An Expert’s Guide to ERP Success

By Eric Kimberling, Managing Partner Panorama Consulting Solutions

Short-term vs. Tier II.Denver. There are lots of buzzwords out there – Tier I. companies that view technology as a competitive advantage have an increased need to control their IT infrastructures and are more likely to find that traditional on-premise ERP systems meet their business needs. Control As outlined in the above table. some companies view the IT function as a non-competitive nuisance. For these types of companies. . On the other hand. What does this all mean and how do you make sense of it all? And more importantly. functionality of potential ERP systems relative to your business requirements. SaaS. the complexities of this decision can be more simply narrowed down to two main variables: complexity and control. However. All Rights Reserved. longterm costs are another important © Copyright 2012 Eric Kimberling. which is the right type of ERP software for your organization? The answer is: it depends (my favorite answer as a consultant. Analysis of Specific ERP Systems One of the first steps in an effective ERP software selection process is to determine the type of enterprise system you're looking for. They want to outsource it and get it out of the four walls of their organizations. software as a service (SaaS) or hosted ERP solutions often make more sense. It depends on a number of criteria. including initial versus ongoing costs. and your organization's want or need to manage its own IT infrastructure. Page 1 of 17 3773 Cherry Creek North Drive . cloud ERP.Suite 720 . by the way). These types of systems provide the flexibility and control that such organizations are looking for.Chapter 3. best-ofbreed and so on. CO 80209 720-515-1377 Panorama-Consulting.

internal support requirements may be higher.Denver. • • • Open Source ERP Solution Cons • • • • Finding implementation and support resources for open source ERP solutions can be difficult. either on premise or hosted off-site (in the cloud). I recall the early days of Linux acceptance when some people felt it was heresy to consider an open source OS for business critical applications. Some add-on software isn’t compatible with open source ERP solutions. Open Source ERP Solutions. Those organizations with higher levels of complexity and sophistication are more likely to consider Tier I ERP systems. CO 80209 720-515-1377 Panorama-Consulting. as they mature. Having said that. Open source ERP solutions are infinitely customizable allowing for companies to mold them to meet specific business process requirements. Open Source ERP Solution Pros • Since there are no license fees. Proprietary software has more features. we expect to see them become more popular. One caveat is higher support costs if major customizations are made. My. • . how times have changed.Complexity The second key variable is complexity. These companies don't necessarily need software with huge levels of scale or broad and sophisticated functionality. The TCO of open source ERP solution may be less given the option of virtually free operating systems (Linux) and databases (MySQL) and potentially lower maintenance fees. so it is important to understand which types of ERP systems will work best in your situation. so they are not as likely to consider Tier I solutions. Page 2 of 17 3773 Cherry Creek North Drive . Companies have varying levels of global presence. Conversely. Because open source ERP solutions are more customizable. diversified products and customer interfaces that provide competitive advantages over their peers. Ready For Primetime? We are starting to see more open source solutions entering the ERP market © Copyright 2012 Eric Kimberling.Suite 720 . All Rights Reserved. the initial cost of an open source ERP solution is usually far less than a comparable proprietary program. Given their immaturity. The simple roadmap on the previous page can help determine how to best address your organization’s enterprise software needs. it is fair to question the longevity of open source ERP solutions. supply chain sophistication. Open source ERP solutions typically have a wide range of integration formats simply because they need to play well with other software components. Every company is different and has different business needs. The fit of an open source ERP solution would be based on the willingness of a company to assume a higher level of risk. smaller and less complex organizations are more likely to look at smaller niche solutions from Tier II or SaaS ERP vendors.

right? Not even close. SaaS is much more limited in its capabilities. Five Important Aspects to Consider When Evaluating SaaS Options • Cost. (whereas one only pays maintenance on a traditional on-premise solution). In addition. but will probably be higher on an ongoing basis. For © Copyright 2012 Eric Kimberling. but it is also true of traditional ERP software. but not always.Suite 720 . • • • • Page 3 of 17 3773 Cherry Creek North Drive .Denver. the ongoing costs are most likely going to be significantly higher since an organization has to pay to use the software annually. So initial costs may be lower for SaaS. While there are some definite advantages. Salesforce. This is sometimes true. Accessibility. configuring the system accordingly and ensuring people are well trained in the new process workflows and transactions. Simplicity. The common perception is that SaaS is much cheaper than traditional “big” ERP systems. In the case of SaaS. Technically this is true. but many of our larger clients with well-defined business processes struggle with the concept of not having as much control as they would prefer. because SaaS does not require a complex internal technical infrastructure to support. Keep in mind that because SaaS solutions tend to get dollars off the balance sheet and optimize a company’s return on assets. SaaS typically is simpler to deploy from a technical perspective. and even on-premise heavyweights like SAP and Oracle have stepped up their cloud offerings. much of the hype fails to disclose the downside. Alternatively. All Rights Reserved. A big selling point for SaaS is that an organization can have a system up and running in a matter of weeks. The problem is that going live has less to do with getting the software up and running than it does with clearly defining business processes. This may be a reasonable trade-off for a small. CO 80209 720-515-1377 Panorama-Consulting. it can reduce costs. so there is less of a big payment up front than with a traditional on-premise ERP system. an organization is in a world of hurt if the Internet goes down. several SaaS and cloud vendors are growing quickly and giving traditional ERP vendors a run for their money. Without question. Workday and NetSuite are just some of the SaaS vendors receiving much attention and business success in recent years. but when it comes to hardcore workflow redesign or customization of the mid-size company. On the other hand. they can be of particular appeal to CFOs looking to minimize capital expenditures. Ease of Implementation. . the high level of technical ease may create additional business complexities that the company might not experience with traditional ERP. traditional ERP does not require Internet reliability provided users are accessing the software from inside the company’s network. One can still configure and set-up the software as desired to a point. Flexibility. So implementing SaaS must be a slam-dunk no-brainer. there is inherently less it can do to change the software to fit specific business needs.ERP Solution: Software as a Service (SaaS) There is much hype in the ERP marketplace regarding the strengths of SaaS relative to traditional on-premise ERP software solutions. it often takes a great deal of time to change the processes of the business to fit the software. Because an organization doesn’t “own” the software on its own servers. Because an organization doesn’t need to purchase additional servers or physically install the software itself. it can be an easy and quick means of deployment. which is not reflected in the typically optimistic implementation timeframe of a SaaS ERP sales rep. However. Since SaaS is entirely accessed through the web. one essentially “leases” the software.

broader or more differentiated functions can be more difficult to accommodate. but hosting those solutions externally to accommodate the desire to outsource their ERP infrastructure. Many of the traditional software vendors are providing hybrid options that combine the best of both worlds by offering customers a single instance with the flexibility of traditional ERP. Advantages of a Hosted ERP Solution • Hosted solutions provide flexibility. After comparing both business cases. Though many readers may not like my “it depends” answer to the question. Choosing between SaaS and traditional ERP isn't easy. Moreover.Denver. human resource management or supply chain management. our larger clients generally find that SaaS does not adequately accommodate their enterprise software needs. If an organization purchases the hosted solution from its ERP software vendor. Whether or not a hosted ERP solution is right for your organization depends on your unique situation. • • Whether or not an organization chooses to host its solution depends on many factors.Questions to Ask When Considering SaaS ERP Solutions • • • • • • • • Is there a need for a highly customized solution? Is there a need to integrate with legacy apps? How large is the planned deployment? Are there features that are missing from software? What is the timeline for deployment? What is the IT staff’s experience level? Is there a need to upgrade a significant portion of the IT infrastructure? How big of a change will the software entail? At Panorama. a company would be wise to consider using this to its advantage. Conversely. such as customer relationship management. All Rights Reserved. It provides strong disaster recovery processes. ERP Hosting: Where’s the ROI? Since hosting an ERP system is a major item that can significantly affect a project’s ROI. CO 80209 720-515-1377 Panorama-Consulting. it may be able to negotiate more favorable terms on the software licenses and/or implementation services. it is a decision that should not be taken lightly. which is good for companies that are going through office moves. which is good for companies that are struggling with Sarbanes-Oxley (SOX) compliance. Specific Functions of ERP Software: Benefits and Drawbacks Page 4 of 17 3773 Cherry Creek North Drive . With hosted solutions. you don’t need to worry about scaling the software to meet your evolving requirements as your business changes. . The best thing to do is to develop at least two different scenarios as part of your business case justification: one for an internally hosted solution and one for an external solution. consolidations or closures.Suite 720 . the SaaS delivery model is often more suited for vanilla and narrowly defined business © Copyright 2012 Eric Kimberling. there are a number of factors that should affect your final decision. Hosting represents a steady cash flow at a high profit margin for software companies. we often find that SaaS solutions are viable for our SMB clients. the most appropriate decision will become clear and you will be on your way to maximizing the ROI of the ERP project. This is also advantageous to companies that have limited IT resources or are in the process of downsizing.

Below are five things to look for when evaluating potential accounting software: • Reporting and executive dashboards. This may be one of the more challenging components of accounting software. seasonality and other more sophisticated statistical models.Accounting Software Considerations In the world of enterprise solutions. Integration with operations. This can be one of the trickier aspects of reporting out of an enterprise accounting solution. Staff members ranging from executives to front-line employees rely heavily on the data and reports provided by accounting software. All Rights Reserved. Accounting is more than just reporting results – it is also about providing internal controls. multiple delivery options. Just as with other modules and functions of ERP. CO 80209 720-515-1377 © Copyright 2012 Eric Kimberling. the customer relationship management (CRM) software selection process can be tricky. These needs should be clearly defined and compared to the functionality of potential accounting solutions. accounting software provides one of the most visible impacts on an organization. not all accounting software is created equally. CRM evaluations should consider elements inherent in effective ERP software selection processes. Rather than forcing users to manually forecast in Microsoft Excel and load data into an ERP or accounting system. Even if an organization is not required to be Sarbanes-Oxley (SOX) compliant. a CRM software selection process should include the following steps: Page 5 of 17 3773 Cherry Creek North Drive . approvals and transaction security will ensure that the company is minimizing business risk and making its auditors happy. • • • • CRM Software Selection As with all enterprise software initiatives. There are plenty of solutions to choose from. Therefore it is important to closely examine the ability to gather this information. provides a great deal of visibility to employees. Budgeting and forecasting. In addition. NetSuite and Oracle CRM are aggressively pursuing the market with competing messages. different users have different needs for transparency into the internal day-to-day workings of the company. production orders. Most accounting packages are able to provide basic chart of account and period-end close processes. For example. and other critical business data. Strong functionality in this area can pay huge dividends in increased efficiencies and more accurate planning. Executives and employees may need to view profit and loss by product lines. along with standard reports to help run a business. accounting data is incredibly useful when it incorporates real-time data around inventory levels.Suite 720 . and large amounts of software vendor hype. . However. Drilling down from income statements to specific customer orders. Stand-alone accounting packages are even more powerful when they integrate into the core operations of a business. some solutions handle accounting better than others. Most companies have fairly unique reporting needs. Job and product costing. companies such as Salesforce. its accounting system’s automated workflows. for example. In addition. Internal business controls. Microsoft CRM. more robust packages will provide tools to develop budgets and forecasts based on historical trends. In addition.Denver. work in progress or other variations.

CO 80209 720-515-1377 Panorama-Consulting. it is important to carefully consider the pros. SaaS implementations are typically implemented in less time. not the technology. Needs such as these may be met via integration with additional enterprise software modules or business intelligence and reporting solutions. If the company’s longer-term plan is to implement other enterprise software © Copyright 2012 Eric Kimberling. Set realistic expectations for implementation cost and duration. product configuration. Before jumping straight on the SaaS bandwagon. Clearly understand the organization’s business and technical integration needs. However. On the other hand the likelihood of going over-budget also is higher. cons and trade-offs of different deployment models. Another example is the finance department. inventory management and financials. 5. .Suite 720 . 4. there are key project activities that need to be factored into the implementation plan. there are five factors that are somewhat unique to CRM software evaluation processes: 1. The beauty (and curse) of CRM is that there are plenty of viable options with sophisticated functionality in the marketplace. Whether it's SaaS deployment models. Whether one is implementing CRM to one or 100 users. Don't forget that it's about the people.• • • • • • • Clearly define business requirements Evaluate the technical fit of potential options Assess vendor viability Evaluate functional fit via a scripted demo process Develop a business case Negotiate with vendors Create a realistic implementation plan In addition to the above. Business process design. sales reps need to see inventory levels and order status and determine available-to-promise dates based on available capacity and production plans. All Rights Reserved. 2. One of the most common reasons for CRM failure is not allocating sufficient time and resources to the implementation. it can be easy to get caught up in the technology. but some of these benefits may be undermined if processes and data are not integrated with other enterprise modules. 3. which may want to see how product costs compare with sales pricing models. Page 6 of 17 3773 Cherry Creek North Drive . It is important to determine which CRM delivery option is best for your business. As we have outlined in our annual ERP Reports (available at PanoramaConsulting.Denver. Evaluate how the organization might extend CRM to ERP. on-premise CRM delivery models. it's important to remember that as with any enterprise solution. Understand the tradeoffs of SaaS vs. It's short-sighted to choose a CRM system without defining a plan for integrating with other key functions such as order entry. training and conference room pilots are just a few examples of key implementation activities that need to be included when budgeting the time and resources required. CRM can be powerful software with tangible benefits. For CRM success is more about people and processes than the technology itself. at a lower initial cost and with higher than average business benefits. cool bells and whistles or other sexy functionality. it is important to have a sense of which will be the right fit beyond CRM so it doesn’t become backed into a corner later on. It is key to find and implement a CRM solution that is a good fit for both the business and its organizational structure.

however. Companies must know who needs what and why. • • Web portals are relatively simple for modern ERP systems and can help companies extend business data to increase efficiency. Their problem is licensing. Some customer and/or suppliers may be reluctant to use the technology and thus training and or incentives need to be provided for support. IT skills may need to be upgraded and or new resources may need to be incorporated. Page 7 of 17 3773 Cherry Creek North Drive . Four Ways ERP Software Solutions Offer Web Portals • ERP software provides development tools that allow companies to create portals for suppliers. The web portal environment is a web development environment. ERP software provides creative ways to charge end-users (customers and/or suppliers). Smart companies have streamlined their business processes to the point where changes in demand or supply have not resulted in significant inventory overages or shortages. ERP software restricts development to only customers and/or suppliers or employees. current systems may or may not be able to support a portal environment thus technical infrastructure as well as strategic planning for the organization should be taken into account. The implementation strategy should not only include employees but also customers and or suppliers. Extending business data throughout the value chain however is difficult for SMBs because ERP software solutions have not figured out a comfortable way to do so. Implementation Strategy. Technical © Copyright 2012 Eric Kimberling. Businesses. your business must first consider the following points: • Business Requirements. Consequently. This includes enterprise-pricing models. The company’s business needs from external parties will shape the portal environment.Denver. CO 80209 720-515-1377 Panorama-Consulting. Web portals can be used in a laundry list of ways. All Rights Reserved.Web Portals in ERP Software Systems Businesses from complex heavy duty manufacturing to wholesale distribution are realizing the value of extending business data within their ERP software throughout the value chain. customers and employees. ERP software vendors have decided to integrate with SharePoint to expose customized pieces of their solution over the web. . • • • Before you decide on using any web portals to extend business data to suppliers and or customers though. must understand their operational and technical requirements prior to considering web portals because their requirements will shape the web portal environment as well as the ERP software that supports it.Suite 720 . ERP systems are the centerpiece of those streamlined operations. Their solution is web portals. Additionally.

warehouse management and other enterprise solutions. and companies were acquired and their manufacturing enterprise software did not keep up. ERP and CRM software selection services as companies plan and budget for purchasing and implementing software the following year. Demand for our software selection services spiked dramatically – a possible indicator of broader investment in manufacturing technologies. the recession forced many (if not most) manufacturing companies to shed employees.Industry-Specific Considerations: Manufacturing The challenging state of the manufacturing sector during this economic downturn has received plenty of press over the last several years. This misalignment is one key reason for the current spike in demand for manufacturing software selection services. When the recession began. supply chains became more complex and globalized. Here again. which appears to be accelerating in more mature and competitive manufacturing verticals. fourth quarter 2011 seemed abnormally busy. but based on what we’re seeing. companies temporarily put enterprise software investments on hold until things improved. So why is this? There seem to be a number of driving factors. The result is pent-up demand for enterprise software solutions that will help manufacturers reduce costs. . Manufacturers have struggled to grow revenues and contain costs. During this time. Cost Pressures Can Be Addressed by Manufacturing Software It may sound counterintuitive. In the meantime.Denver. many manufacturers faced competing priorities and neglected to assess their enterprise software. In addition.Suite 720 . Fourth quarter is usually the busiest time of year for Panorama’s manufacturing enterprise. We are finding that this increasing demand for manufacturing enterprise software is widespread. while others are more than $500 million in annual revenue with several hundred employees. CRM. These newly lean organizations are exposing and magnifying the weaknesses and inefficiencies of supply chains since there are less people to run the operations. it would be a welcome improvement in the ERP software industry. Recent news has been focused on the beginning of a sustainable recovery for manufacturers. manufacturers were feeling the combined pains of global competition. Some are under $100 million in annual revenue and 100 employees. CO 80209 720-515-1377 Panorama-Consulting. Companies ranging from medical device to film equipment to consumer product manufacturers have expressed interest in Panorama’s evaluation and selection services. evolving manufacturing and production models. Now that the recovery is proving not to be highly dramatic and costs will likely remain under pressure for the foreseeable future. Then the recession hit and IT budgets were put on hold. manufacturing ERP software is an opportunity to create efficiencies and act as a surrogate for displaced employees. manufacturers are leveraging enterprise software as potential mechanisms to drive down long-term costs and increase revenue. © Copyright 2012 Eric Kimberling. Page 8 of 17 3773 Cherry Creek North Drive . manufacturers’ operations became more misaligned with their manufacturing software. All Rights Reserved. grow revenue and scale for potential merger and acquisition activity. Business models changed. I’m no economist. but enterprise software may be a key to helping them through stagnant economic growth. If this is indeed a trend. and significant merger and acquisition activity. Misalignment Between Manufacturing Software and Operations Before the recession officially began in late 2007. deferring necessary investments in ERP. manufacturers may finally be loosening their purse strings to invest more in their operations and enterprise level manufacturing software. but the fact that sales are flat and costs are under pressure also are driving the need for manufacturing software solutions.

and provide better information for your customer service teams. Processes ranging from engineering. Several ERP and other enterprise software packages originally targeted the manufacturing industry and expanded functionality to other industries over time.Manufacturing ERP Software Selection The good news for companies evaluating potential manufacturing software solutions is that there are plenty of options to choose from. Believe it or not. Customer relationship management (CRM).Suite 720 . So what's the best way to navigate through this overwhelming number of options? The most important thing is to focus on both the aspects that are most important to your company and the differentiators between vendors. This includes everything from defining business rules when creating orders. so any evaluation should explore your needs in this area. bill of materials. it is important to find software with a product configurator robust enough to handle your specific product line. but also for components and parts. a robust offering can help your organization sell more with less people. Effective MRP and planning tools can help significantly reduce inventory costs and increase revenue. such as Epicor. all the way through manufacturing and assembly. manufacturing software doesn’t always contain robust MRP and planning tools. Infor. Product lifecycle management (PLM). it is typically more effective and less complicated to focus on a single system that addresses your operational needs. They all have different strengths. Product configuration.Denver. not every manufacturing ERP system provides the functionality of manufacturing execution systems or shop floor automation. order management. In addition to Tier I options such as SAP and Oracle eBusiness Suite (EBS). While most enterprise software at least provides third-party build-ons to address manufacturing processes. new product development can be the lifeblood of their businesses. Material requirements planning (MRP). New product designs should be integrated with your engineering. For non-commodity manufacturers. However. CO 80209 720-515-1377 Panorama-Consulting. make-to-stock and other types of manufacturers. weaknesses and sweet spots. In addition. In addition. . it is imperative that your enterprise software support planning demand not only for finished products. Since engineer-to-order (ETO) manufacturers create custom products with a dizzying array of potential configurations. process. cross-sell and up-sell to existing clients. This all equates to a broad range of software options. PLM is one of the less common modules within manufacturing software. CRM is one of the less mature modules within manufacturing software. QAD and SYSPRO. inventory management and kanban should be evaluated. In general. but most enterprise software is fairly comparable in those areas. • • • • Page 9 of 17 3773 Cherry Creek North Drive . purchasing and material management processes to drive down costs and decrease your product development lifecycle. there are dozens of viable Tier II manufacturing solutions. comprehensive G/L and accounts receivable processes may be important to a business. Given the complexity of many manufacturing products. Here are a few examples of some of the differentiators worth drilling into during your manufacturing software evaluation process: • Integrated manufacturing and shop floor © Copyright 2012 Eric Kimberling. All Rights Reserved. For instance. a host of niche software vendors focus exclusively on discrete. make-to-order.

gas) are just a few of the challenges that make the chemicals and process manufacturing industry unique. liquid vs. CO 80209 720-515-1377 Panorama-Consulting.Suite 720 . you may want to carefully evaluate the ability of the software's canned reports to provide information related to job costing. For example.g. MRP and other enterprise software for our clients in the chemical products manufacturing industry: • • • • • • • • • Laboratory management Formulations and recipes Scalable batches Strong inventory management Certificate of analysis (COA) generation Bi-directional lot tracking Expiration date tracking Recall management Audit trails and reporting Not all enterprise software solutions are able to handle these complex requirements. Below are some of additional factors we tend to focus on when evaluating ERP. . All Rights Reserved.Denver. product costing and overhead allocations.. An organization should clearly and thoroughly define its specific business processes and requirements to give you tangible criteria to base your evaluation and decision. These are just a few pointers to start an evaluation of manufacturing software solutions. MRP and other enterprise software for our clients in the manufacturing and distribution industry: • • • • • • • • • • • Demand forecasting Advanced material requirements planning (MRP) Automatic scheduling Standard costing Product engineering Product lifecycle management (PLM) Engineering change notices (ECNs) Online product configurations Inventory management Consignment inventory Quality control Chemical Products Manufacturing ERP Selection Based on our experience with chemical products manufacturing companies. Below are some of the factors we tend to focus on when evaluating ERP.• Business intelligence. Employees and executives need to have broad visibility into manufacturing © Copyright 2012 Eric Kimberling. Companies that fail to select software that can handle some of these complexities often end up Page 10 of 17 3773 Cherry Creek North Drive . so it is important to conduct an enterprise software evaluation that objectively compares potential vendors' ability to meet these needs. Units of measure. lot traceability and shipping in multiple forms (e. This is typically one of the biggest differentiators of manufacturing and enterprise software solutions. this industry has unique needs that are not effectively addressed by all enterprise software vendors. so it is important to ensure your potential software options provide the reporting and business intelligence you need.

Given the complexity of MTO and ETO products. high-dollar items (e. This tool should also integrate project data regarding resources. . its annual conference for cloud ERP vendors. Page 11 of 17 3773 Cherry Creek North Drive . Project management. Material requirements planning (MRP). Panorama experience shows this area to be a common pitfall for complex manufacturing software. Given the relatively high levels of labor costs.Denver. it is critical to understand how any potential ERP software handles serialization. it is important to drill down into product costing functionality during the ERP software evaluation process. Product costing. this particular industry has been sorely lacking the software options required to give most manufacturing executives the choice and comfort required to fully embrace the SaaS model. returns and warranties. This includes everything from defining business rules when creating orders. it is important to find software with a product configurator robust enough to handle your specific product line.000 participants this year.. and Epicor already provide SaaS manufacturing ERP systems. While ERP vendors such as Salesforce. Organizations that manufacture complex. CO 80209 720-515-1377 Panorama-Consulting. All Rights Reserved. low-volume.g. Therefore. manual process workarounds and suboptimized business benefits. underscoring the significance of the company in the ERP space. the significance of cloud and SaaS-based ERP solutions. not all enterprise software contains robust MRP and planning tools. Based on our research and client experience with manufacturing software.Suite 720 . Kenandy’s launch. Effective MRP and planning tools can help significantly reduce inventory costs and increase revenue. Believe it or not. Salesforce hosted Dreamforce. Serialization and returns. ERP Software For Make-to-Order and Engineer-to-Order Manufacturers Make-to-order (MTO) and engineer-to-order (ETO) manufacturers face a number of additional challenges unique to their industry. Dreamforce also featured the launch of Kenandy. and more © Copyright 2012 Eric Kimberling.spending significant amounts of money on software customization. which is backed by over $10 million in venture capital funding. • • • • Manufacturing ERP and the Cloud: An Idea Whose Time Has Come? In September 2011. all the way through manufacturing and assembly. a Silicon Valley startup focused on SaaS ERP solutions for the manufacturing industry vertical. parts and labor with core financial ERP data. it is imperative that your enterprise software support planning demand for not only finished products. but also for components and parts. Since many MTO and ETO large-ticket items are serialized at both the finished product and component levels. below are five common pitfalls in selecting MTO and ETO ERP software: • Product configuration. Plex. aerospace and defense) can benefit from an integrated project management tool to manage large projects. helps mitigate these concerns. MTO and ETO manufacturers need to have a good grasp on their product costs. Since ETO manufacturers create custom products with a dizzying array of potential configurations. The event drew over 45.

All Rights Reserved. so it is something that is clearly desired by the market. The complexity of most manufacturing companies makes SaaS adoption more difficult. In addition to more options. manufacturing executives are going to remain skeptical. 3. where they purchase traditional ERP solutions while having them hosted in the cloud. Since SaaS options typically entail multi-tenant delivery models. More robust development and integration tools. manufacturing companies that service aerospace and defense. they are inherently less flexible to customize. However. Panorama analysts still feel as if we are still three to five years from seeing widespread adoption of SaaS enterprise solutions in the manufacturing industry. executives in this industry vertical will become more comfortable and more likely to adapt the SaaS model.Suite 720 . In fact. food and government sectors have concerns about controlling or owning the data. according to our research.Denver. So does this mean that traditional manufacturing ERP systems are obsolete. when it comes to fully integrated solutions that tie together a manufacturer’s data and business processes – ranging from financials to inventory to manufacturing workflows – into a single system. on-premise solutions. ERP vendors such as Salesforce and Workday are providing best-ofbreed point solutions in the CRM and HR arenas. most SaaS ERP systems do not provide the breadth of functionality and business processes that are required to address manufacturers’ business requirements. Until software companies do a better job of selling their capabilities in these areas. only to be replaced by SaaS options like Kenandy? Not quite yet. executives at the event demonstrated common concerns with security and data ownership. executives are going for a sort of hybrid approach. In the meantime. the fact of the matter is that SaaS and the cloud have not yet quite killed traditional enterprise software. but they do not allow heavy customizations. More breadth and integration.Don’t get me wrong: the SaaS and cloud trends are very real and are quickly changing the game for ERP vendors and their customers. Concerns with security and data ownership. One of the shortcomings of the SaaS model is the relative lack of flexibility compared to traditional. While SaaS CRM or HR options from Salesforce or Workday can be effective solutions to address specific and relatively vanilla functional areas. but the maturity and breadth of fully integrated manufacturing ERP processes are not quite there yet. Granted. 2. SaaS ERP systems have been lacking. it is often required to help organization’s maintain and automate their competitive advantages. . which are more likely to be embraced by manufacturing executives. they will always play second fiddle to traditional ERP solutions. During a recent presentation at a manufacturing conference. Although many industry analysts strongly disagree with my lukewarm opinion of SaaS © Copyright 2012 Eric Kimberling. This often provides companies with the potential benefits of SaaS while maintaining the flexibility they are looking for in their ERP systems. The reality is that SaaS and cloud providers build their entire companies around providing secure solutions – while manufacturers aren’t generally focused on doing so – so they can quite frankly provide more security and stability than any internal IT department would ever be able to. resulting in a lower adoption rate here than in other industries. here are a handful of things that need to happen before manufacturing executives fully embrace the SaaS model: 1. Similarly. they still do allow tailored changes to basic configuration and set-up. SaaS ERP vendors don’t seem to be doing enough to address these concerns. with only a handful of solutions providing the truly integrated processes desired by most manufacturing and distribution companies. While customization is generally viewed as a negative thing. manufacturing companies will more fully embrace the SaaS model. Until SaaS solutions further develop their tools to allow the flexibility that most executives are looking for. Companies such as NetSuite and Plex are changing this. which are addressed by most effectively negotiated software contracts. In addition. only 15-percent of ERP implementations involve no customization. Despite the hype and long-term potential. However. With each new company like Kenandy and Plex. CO 80209 720-515-1377 Panorama-Consulting. Once these three areas are addressed. Page 12 of 17 3773 Cherry Creek North Drive .

Planning and demand forecasting.Suite 720 . so it is important to consider functionality that is unique to process manufacturing and food Page 13 of 17 3773 Cherry Creek North Drive . Following are three differentiating factors for food distribution software: 1. Distribution software should contain robust financial reporting to support these needs. As a result. Food distribution lot traceability. Given the higher finished goods inventory. Considerations for Evaluating and Selecting Distribution Software • Purchasing and procurement. Distribution companies differ from manufacturers in a number of © Copyright 2012 Eric Kimberling. While most distributors do not require sophisticated product configuration or other engineer-to-order functionality. Distribution software for a food producer or wholesaler has different requirements than in other industries. Instead of requiring capabilities around production planning and product configuration. .Denver. accurately planning demand and corresponding inventory needs is very important. so it must be carefully explored during the software evaluation process. Process manufacturing capabilities. such as sales by brand.Industry-Specific Considerations: Distribution As some US-based manufacturers move away from domestic manufacturing toward more distribution-based business models. it can become increasingly difficult to track sales by a number of different variables. effective and consolidated procurements becomes increasingly important. Lot traceability is not something that all ERP solutions do well. Many distributors expand their product lines as a result of their shifting focus away from manufacturing to distribution. The FDA requires transparency to the manufacturing and supply chain process. product line. especially in the event of a recall. many find it beneficial to find software that better fits their evolving operational strategies. • • • • Food Distribution ERP Software Selection Every industry is unique and has certain needs that demand different ERP software solutions. it is still important that the distribution software enable final assembly of products. This is an area where ERP software solutions vary considerably. 2. so this area should be carefully examined relative to an organization’s needs. Companies must have access to vendor purchases. Complex financial reporting. The increasing importance of business-to-business sales underscores the need for seamless communication with customers. All Rights Reserved. Our experience in the food distribution industry reveals that this is true for this vertical as well. EDI and customer integration. distributors need to be better equipped to handle functions such as procurement and demand forecasting. etc. The manufacture of food is very different than the production of a widget. Light assembly. Packaging and value-add assembly processes are two examples of potential functionality that should be supported. product costs for different vendors and other such information. Because distributors have more money tied up in finished goods inventory than manufacturers. CO 80209 720-515-1377 Panorama-Consulting. Integrated and automated communication of areas such as electronic data interchange (EDI). advance ship notification and order status updates are very important and should be carefully considered with potential distribution software offerings. geography. An effective distribution ERP system should enable these processes.

com © Copyright 2012 Eric Kimberling. state and local entities have shown us that certain challenges are especially pronounced in the public sector. Not only is it important for the project team and executive sponsors to communicate major process and organizational changes to employees. Here are a few distinct challenges to consider before embarking on an ERP implementation for a public sector organization: • Organizational change management. CO 80209 720-515-1377 Panorama-Consulting. brand. employees may not be used to the large changes entailed by an ERP implementation. All Rights Reserved. because government organizations often do not feel the same external market pressures to change quickly. Below are some of the factors we tend to focus on when evaluating enterprise. 3. but there are things that make them unique. Not all enterprise software can handle this reporting complexity. In addition to the cultural change enabled by an organizational change management plan. • . Public sector ERP systems face unique obstacles related to people. federal. For example. such as by region. For these reasons. In addition. general communications can be especially challenging with public sector entities. financial management and accounting software for Panorama’s government and nonprofit clients: • • • • • • • • • Fund accounting Budgeting Account allocation Fixed asset tracking Recurring billings Permit tracking License renewals Human resources and payroll Reporting Our experience with non-profits. most food manufacturing and distribution companies need flexible units of measure and the ability to track the “recipes” of their products within the bill of materials. but there are typically a complex series of stakeholders that need to be communicated to as well. Communications. Fund accounting. Change is hard for employees at most organizations. license tracking and tax revenue tracking are just a few of the challenges that make government and nonprofit enterprise software unique. and complexities. business processes. organizational change management plans need to pay particular attention to "selling" the changes and positively impacting the culture of the organization. product line. Sales and financial results often need to be sliced and diced in a number of ways.Suite 720 . Industry-Specific Considerations: Government and Public Sector There is no question that the government and public sector have unique needs that are not effectively addressed by all enterprise software vendors. Employees in the public sector haven't traditionally been motivated by a fear of having to outperform peers to keep their jobs (although this is changing in recent years). Companies within the food industry often have more complex reporting requirements than other distribution companies. etc. Constituents such as internal customers. so performance-based incentives may not be as effective.Denver. It's not that public sector ERP implementations are necessarily more difficult than those in the private sector.distribution. external taxpayers and Page 14 of 17 3773 Cherry Creek North Drive . but it can be even more difficult to manage in the public sector. Sales and financial reporting.

field service management. field service crews and maintenance need to be managed spatially. Another challenge for government organizations is that they are generally larger. For this reason. Trouble and outage management. It can be a challenge finding an ERP system that can effectively handle all of these areas. However. more complex and impact people more than those in the commercial space. geographical information systems. Whether it's building a new power plant or performing maintenance on an energy substation. Public sector ERP implementations are difficult – but not impossible – if managed effectively and with the right implementation partner. The above three variables are three key complexities to consider as you begin your organization's ERP initiative. This is one of the more difficult challenges for many ERP solutions. an opportunity for efficiency lies in leveraging enterprise software to better manage engineering processes. Utilities. systems. work management. it's interesting that not as much has been said about how these new energy companies. Support geospatial data. CRM and trouble management are just some of the varying needs that somehow need to be integrated together. It's rare to find a small. Energy companies have unique and diverse requirements when compared to other industries. It is for this reason that public ERP systems often take so long and cost so much to implement. maintenance and cost of these assets. exploration. people and organizational structures all can be more complex than what you might see in the commercial space. Engineering designs for fixed assets require careful tracking of work orders. Business processes. ERP software needs to be able to track construction. along with existing firms. but also track those orders to assets and other geospatial data elements.Denver. materials management and other critical points in the supply chain. Industry-Specific Considerations: Energy. • Complexity. All Rights Reserved. 4. CO 80209 720-515-1377 Panorama-Consulting. Engineering and graphical work design. which is a key reason why energy companies commonly add separate GIS solutions to their core enterprise software.Suite 720 . inventory. Oil and Gas Industry ERP software is always complex. which increases the data complexities of enterprise software. you want to make sure you have a software solution and ERP implementation partner that is accustomed to these complexities.external "customers" all have a vested interest in ensuring the project is successful. Enterprise asset the complexities can be material. are going to handle the changes and shifting complexities of their business. With all the talk of clean and renewable energy. Page 15 of 17 3773 Cherry Creek North Drive .no matter how relatively small it may seem compared to other government entities . Fixed asset management. 2. So where is an energy company to start when evaluating potential enterprise systems? Below are six of the key areas to explore when choosing and implementing an ERP system: © Copyright 2012 Eric Kimberling. Relatively straight forward data such as assets. they need to not only track trouble tickets. but especially so in the energy. oil and gas industry. Another unique factor within the energy industry is the reliance on geospatial data. Energy companies are extremely asset-intensive. Therefore. 3. nimble and simple government organization . . When building and maintaining the plants and other fixed assets required to run energy companies. utilities. getting there is easier said than done. One of the biggest headaches for energy companies is an infrastructure outage.

As is the case with telecommunication companies. In addition to basic customer relationship information. and establishing new service for customers. MRP and other enterprise software for our clients in the life sciences industry: • • • • • • • • • • • Multi-level bill of materials Recipe and formula management Yielding Lot tracking and lot property management Serial number tracking Warranty tracking Recall management Business intelligence Ad hoc reporting Electronic signatures Audit control Page 16 of 17 3773 Cherry Creek North Drive .5. geospatial. CRM. which makes the process that much more complex. ranging from other distribution companies to consumers. . Industry-Specific Considerations: Life Sciences FDA compliance. Following are some of the unique factors Panorama consultants hone in on when evaluating ERP. customer service and billing. these functions need to integrate with outage management and work management processes. Work management and field service management. energy organizations need to manage work orders for building new assets. These work orders need to tie to the asset management.Denver. 6. All Rights Reserved. such as customer © Copyright 2012 Eric Kimberling. Energy companies typically have different classifications of customers. CO 80209 720-515-1377 Panorama-Consulting.Suite 720 . conducting periodic maintenance. mobile workforce management and customer systems. product configuration and lot traceability are just a few of the challenges that make the life sciences industry unique. billing and account management.

and ERP implementation project management experience. Eric Kimberling realized the need for an independent consulting firm that really understands both ERP and the business benefits it can enable. All Rights Reserved. merger and acquisition integration. In addition to extensive ERP experience. Page 17 of 17 3773 Cherry Creek North Drive . the world’s leading independent ERP consultant. Eric holds an MBA from Daniels College of Business at the University of © Copyright 2012 Eric Kimberling. He currently serves as the managing partner of Panorama Consulting Solutions. Eric has also helped clients with business process re-engineering. Samsonite.Denver. . and Lucent Technologies to name a few. Throughout his career.Suite 720 . Eric has helped dozens of high-profile and global companies with their ERP initiatives. Eric’s background includes extensive ERP software selection. Coors. Duke Energy. and Six Sigma.About the Author After 15 years of ERP consulting at large firms including PricewaterhouseCoopers and SchlumbergerSema. ERP organizational change. Eric began his career as an ERP organizational change management consultant and eventually broadened his background to include implementation project management and software selection. strategic planning. including Kodak. CO 80209 720-515-1377 Panorama-Consulting.