Sometimes it’s easy to lose perspective in the ERP industry. When you work with ERP software every day, it’s tempting to believe that everyone who might need it is both already aware of the technology and convinced of its value. We’re keen advocates of new technology and new processes, but we struggle to understand anyone who doesn’t want an ERP system.
Sometimes, something happens to challenge this way of thinking. It could be direct experience, or a piece of research like the manufacturing report published last week by US accountancy firm Sikich. The company revealed that 53% of the manufacturers and distributors it polled still use manual processes, such as spreadsheets, to measure key performance indicators (KPIs). In other words, more than half of a survey group numbering some 116 companies (the majority of which have annual revenues of between $1 million and $100 million) have not deployed ERP software.
Sikich’s Jim Wagner expressed concern at the persistence of manual processes in manufacturing and said that “tracking accurate KPIs can mean the difference between stagnation and long-term growth”. He added that technology “has the potential to transform the industry and drive success, but companies need to make full use of it to realise gains”.
All of these comments are true – and I agree entirely with the statement about the importance of KPIs. However, manufacturers in this situation also need to consider that the choice they have is not really a simple case of spreadsheets v ERP software. As Wagner implied, it’s really about choosing growth over stagnation.
ERP software as a platform for growth
The act of moving from manual processes to an ERP system will not perform miracles overnight. And similarly, persisting with spreadsheets as a way to track KPIs will not in itself consign a business to the scrapheap. However, investing in ERP software will provide a platform for significant and sustainable growth based on the optimisation and alignment of business processes. In fact, IDG has stated that companies with effective data, which allows them to monitor and control their business, grow 35% faster.
So ERP or spreadsheet is actually a fairly easy choice to make. However, as I talked about in our recent post about Epicor 10, ERP on its own is some software and little else. A level of intellectual investment – as well as financial – is required to make it work.
The real issues manufacturing businesses must address are more difficult, or at least have the potential to be. Are they ready to prepare for growth? Do they have the stomach to make the tough decisions that preparation may demand? Are they willing to reject the ‘this is how we’ve always done it’ mentality and place their processes under extreme scrutiny? And can they accept some short-term disruption and difficulty in order to achieve a long-term gain?
The Sikich report ends by striking an optimistic note for the US manufacturing industry. It concludes that manufacturers “have the ability to further restore an industry that was once lost to overseas production”, providing they can overcome barriers such as the failure to embrace technology and other obstacles like a growing workforce skills gap.
I would argue that many manufacturers in the UK and Europe have a similar opportunity. To grasp it, they will need to understand both the benefits of ERP systems and the all-round strategic commitment required to maximise their impact. Our job as ERP consultants is to make sure this message gets through.