A drop of inspiration

Choosing a new ERP system – it's a decision with potentially business-limiting (and career-limiting) consequences. Yet, talk to manufacturers and surprising numbers of them retrospectively confess themselves dissatisfied with how they approached this very decision. Simply put, get it wrong and you find yourself saddled with a system that isn't right for your business, isn't right for the industry you're in, isn't right for your growth strategy and, just as frequently, isn't right for your budget. The good news: by following some simple guidelines, manufacturers can go a long way towards preventing such problems. In particular, having the discipline to step back and ask some probing questions can pay dividends in terms of the calibre of the eventual selection and evaluation decision. And this questioning needs to begin at the very start of the process say experts. In other words, how should a manufacturer determine that a new system needs to be acquired in the first place? "The tell-tale signs are always the same," says Cindy Jutras, president of analyst firm Mint Jutras. "What you see is people working around the limitations of the system – using paper or spreadsheets to achieve things and side-stepping the system in the interests of getting things done. And, from a business perspective, metrics moving in the wrong direction are also a sign: inventory increasing, for instance, but customer promises still being missed." Shortcomings in ERP?selection Missing functionality is also a red flag and one that possibly indicates shortcomings in how a manufacturer approached ERP selection on a previous occasion. "System 'workarounds' indicate a lack of functionality, or a lack of integration, or, indeed, both," observes Jonathan Orme, sales operations and marketing manager at ERP provider Exel Computer Systems. "Functionality such as e-commerce links with suppliers and customers, website integration, and mobile data communication might not have been thought about 10 years ago, but are now very much core requirements." That said, evaluating prospective ERP systems solely on a technology basis also leads to flawed decisions. First and foremost, stress experts, an ERP system is a business system and not a series of technologies. "Companies should start by asking themselves: 'What are the key business challenges that we face and how will our proposed new business system help us to address them?'" says Carl Tomlinson, principal consultant at The Manufacturing Institute. "It's not just about getting the latest technology, it's about leveraging a system in order to achieve your business goals." And those goals, points out Nick Castellina, a senior research analyst at Aberdeen Group, will best be furthered by a system that smoothly reflects the nature of the business and the industry in which it operates. "It's important that companies ask themselves what business processes they want to support, what regulations and industry norms they must comply with and how the system that they choose reflects the way that they do business," he warns. In other words, choose a system that works the way that you and your industry work. Build-to-order or engineer-to-order manufacturers, for instance, should ask themselves if they need to look for project-based functionality. Food manufacturers and pharmaceutical firms, meanwhile, should look for process manufacturing and recipe formulation capabilities, regulatory compliance in terms of traceability and, perhaps, the ability to handle reverse bills-of-material where a chicken, say, is disassembled and finds its way into multiple products. But who, precisely, should ask these questions? Again, say experts, it's important that viewpoints are included from all over the business and not just the IT function. Recognising the business viewpoint "It's more than just an IT decision and, in our view, companies that understand this tend to reach better decisions," says Exel's Orme. "First and foremost, it's a business decision, and broadly-based teams tend to result in that business viewpoint being appropriately recognised." Antony Bourne, global manufacturing industry director at IFS, agrees, adding that this broader business involvement needs to be carried on through the implementation process, as well. "If you look at businesses that have got selection and implementation wrong, you often find that they've treated it as an IT project," he points out. "They haven't seen it as an end-to-end business project to be implemented in full and which should deliver measurable business benefits. Which is why I like to see a project manager from within the business, with IT as part of the team, but not leading the team." And, properly constituted, with a broad business involvement, a shortlisting process needn't be an onerous or extended exercise, adds Andy Morcom, account manager at K3 Business Technology Group, reseller of Microsoft Dynamics, SYSPRO and Sage ERP systems. "ERP systems have almost become a commodity product," he points out. "And so functionality and suitability should be readily assessable by both the company and by potential vendors, to quickly determine if there's a good fit and build an appropriate shortlist." That said, with a shortlist drawn up, hard choices remain. It's relatively rare for any system to be a perfect match and judgments must be made, and relative strengths assessed and evaluated. And here, say experts, careful prioritisation is the watchword. "It's the 80-20 rule," says IFS's Bourne. "There will be some processes – the 20% – that give you competitive advantage. Focus on those, and don't compromise. But the remainder – the 80% – aren't business-critical, and any compromise won't matter so much." "There has to be a minimum level of fit and functionality, but, after that, other things come into play such as the stability of the vendor, the technology roadmap and the likely nature of the relationship," adds Mint Jutras' Jutras. "Our annual survey, for instance, increasingly shows that ease of use is of growing importance as a factor." And sometimes compellingly so, observes Guy Amoroso, managing director of ERP provider 123 Insight. One of his firm's most recent customers, he relates, made contact with 19 potential vendors in its search for a new system and then promptly plumped for 123 Insight after seeing the product demonstrated at one of the regular public demonstration workshops that the firms holds. "Sometimes, people over-complicate things," sums up Amoroso. "We urge simplification and letting the system speak for itself." Three steps to new system nirvana 1 Start with some soul-searching: some meditation over what you need from a system at the outset will help you achieve a Zen-like state further down the line. Organisations with a clear plan not only find an ERP system that best meets their needs, but also find the roadmap means a smoother implementation process, according to Aberdeen Group research. 2 It's not all about the money: fist pumping over bringing a new system at cut price will quickly turn to fisticuffs if your budget buy is riddled with expensive shortcomings. Far better to prioritise functionality and ease-of-use over the price tag. A fit-for-purpose ERP system will save you more in the long run. 3 Don't leave it to the IT department alone: IT might be the technical expert, but the tacit knowledge around ERP requirements lies outside the server room. Make sure the employees who use the systems day in, day out are part of the deliberations on system selection. Doing so will boost system functionality and buy-in for the new kit as employees see the system as something they've had a say in rather than an IT diktat.