What is in this article?:
- Why, When, and How to Choose ERP
- Time to upgrade
- A cost to doing nothing
- Indicators for upgrading
“Ultimately, the price should be viewed as an investment. Although difficult to measure, the manufacturer ought to expect a return on that investment in terms of improved efficiencies and information to support improved decision-making.”
As manufacturing across the Midwest continues to pick up steam, a lot more attention is being paid to an area that cash-strapped companies have neglected for years: enterprise resources planning, or ERP systems.
ERP systems have been around in some form for decades and are valuable for their ability to provide a tightly integrated solution to support all aspects of the business, including sales and operations planning, materials management, production, human resource management and accounting/finance. But, as the economy began to soften five years ago, most companies became reluctant to invest money in ERP systems — and many of them have simply maintained that strategic outlook.
There's a cost to doing nothing, however. You can get away with it as long as your competition is in the same boat, but as the economy picks up and the competitor down the street starts to invest in ERP and comes up with ways to process and manage information better and faster and is able to serve customers in a more cost effective and responsive way, your business is going to be in trouble if you don't respond in kind.
What we have seen recently is that as business revenues have increased while staffing levels have stayed constant, companies are seeking improvements in operational efficiency and looking to ERP systems to enable these improvements. The reality is that ERP systems have advanced significantly and now are much more robust, flexible, and configurable than systems were five years ago. Most organizations have been surprised at the improved functionality and user access to needed information across the organization."
The process of selecting and implementing a new ERP system for a middle-market company typically takes from nine to 18 months, depending on the size and complexity of the business. Costs vary widely, depending on a number of factors that include the functionality required by the business, whether the ERP system is a hosted solution or not, and how much implementation assistance the business requires.
Ultimately, the price should be viewed as an investment. Although difficult to measure, the manufacturer ought to expect a return on that investment in terms of improved efficiencies and information to support improved decision-making.
The good news is that most middle-market manufacturers can select an off-the-shelf software package that will meet their needs. More vendors are offering hosted solutions that allow companies to reduce significantly their investment in in-house IT resources to support the system, such as servers, application support personnel, etc. Whether hosted or not, most ERP systems can be accessed securely over the Internet from anywhere in the world - whether a user is on assignment or on vacation.