Manufacturers need IT vendors to understand their issues

Manufacturing SMEs are increasingly hesitant about upgrading their existing ERP and equivalent systems because they don’t believe the cost/benefit ratio stacks up. That’s among key findings of a study carried out by Benchmark Research for Microsoft and ERP vendor K3 among managing directors, finance directors and other board members of small to mid size manufacturers in the UK that haven’t upgraded. It reveals that while half accept they could expect better management information from new ERP, and 40% believe they could cut duplication of effort, while 34% also understand that they would be alerted to problems sooner, that’s not enough to make them invest. Functionality that drives better business vision, even improves the speed of estimating and quoting and other functions isn’t turning them on. Indeed, only one in five believe that an upgrade would improve their quality of service to the extent that they could win more business and increase profits. In part that’s due to scepticism around IT, but it’s also a reflection of the changing pressures on manufacturers facing not only the usual cost-downs, but a need to outsource more production overseas, and manage those different operations. But beyond the scepticism, directors also say there are too many other, apparently more urgent calls on their, investment budgets and that current financing arrangements from IT vendors aren’t flexible enough to make new systems affordable. A surprising 90% of manufacturers are also concerned about security risks if they upgrade to a more modern system. “IT vendors need to get closer to manufacturing companies, to understand their detailed business, not just their production, issues,” says Benchmark managing director Guy Washer. He suggests annual review meetings would help not only IT vendors to make better sales, but SME manufacturers to better understand the business cases for improvement and competitiveness available to them through IT. Interestingly, the research indicates that, while directors leave IT responsibility largely to IT managers, they would mostly welcome the opportunity.