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MAY 13 2012
Enterprise Resource Planning
that have driven change in the ERP sector. ‘‘ T h e re are i nt e re st i ng things happening in the industry around the area of sustainab i l ity. O n e of t h e m a i n principles of ERP is enterprise-wide planning, and you can see an example of how that works in reality if you look at the automation of warehouses ^ the automation of orders coming in to be picked up and delivered, and the way they’re automatically linked into a delivery system with no need for paperwork,’’ said Connor. ‘‘A rep can take an order on the road using a hand-held device or laptop, and have that order come through into their company’s customer relationship management [CRM] system, on into procurement and through to the warehouse. These used to be disparate functions in the company, but technology is bringing them together.When it starts to work across departments like that, then the value of a joined-up approached to ERP becomes evident.’’ ‘‘It truly becomes an enterprise-wide solution, rather than one solution for sales, one for stock, one for manufacturing and so on. It means that, rather than trying to implement a massive top-tier solution with a very impressive price tag on day one, you can look at implementing, on a modular basis, mid-range solutions to fit an existing need, with the comfort that it can evolve to take on new modules as you need them, so it’s a much more affordable solution.’’
ERP isn’t just for heavy hitters
Falling costs have now made enterprise resource planning more affordable for everyone, and the benefits are numerous, writes Alex Meehan
h e re once e nt e rprise r e source planning (ERP) was the sole preserve of large companies and multinationals, lower purchase prices and technological advances in recent years have meant that it is now accessible to a much wider range of businesses. According to Alan Connor, commercial director with Exchequer Software, there has also been a significant shift in how ERP is perceived. ‘‘Where ERP used to be something you bought, it’s now something that you do. There’s no one box for it anymore, and you can’t really separate it from the other aspects of how companies manage their work processes.To do so would be like saying ‘I want to buy a cloud for my ITsystems’, when actually cloud technology already permeates and facilitates so much that such an idea is meaningless,’’ he said. ERP can help companies make the best of the changing nature of the Irish economy. ‘‘ERP as a concept has two elements ^ there’s the enterprise-wide element which is widely recognized and understood, and there’s also manufacturing resource planning [MRP]. This covers areas like mater ials, purchasing and stock requisitioning and it’s becoming increasingly relevant, because in many cases companies are no longer holding lots of stock,’’ Connor said. ‘‘This is particularly true for companies dealing in areas such as foodstuffs or technology, where stock either goes out of date or gets superseded relatively quickly. ‘‘In the past, a lot of IT and general device suppliers would have had a lot of stock on their shelves, but now they’re ordering based on very particular requirements. ‘‘Nobody wants to get stuck holding a lot of stock, or to have a situation where their custo-
mers are holding a lot of their stock in case they in turn run into problems with their suppliers or customers.’’ With this in mind, the kind of planning necessary to keep a company responsive to market conditions has changed. ‘‘In the days of the Celtic tiger, you needed to be able to take as many orders as you could and ship as many orders as you could. You worried about accounting for it later. But now businesses are planning much more in advance to minimise their exposure and maximize their cash flow,’’ said Connor. ‘‘For example, if you’re shipping laptop computers or TVs, not only do you need to be aware of sales patterns going back over a number of years, you also have to base your ordering on things such as seasonal trends, average spend, and excluding particular customers who are no longer in the market.’’ According to Connor, technologies such as ERP and MRP allow companies to expect and receive more active m a n a g e m e nt f r o m s t a f f charged with staying informed of market demand. ‘‘Managers are having to manage like never before, and they need the tools and the information to do that almost before things happen ^ they need to be notified in advance of anything that affects their area. Tools such as ERP can help with that. It’s what makes the difference between a bookkeeping or accounting solution that simply records transactions, and a system that manages and manipulates that data to allow managers manage better,’’ he said. The tools to do this aren’t particularly new, and have been used by large companies for decades. But what has changed is the starting price of entry-level ERP systems. ‘‘In terms of cost, it’s no different to how mobile phones developed ^ 20 years ago mobile phones were the size of a brick and cost a fortune, and
‘In terms of cost, it’s no different to how mobile phones developed’
Alan Connor, commercial director, Exchequer Software in the same way, ERP solutions were only affordable by the largest Irish businesses. Most companies simply couldn’t have justified paying out the kind of money involved,’’ said Connor. ‘‘Nowadays, mid-range accounting and business software delivers ERP functionality without the overheads that were involved 20 years ago. Technology has advanced to such a level that systems that used to require huge sequence systems and a lot of resource implementation, not to mention full time personnel working to implement them, are now available as off-theshelf mid-range solutions.’’ ‘‘The data and tools are there in those mid-range solutions, but it’s down to the companies to get the ERP benefits from them by using them in the way they were designed. That’s the distinction now compared to the past ^ it’s not beyond the grasp of a company that is still using its first accounting software package to go up to a mid-range one such as Exchequer,’’ he said. ‘‘Because of the way it expands and can be adapted using add-on modules, that could be the last product they would need to buy. And it’s becoming more affordable.’’ So if ERP and MRP functionality are becoming increasingly powerful and at the same time easier to gain access to, what barriers are there for companies embracing this technology? For many firms, the answer lies in the problems associated with moving data from an old system to a new system. This data migration has traditionally been a thorn in the side of those looking to upgrade their ERP systems. ‘‘If you implement a midrange accounting software system with wonderful facilities to analyse your data, it will be pretty much useless for the first few years unless you migrate data from the old system as
well. So a lot of thought has to go into the process of migrating companies from entry level accounting software up to mid-range systems,’’ said Connor. ‘‘Technically it’s not difficult to migrate such systems any more but there are some legacy systems out there where you pretty much have to be a brain
surgeon to extract data from them. However, customers expect more open availability of data and the idea that you can lock people into proprietary software is dead and gone.’’ ‘‘Around 95per cent of our customers upgrade from another accounting software package, so this is our bread and butter. We constantly extract data from other systems, taking out what the client needs and then re-analysing and re-formatting it. The goal is to put it into a new, futureproof reporting structure, because that’s when the client can start getting the ERP benefits out of it.’’ Along with the demands being placed on Irish companies by a stressed economy, there have been other changes to the market in recent years
‘Always on’ feature is a big attraction
By Caroline Allen
ompanies want to access important financial information from multiple devices and applications ^ and, as Karl O’Leary sees it, the trend is rapidly transforming the world of ERP. O’Leary, who is business manager for Microsoft Dynamics in Ireland, said companies were increasingly looking for ‘always on’ access to their financial information. ‘‘Up to now, ERP has recorded the history of what was happening in an organisation. It provided a means of understanding the figures and assisted in relatively short term forward planning,’’ he said. ‘‘What is happening now is that people want to be connected to data and processes through different devices to enable them make better more informed decisions for the short and long term.’’ Companies are using ERP to make better business decisions and respond quickly to opportunities. For big companies, O’Leary said, there was also the contentious issue of ‘‘big data’’ ^ the copious amounts of information created by emails, transactions, customer and supplier interactions etc, etc. ‘‘Companies have to sift through, record and reuse
Karl O’Leary, business manager for Microsoft Dynamics in Ireland more and more data. They want to not just record what is happening but to plan and be agile with their business,’’ he said. O’Leary said companies could use the Microsoft platform to connect with its Dynamics ERP system using any device or application. ‘‘Dynamics ERP is weaved in with Microsoft Office, Microsoft CRM, Sharepoint and Lync, our communications platform. It not only records data, but offers the ability to collaborate with customers and partners through tools like Lync and Sharepoint,’’ he said. ‘‘Businesses dramatically benefit from this. For example, Microsoft Office Excel which is fully integrated into Dynamics, really delivers self-service business intelligence.’’ O’Leary said Microsoft was bringing consumer innovation to ERP. ‘‘People are used to being able to check their email from anywhere,’’ he said. ‘‘The same vision is being brought to Microsoft’s Dynamic suite. Businesses can have the same level of connectivity to their ERP solution and core business processes as they currently have to their email. ‘‘However, the way we use email is changing. We are now all leveraging Instant Messaging and ‘instant’ online meeti ng s to c ol l ab orat e w it h customers and suppliers. Dynamics ERP fully leverages Sharepoint and Lync to facilitate this.’’
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