What if?

Talk to big-ticket ERP software vendors or their users and it soon becomes clear that the business case for their adoption has changed significantly in recent years. Whereas once, it was about integrating hitherto separate systems and departments – promising, if not immediately delivering, phenomenal ROI – today's implementations are generally second or third generation. As a result, the obvious costs, duplications and inefficiencies have long since been stripped out. As Duncan Smillie, sales and marketing director with KCS Datawright (formed last year when Kerridge Commercial Systems acquired Datawright), puts it: "Nowadays, it's mostly about companies wanting to do something extra that their existing systems won't let them do. For example, supply chain automation or product configuration via the web, which the old system just doesn't support." For him, while that changes nothing, in terms of the widely acknowledged need to refresh any major business system periodically, it does imply a more than subtle rethink of the rationale and business expectations of the next investment. And that includes consideration of the massive changes in ERP system functionality – and of the underlying technologies used to deliver it, as well as new systems' flexibility and ease of use. Changing roles But there's another important point, and that has to do with the changing responsibilities of IT directors and CIOs, as evidenced in Epicor's latest survey. This finds unanimity among respondents, agreeing that the demand for speed, re-invention, agility and innovation has accelerated dramatically over the last five years – and altered boards' expectations of them correspondingly. "With the challenges faced by manufacturers and their dependence on increasingly sophisticated systems, CIOs now have greater influence over how quickly a company can expand into a new market or how quickly a business model can change," observes Martin Hill, vice president of marketing for Epicor. That means refocusing on business transformation, rather than simply on improvement and efficiency, he insists. "Unfortunately, this is not what's happening in many cases, [because] inflexible systems, restricted budgets and outdated technology are holding back CIOs." If that sounds familiar, it's almost certainly time for a system review, first, and reconsideration of exactly how a transformational role might be accomplished, second. The latter should become a central part of the ROI calculation. But what to look for in any new system? Beyond the obvious general requirement for a technology platform that makes it relatively easy to adopt new functionality and adapt to market changes, as well as one that's simpler, in terms of deployment and maintenance, there are some specifics. Prioritising those is clearly all about understanding your business, industry sector, position in the marketplace, technical resources, budget etc. However, one increasingly recurring theme involves implementing 'what if?' facilities, and not only around production and/or supply chain planning and scheduling. Why? Because although in business there are always choices, today's straitened and competitive times are particularly unforgiving of second best. So an ability to 'see' the consequences of potential actions, using software that provides near real time predictions, is worth a lot, in terms of improving decision making. Take, for example, clamps and joints manufacturer Teconnex, which recently chose Epicor's 'next-generation' ERP to replace its ageing manufacturing, finance, CRM and quality control systems. The company, which employs 230 staff in the UK, US and China, has been seeing significant growth, so is using the opportunity of a system refresh not only to move to a single, integrated system – expecting the usual benefits of improved visibility and control – but also to improve its responsiveness through 'what if?' functionality. "Our staff will have all the information they need at their fingertips, available in real-time," comments Daniel Topp, IT manager. "We will be able to streamline our processes, run 'what-if?' analysis on our schedules when there are unexpected changes in the supply chain, and accommodate urgent orders more effectively, without negatively impacting the existing production schedule." It's a similar story at consumer products distributor HoMedics, which recently extended its Infor ERP system by adding Infor Demand Planning software. Operations director Keith Allison explains that this will replace existing fragmented supply chain planning systems across the company's UK, Italian and German operations, with a web-based forecasting system. That, he says, will enable near real-time collaboration between sales and production staff, supported by 'what-if?' functionality, to test models associated with seasonal demand changes. "Our initial goal is to realise a substantial inventory reduction through improved forecast accuracy and we are very confident of a rapid return," states Allison. "But beyond this, Infor Demand Planning will also help us evaluate the routes of supply to our international distribution centres, to help us realise the optimum scenarios for both high volume and premium products, delivering the lowest cost of transport." Sales and operations planning And then there is semiconductor systems supplier Infineon, which reckons it has now halved its sales and operations planning cycle time, by using enhanced S&OP software from developer JDA – again specifically equipped with 'what if?' capabilities. Andreas Mätzler, senior director of supply chain engineering at Infineon, says its system now enables fully interactive simulations of rough cut capacity planning globally. What's different, he explains, is that the system not only depicts forecasts and processes with reference to S&OP demand, but also models the entire field of supply, including manufacturing cycle times, capacities, manufacturing locations and yields – taking data from all company divisions. "With the new functionality, the question 'what if?', for all business decision dimensions, can be answered online, which makes coordination clearly more efficient," states Mätzler. Plainly, ERP is much more than it used to be – and these implementations of 'what if?' functionality are just examples of the differences. Indeed, David Betts, projects director with Sigma Components' aerospace division, believes other equally significant developments include user interfaces (intelligent dashboards), systems' ease of customisation and achievable project timeframes. And he should know: as a business turnaround interim, he sees this stuff all the time. In his current role, Betts was initially charged with getting Sigma's Farnborough factory off its former parent's hosted SAP implementation and onto a new system that would also suit much of the rest of new owner Avingtrans' group companies. For him, then, the overriding requirement was a system that would enable developments and customisations in-house quickly, cheaply and flexibly "to enable ERP to meet the needs of the business, rather than the other way around". In fact, the choice was Epicor, precisely because of its flexibility, he says, specifically in terms of adding custom fields in tables, as well as, at a higher level, developing custom business processes. "With Epicor, we have done in excess of 100 customisations – local add-ins that don't affect the code so maintain our future software stability – at a cost of just £20,000," he says. Why is that so valuable? Betts gives the example of Sigma Components' new ability to cut through the barriers that hitherto hid where its parts go – which customer, engine and platform – by refocusing on its parts master field. "That's very powerful for sales," he asserts. And software upgrades won't be a problem. Dashboards for business But there's more. In Betts words: "There is no aspect of an organisation that can't add value with ERP today. So with the flexibility of Epicor, we are now able to monitor KPIs and see, for example, business trends. Using our new dashboards, our people can understand what the data is trying to tell them in real time on-screen. That's an enormously capable facility. For example, we can see customer delivery performance instantaneously, and the same applies to the debtor book and overdue invoices – by age and by reason code. And our managers can slice and dice that, and drill down to reveal actions being taken at a detailed level." Making the point another way, he adds that go-live, on 1 September 2013, didn't mark the end of this project, but the beginning of phase two. "We're now going through the whole business, using [our ERP system] effectively as an improvement tool. Currently, for example, we're developing a multi-level pegging dashboard that enables us to go from sales order to works order to the parts, all the way through, and get a much better view on availability of components against sales orders and customer data." What if your company could do something similar?