Leaning out

For two decades, manufacturing companies have been applying lean principles to their factory floors. And now, says Rue Dilhe, managing director of mid-market ERP vendor Exel Computer Systems, they're applying those lean principles somewhere else – namely, to their IT organisations. And the outcome, adds Dilhe, is a fundamental change in the way that manufacturing businesses view their IT systems and infrastructure. "There's a significant change underway, and it's been taking place faster since the recession," says Dilhe. "Our customers are seeing it, we're seeing it, and the industry as a whole is seeing it." So what, exactly, is going on? Simply put, says Dilhe, manufacturing businesses have been taking a fresh look at their IT functions and infrastructure, viewing them through the same lean-centric lens with which they look at their factory floors. In short, they've been stripping out complexity, striving to make systems and procedures 'fail safe' and foolproof, reducing headcount, and eliminating activities that they regard as unnecessary. Lean-style procurement practices are becoming more usual, too: single sourcing, building strategic relationships with a smaller body of vendors, and looking to trusted long-term suppliers to add value by providing a broader mix of products and services. "Companies just don't want to deal with multiple IT vendors any longer," says Dilhe. "They've taken a strategic decision to eliminate duplication and complexity in their manufacturing processes, and now they're following the same logic in their IT processes and infrastructure. In staffing, the change is particularly noticeable: without doubt, IT functions aren't as well-resourced as they were five to 10 years ago." And the result of these changes, he says, is an undeniable shift in the balance of power in the long-running debate over the choice between best-of-breed niche solutions and fully-integrated ERP enterprise systems – with the tide now turning firmly against best-of-breed. "As companies have become leaner, with fewer IT staff, enterprise systems have advanced to the point where customers can see that a modern, fully-integrated system quite simply needs far less full-time IT resource," says Dilhe. "So the search has been on for ways to reduce the vendor count, and standardise around a single solution." To be sure, it's a development that for Exel has been a mixed blessing. In terms of sales and marketing, the business is finding a newly-receptive marketplace, with manufacturers who were formerly happy with best-of-breed now slimming down their IT functions, and seeing new merit in going down the fully-integrated, single-vendor ERP route. But on the other hand, the company's product support function has undeniably taken more phone calls. "We've seen a marked increase in support calls that appear to be directly related to a reduction in IT staffing levels at the customer," notes Dilhe. "Previously, the customer might have been able to field front-line support queries themselves – and now, people have left or retired, and not been replaced, and we're picking up the slack." In short, he explains, Exel is seeing the marketplace wake up to a set of messages that it and other providers of fully-integrated ERP solutions have been extolling for years. "You've got one supplier, who take takes full responsibility – and no finger pointing between vendors as to why things aren't working," he notes. "There's no costly replication and duplication of data, or duplicated integration, maintenance and development costs: what you buy is already integrated, and offers inherently more robust data integrity. And overall support costs are lower, because there's only one product requiring support." Throw in the fact that fully-integrated solutions are generally easier to upgrade – because a manufacturer is only upgrading one system, and not multiple systems as well as the interfaces between them – and Dilhe is convinced that in these times of straitened economic circumstances, the battle is going Exel's way. "Companies just don't want to deal with multiple vendors from a corporate bandwidth point of view, and can't hold the knowledge internally to handle multiple systems," he stresses. "What they want is one support contract, one upgrade path, a single user interface for enhanced usability, a single point of contact, and a single body of knowledge to be held internally." But isn't there a downside to this new lean approach? It might be leaner, it might be easier to manage, with a less complex IT infrastructure—but does it result in an IT infrastructure that is just as effective? Go with best-of-breed, runs the familiar logic, and you get best-in-class functionality, as well as flexibility and configurability. Simply put, a manufacturer who went with best-of-breed knew from the outset that they didn't have to compromise: their new best-of-breed system would do what they wanted it to do. The only problem: integrating that best-of-breed system with the other systems that populated the business's IT landscape. But these days, says Dilhe, that's yesterday's logic. The world has moved on, and today's ERP systems offer functionality that is just as rich as that of best-of-breed systems. In short, there's no need to go down the best-of-breed route at all, along with its complex IT integration, support and upgrade requirements – the functionality that manufacturers want is these days built into ERP, available right out of the box. Better still, he adds, quite apart from their level of inherent functionality, modern ERP systems have extensive customisation capabilities, allowing manufacturers to change screen layouts, automate processes and specify workflow. "People tend to underestimate the impact that such tweaks make to users' productivity," he notes. "But presenting users with just the information they need, in just the format that suits them, is the next step on the lean IT journey. It's the same with workflow: users no longer have to go looking in the system for the tasks they must perform – everything that requires their attention is presented to them in their inbox. It's about making the ERP workstation as efficient as a workstation in a cell on the factory floor: no clutter, no wasteful activities and everything that you need, right at hand." Best of all, he adds, customising an ERP system in this way shouldn't create problems for subsequent upgrades. Exel, for instance, delivers such customisation by building a development layer on top of the system, called 'Adapt'. "This allows manufacturers to take the basic software process and add their own 'tweaks' to it, and still keep to the standard software product, and the standard upgrade path: the customisation is in the development layer, and not the core product," enthuses Dilhe. "It means that the IT function is making changes just once – and having them automatically re-applied with each upgrade." So does lean IT really spell the end for best-of-breed? In mainstream manufacturing, the answer is 'yes', insists Dilhe. "You can't wind back the clock," he concludes. "A business that has discovered the advantages of a lean and efficient approach to IT won't suddenly go best-of-breed, and take on more IT staff, and start creating integration layers again. "Like the typewriter and telex machine, the era of best-of-breed software has had its day."