the luxury of a decade to perfect this fit.  Rather, ERP solutions need to deliver domain expertise ‘out of the box’ to provide a quick time to value without lengthy configurations. Just like a car, today’s ERP is about speed! Speed of implementation, and the all important speed of accessing the right information for effective decision making.

These specifics risk understating the profound strategic change that Škoda underwent – and indeed that lies ahead for ERP.  By thinking differently about what made them unique, about what drivers wanted from their cars and how to best fulfill these requirements, Škoda was able to transform from motoring joke to the entry level brand of the Volkswagen Group.  

Likewise, it’s time to think differently about ERP. For ERP vendors, thinking differently about the demands of manufacturers is now the order of the day.  Because unlike Škoda, ERP can no longer afford to be the butt of jokes in the boardroom.

Wolfram Schmid

Director, Product & Industry Marketing, Automotive  

ERP has been the backbone of manufacturing IT for so long that it has taken on its own myths. The trouble is that these myths are now ‘accepted wisdom’, despite being anything but acceptable or wise.  Destruction of these misconceptions is long overdue.

Misconception 1: ERP is costly

“For manufacturers with multiple sites, subsidiary companies, international facilities and specialised production processes, connecting systems into an ERP framework soon builds to the point where rip and replace seems the easier option.  For those looking to invest first time around, the costs of an ERP expert to analyse and align business processes to match the ERP system and train employees is prohibitive.”

This is simply not true.  The technology to connect disparate systems and deliver the information in a clear, meaningful manner is already available.  It does not matter if these are cloud, hybrid or on premise so the lower upfront investment options of cloud computing are there for manufacturers looking to expand or invest for the first time. Expensive ERP expertise is a thing of the past.  Dashboards and analytics based on familiar, industry standard platforms have replaced complex proprietary options.

Misconception 2: ERP is complex and always results in projects running over time

Manufacturing is a complex industry.  Research shows this will only increase.  Analysing business processes and developing software to automate them should eliminate complexity but when it doesn’t, we have to throw time and resource at the project and use brute force to crack the nut.

Now we know better.  Firstly complexity is no bad thing – it is a mirror of the business.  It enables operational precision and commercial opportunity.  But complexity can inhibit innovation so focus on making processes tight and lean before they are automated.  As a result, an ERP implementation delivers value earlier and is completed quicker.

Misconception 3: ERP implementations are invasive and disruptive

Connecting the mass of data and information to deliver a working ERP system is a huge task.  It is dwarfed only by the ongoing use of ERP that demands software upgrades, training, security patches and a lot more besides. This is a huge drain on the resources of the company.

Wrong again.  Intelligent deployment delivers consistent, meaningful information to the end user regardless of the deployment method, so a business can be up and running with ERP in days.  A modular, event driven approach means manufacturers can get the capabilities needed in the order they want without disrupting other areas of the business.

Misconception 4: ERP vendors are inflexible and notorious for their lack of support

 Some software vendors can disregard the pains of manufacturers, ignoring the realities of budget and IT resource limitations as well.  Believing that the software is always right, business processes have to be changed and people retrained.

Well I cannot speak for others but not at Infor.  We spend thousands every year researching the issues and challenges facing manufacturers.  We spend millions developing solutions to help solve these problems and we are in this for the long haul.  That goes for both the software and services.

So why have these myths never been slain before?  There are many possible reasons but I believe it is because manufacturing has rarely dared to think differently.  Thankfully, this is now changing.  Operational directors are not just accepting what the software industry tells them they can have. 

Savvy manufacturing leaders now start with an outcome – for example a 20% cost decrease – and ask software vendors what they can do to make it happen. Thinking differently, daring to push manufacturing technology beyond current limits should be encouraged.  Destroying myths and accepted wisdom will be a hallmark of those manufacturers set to succeed.

To learn more about how to think differently about ERP visit www.thinkyouknowerp.com

Posted by:  Andrew Kinder, Head of Product Marketing, Infor

According to the latest figures[1] UK manufacturing output grew by 6.8% in January compared with the same month a year earlier – the biggest annual rise in 16 years.  And according to the EEF, the manufacturers association,  "robust demand" from overseas markets will see engineering and manufacturing sectors outperform the rest of the UK economy in 2011.

The manufacturing sector’s growth has been attributed, in part, to improvements in productivity.   Turbulent conditions experienced long before the recession took hold, forced manufacturers to reduce costs and strip out inventory.  As a result, many are now equipped with infrastructures which allow them to trade profitably on lower sales, and recover some of their lost profits.

But while productivity in UK manufacturing has, since 1997, increased by 50% - about double the growth in productivity for the economy as a whole - it seems that this can only claim come of the credit for the manufacturing industry’s recent turnaround of fortunes.      

According to research undertaken by IDC Manufacturing Insights, growth and retention of existing customers is the top strategy in manufacturers’ quest to achieve operational excellence, with productivity and cost cutting ranking second place. 

Given the economic uncertainly which prevails in 2011, this conservative approach would seem to be sensible.  However it is the interpretation of this customer focus which holds the key to securing long term growth. 

While customer service and fulfilment initiatives play a part in preserving market share, innovating to deliver the right products; in the right way; at the right time; and crucially, to the right markets; is key to manufacturers’ efforts to increase market share.

Further evidence of this can be found in the EEF’s most recent Innovation Monitor, which highlighted that manufacturers are focusing their innovation on customers in fast growing markets. It showed that two-fifths of firms already sell into five or more major global markets, with an increased focus on Asia.  And prior to the cuts in government spending, firms were already limiting their exposure to the public sector.

So while productivity will continue to be the foundation for operational excellence, it is customer-driven innovation, supported by the right skills, taxation and regulatory environments, which will help to consolidate UK manufacturers’ position as the jewel in the UK economy’s crown throughout 2011 and into the future.

Discrete manufacturers should lead the world when it comes to customer fulfilment. The strategies published by Mather in 1988 - and his ‘P:D’ discussion of the various ratios between production and demand lead-times - are excellent frameworks for assessing how long customers will wait for an order to be completed, and a solid foundation for assessing customer fulfilment.

Discrete manufacturing is easily classified into the categories which follow from Mather’s work. Engineer-to-Order (ETO) and Build-to-Order (BTO) models are commonplace in the automotive and metal fabrication sectors.  Assemble-to-Order (ATO) where a product is built to customer specifications from a stock of existing components, is typical in the hi-tech and industrial machinery and equipment sectors.  Elsewhere, electronics manufacturers – particularly those with a large consumer market - prefer a Make-to-Stock (MTS) or Build-to-Forecast (BTF) approach.

It is amazing that – for once - these TLAs (that’s three letter acronyms for the uninitiated) are so accurate.  So how is it that with such a strong framework in place, and a series of models so suited to discrete production, manufacturers in emerging markets have been able to take so much business away from Europe and the US?

Conventional wisdom dictates it must be an issue of price – notably the lower cost of labour.  But recent research commissioned by Infor and carried out by IDC suggests that it may be because the emerging markets have already realised the critical role of customer fulfilment.

As part of the largest survey of its type ever undertaken, over 720 discrete manufacturing leaders were asked “What business initiatives will your company undertake in the next two years?”. 

Not surprisingly, ‘improving customer fulfilment’ dominated the list of responses.  However, the research also showed that the emerging economies were far more focused on implementing these initiatives – particularly Brazil and China.

There are many possible reasons behind this: as latter entrants to the manufacturing industry, Brazilian and Chinese companies can learn from the challenges faced by competitors in more mature markets and accelerate their own development.  Quite simply they can profit from the mistakes of others.

Alternatively, customer fulfilment may simply be a more important concern to manufacturers in these countries.  As offshore manufacturers in low cost countries struggle to maintain the incredible levels of growth they have had in recent years, they have to go further up the value chain and deliver more.  The easiest way to do that is focus on the customer.

But the reasons here miss the central point – that customer fulfilment as a differentiator (once thought to be the privilege of manufacturers in mature markets) - is now open to all.  And if manufacturers in mature markets do not realise this quickly and start applying customer service excellence alongside Mather’s framework, they can add a new three letter buzzword: HFF – heading for failure.

Posted by: Andrew Kinder, Head of Product Marketing, Infor

Statements of the obvious can take you on an interesting and educational journey.  In recent research conducted by IDC Manufacturing Insights, which looked at what manufacturers will be doing over the next two years, retaining and growing existing customers came out as the top strategy in the boardroom.  In order to do this, the top initiative manufacturers are looking to undertake is the improvement of customer fulfillment.  So far, so obvious – keep customers happy to keep customers.

But interestingly the second initiative that manufacturers are most looking to undertake –improving bid and project profitability - suggests that they already realise they cannot blindly chase revenue to survive and grow.  They must retain and grow their customer base with one eye on costs.

Indeed as the most pressing current business concern, revenue beat profitability by the thinnest of margins.

So how do manufacturers ensure revenue growth leads to improved profit?  At the risk of once again stating the obvious; by looking at the costs involved.  Not surprisingly, decreasing manufacturing and operational costs was the third hottest initiative manufacturers are looking to undertake over the next two years.  You can chart a logical progression here – retaining and growing customers as a central strategy leads to sophisticated thinking as to how these activities are undertaken in the most profitable fashion.

Whereas prioritising revenue would most likely lead to a discussion of CRM as the likely technology solution, this more sophisticated analysis puts ERP at the heart of subsequent initiatives.  Indeed, after improved decision making, the second main benefit cited by ERP users in the research was improved profitability of the business.

The lesson here is also obvious.  Manufacturers need to go to their ERP providers and ask how their current (or possible short term future) investment in ERP, can cut costs, or improve service, in either manufacturing operations or the supply chain.

This is the first stage in a manufacturer developing a partnership with its technology supplier.  The success of the initiative is dependent on how pervasive that partnership is.  Making tactical savings in one department will not lead to a strategic reduction in costs throughout all manufacturing operations and the supply chain.  Again to risk stating the obvious – if you want everyone to reduce costs, you have to ensure everyone knows how.

But is there a risk that this focus on reduced costs will decrease customer service? Not according to IDC or our experience.  In the report on the research, IDC Manufacturing Insights states:

“Excellence in managing the supply chain ultimately leads to lower costs and to the ultimate goal of servicing the customer better.”

And from our experience with one customer – JAE – cutting over £500,000 from supply chain costs while still improving customer service (by integrating production timetables and demand planning) is more than feasible. Figures like this show that the journey from the obvious can lead to pleasantly surprising destinations.

Never mind the mantra that the customer is always right, according to the findings of new research from IDC Manufacturing Insights into the strategies of the discrete manufacturing sector, the customer is seriously high maintenance. 

Whether you are a CEO, COO, CFO or CIO in the manufacturing sector, you’ll be well aware of, and no doubt responsible in part for, the dynamic of living in the ‘now’ society.  We expect products how, when and where we want them, and worryingly, this trend shows no signs of abating.  But cultural and social implications aside, this market characteristic is making an already tough manufacturing environment exponentially tougher.     
 
The knock-on impact of the ‘now’ society is that manufacturers are citing increasingly or rapidly changing customer requirements and demand volatility as serious concerns when it comes to servicing the customer effectively.  Manufacturers were asked how concerned they were about a range of issues on a scale of 1-5 and both demand volatility and changing requirements came in at a ‘very concerned’ 3.41.   
Interestingly, despite these concerns, manufacturers believe that their customer fulfilment is excellent and precisely where it needs to be in moving forward.  They are less confident about areas which can add major value in addressing these concerns, most notably demand planning and bid and project management, citing a significant gap between where their current capabilities are, where they need to be over the next two years.   

How concerned are you about servicing an increasingly volatile and demanding customer base?  If our findings serve us rightly, all manufacturers are feeling the heat to some degree – whether you are in the UK, Germany or China. 

But while low cost bases and low complexity equips Emerging Markets with greater agility to respond to customer volatility, Western Markets have a greater handle, and therefore derive substantially more benefit from the tools and ERP systems to manage fluctuating demand. 

Our expectations of the ‘now’ society certainly aren’t going to decrease any time soon.  And to keep pace, we, as an industry, truly have our work cut out.  Business agility, and recognising the right tools for the job, will sort the winners from the losers in this space.    

Posted by: Andrew Kinder, Product Marketing Director, Infor

With the UK in the midst of a rocky recovery, strong UK manufacturing growth remains one of the few bright spots in an otherwise gloomy economic outlook. As Investing in Recovery, an EEF/Infor report on manufacturing and innovation, shows this success is down to manufacturers’ investments in innovation.
Drawing on an in-depth survey of UK manufacturers, the report also paints a picture of caution. Reduced cash flow, technical troubles and fears about the sustainability of the recovery are each serving as a constraint on innovation. The good news, however, is that successful innovator are able break through these barriers by maintaining a singular focus on the customer and through strategic investments in IT solutions as an innovation-enabler.

The customer is king
Having reaped the benefits of process, organisational and marketing innovations during the recession, firms are complementing this innovative activity with a renewed focus on the products and services their global customers demand. Two-fifths of firms already sell into five or more major global markets, with our survey showing an increase in firms selling into Asian markets and official statistics indicating a 50% increase in exports to China in the first year of the recovery.

UK manufacturers are also actively looking to benefit from the low-carbon agenda, with over a quarter of firms stating that developing low-carbon technologies was driving innovation. The survey also shows that almost 60% of firms face technical barriers to innovation. Tackling these technical troubles, however, can cost firms time and money as they strive to get to market quickly. Yet in competitive global markets, time and money are luxuries that most manufacturers do not have. At the same time, globalisation is making the basics of business ever more complex. From growing market share to managing supply chains and customer relationships, firms are becoming more strategic about how they use innovation and invest in IT applications to improve their competitiveness.

Enabling innovation
Making innovation a more predictable and successful process can help boost returns. One way of ensuring innovation is more successful is to manage and monitor innovation in the same way as any other business process. Manufacturers are clearly aware of the importance of better business process, with 53% targeting new software investment towards the planning and scheduling of operational processes; and 37% introducing new software to improve analytics and reporting.

Manufacturers are using IT and software to support innovation in other ways too. In the next 12 months over half of companies surveyed were planning to use software to improve their customer relationship management: customer-centric development in a global marketplace can only be achieved through good management of information about customers’ requirements.

Manufacturers are also using IT for product design and development, with 39% of companies citing this as a reason for introducing new software. This ties in with manufacturers’ aims to increase exports within established markets as companies seek to develop products which are more focused on local customer bases to gain a competitive advantage.

Yet, only a fifth of firms are investing as much as they want in new software solutions, with a quarter investing less than desired, and two-fifths keeping investment on hold. Part of this caution will reflect manufacturers’ concerns about cashflow. It could also reflect a bias to under investment, as both an EEF/Infor report on IT and productivity and research by IDC Manufacturing Insights suggest that firms find it difficult to measure the benefits of such investments.

Although the returns are not always visible, investment in IT remains a key enabler of innovation, allowing firms to manage complexity, drive up performance and maximise the benefits of customer-focused innovation.

Posted by: Jeegar Kakkad, Senior an economist at EEF