These are interesting times. The world of manufacturing IT, which for so long has been about systems – ERP systems, CRM systems, PLM systems, and MES systems – has undertaken something of a U-turn and is instead becoming focused on technologies and capabilities.
Such as the Internet of Things, for instance, which provides connectivity with intelligent devices on manufacturers’ factory floors and in their supply chains. According to analyst firm Gartner Group, the Internet of Things could total 26 billion devices by 2020, up from 0.9 billion just five years ago.
Big Data, for another, together with its related technologies such as predictive analytics, customer analytics, and supply chain analytics. Although loosely defined, what Big Data really comprises is data sets that were too large, or too expensive, to meaningfully work with even as recently as five years ago. No longer: low cost storage, together with open source – that is, largely free – software products such as MongoDB, MySQL, and Apache Hadoop have now re-written the analytics rule book.
And the cloud, for yet another disruptive technology that is very much coming of age. As never before, the cloud not only makes it possible for manufacturers to quickly deploy capabilities such as Business Intelligence or niche line-of-business software products such as route optimisation, but also enables many of those capabilities to be rented, rather than owned outright. At a stroke, almost nothing is too expensive to explore to see if it offers benefits.
And so on, and so on. As Cathie Hall, managing director of ERP provider K3 Syspro points out in this year’s IT Strategy supplement, the list is long. Robotics, machine-to-machine communications, data in unparalleled volumes, and at unparalleled velocity, the Internet of Things, all manner of analytics – the feast is rich indeed. Where to start?
Well, as Hall adroitly argues, not necessarily with the technologies themselves. Rather than splash out on half a dozen technology initiatives, just because they are newly possible and newly affordable, she emphasises that it’s better by far to first consider the business’s strategic priorities, and focus new technology adoption on those.
Perhaps more fundamentally, the astute manufacturer will also pause to consider the interactions between these various technologies, and the fact that some of them are distinct enablers for others. Fairly obviously, for example, the cloud and the Internet of Things are both enablers for analytics, and as a result, following the implied natural order of precedence will make for a smoother implementation.
But put another way, says Paul Ross, vice-president of international marketing at analytics specialist Alteryx, tackling initiatives in the right order, or the right combination, can also have useful synergistic effects.
“Look at some of these initiatives, and you’re asking ‘Is this the Internet of Things, or predictive analytics?’, and it’s really not clear,” he says. “What is clear is that leveraging the two together make a sum that’s greater than simply the sum of the parts.”
Similarly, points out Richard Wilding, professor of supply chain strategy at Cranfield University’s Cranfield School of Management, the present slew of new technologies that manufacturers are busy evaluating are actually creating new possibilities in terms of where business processes are located with the cloud making for an increasingly intelligent choice.
“Think of it as ‘business process as a service’,” he urges. “Operated in the cloud, and delivered as a best-in-class business process, and run remotely, it’s services that businesses pay for on a subscription basis. You don’t have to build them, you don’t have to invest the capital for them; you just have to use them, and benefit from them.”
And, as Phil Lewis, vice-president for solutions consulting at enterprise applications giant Infor explains in this very supplement, business processes as a service is a concept that is both very real, and delivering very real benefits. Infor, he relates, has this past summer acquired supply chain transaction platform GT Nexus, firmly taking it into just that territory.
“GT Nexus connects 25,000 active trading organizations – buyers, suppliers, and logistics and financial partners,” he points out. “That includes 30 of the world’s top financial organisations and banks, 50 of the world’s top 3PLs, and a roster of blue-chip manufacturers such as Nestle, Electrolux, Philips, Lenovo, Hewlett-Packard, Procter & Gamble, and Caterpillar.”
Business Intelligence, too, is another example. In contrast to the lengthy timescales and costs associated with traditional on-premise server-based Business Intelligence solutions, many manufacturers are opting for the cloud. Not only does this give them access to powerful cloud-based servers and data warehouses, observes Matthew Scullion of cloud Business Intelligence specialist provider Matillion, but it also means that Business Intelligence is something that businesses pay for on a subscription basis, rather than through upfront capital investment.
“A cloud-based Business Intelligence solution can be up and running in eight to ten weeks, far faster than on-premise solutions, and is paid for out of operating expense, not the business’s capital budget,” he points out. “Nor is ‘Big Data’ scale a limiting factor: one Matillion customer has a cloud data warehouse of over 600 million rows of sales history, growing at a million rows a week.”
That said, the current focus on how best to exploit all these new and exciting technologies does not mean that ERP systems are no longer relevant. Quite the reverse: while they may have been temporarily eclipsed, as Big Data and the Internet of Things enjoy their moment in the spotlight, ERP systems never been more necessary.
For whatever else a manufacturing business needs, it cannot do without an efficient, affordable, and expandable transaction backbone, a description that any ERP provider will instantly recognize. So it’s no surprise that two other features in this IT Strategy supplement focus heavily on ERP.
In the first, the specific focus is on those businesses that have yet to make the transition to ERP – and yes, even today, such businesses do exist, says Peter Mroch, business development manager for ECi Software Solutions’ M1 ERP system for manufacturing businesses. Routinely, it seems, ECi comes across manufacturers running their businesses with a combination of a basic accounting package and a collection of spreadsheets. Or, almost as bad, legacy ‘green screen’ ERP systems, running under Unix or MS-DOS.
Despite which, says Mroch, manufacturers should still adopt a hard-nosed approach when replacing such systems, with a very clear view of what they expect by way of ROI.
“With the money that they invest in an ERP system, most manufacturers could make some fairly substantial capital expenditure purchases from which they would then undoubtedly expect to see hard cash benefits,” he argues. “Our view is that an ERP system has to pass the same test.”
In the second ERP-focused feature, meanwhile, the theme is implementation success, which, of course, is a key factor in determining that very ROI. And Guy Amoroso, managing director of 123 Insight, an ERP provider serving smaller manufacturers, pulls no punches, drawing on many years of ERP implementations.
“It really isn’t rocket science,” he sums up. “Select a system that’s right for the business, and which is straightforward to implement and then follow some very simple best-practice guidelines to ensure implementation success. Why make life complicated?”
Why, indeed.
