Panorama Consulting has released its 2014 Manufacturing ERP Report.
And as ERP is at the heart of most manufacturing facilities today, we thought we’d take a little time to reprise some of their key findings on the state of ERP today.
Manufacturing imposes unique and deeper ERP requirements on companies due to the complexity of the way manufacturing processes interact. ERP in manufacturing also, as a rule, costs significantly more than some of the ‘vanilla’ (i.e., mostly accounting/inventory based) implementations typical of non-manufacturers.
So, while Panorama usually works in the environment of large-scale ERP implementations (SAP, Oracle, etc.) costing $5 to $15 million or so, many of the survey findings hold value for smaller businesses too.
We’ll skip the “top vendors” portion since vendors of multi-million dollar solutions are beyond the budgets of the small to midsize market. But a look at the reasons for implementing ERP software shows they share traits with most smaller businesses, such as:
- 22% implement in order to “better integrate systems across multiple locations” and in similar numbers, “to standardize global business operations”
- Another 18% do it to “replace an old ERP or legacy system”
- Interestingly, a mere 11% do it “to make employees jobs better”
- 10% deploy new systems “to ensure reporting/regulatory compliance” and
- 9% do it “to position the company for growth”
We found that last item interesting, because in the SMB market, this is – or we believe should be – the number one motivator for ERP. You want to grow? Do you have the business infrastructure to allow it? Or will you stretch every resource in the building by trying to do more volume in the same old way? If anyone needs ERP, it’s the growing company!
After “reasons”, Panorama draws some conclusions about implementation times for projects.
They conclude that while the duration for most ERP implementations in industry overall go about according to plan (around 18 months or so), in the manufacturing sector unrealistic expectations tend to make the gap between expected and actual deployment times several months longer. No one should be surprised.
Panorama concluded that “organizational issues and project scope issues” were the most common reasons for extended durations. Also cited were training issues, data migration complexities, and unrealistic timelines.
We see this all the time: the reality of deployment involving real humans and real process change chasing the ‘optimistic’ expectations of people who mean well, strive for the best and, in the end, find that they too are only human.
In this three-part post, we’ll look in our next post at current trends and realities in ERP project costs and budgets. Stay tuned…