Manufacturing organizations today are increasingly focused on streamlining their operations to drive profits, increase margins and deliver high quality to customers in a timely fashion. While striving to remain competitive, some manufacturing organizations use every tool imaginable except the one tool that can truly help them: ERP software.
A robust ERP system helps organizations properly integrate and streamline interdependent departments. For most companies, it’s very important. For manufacturers, it’s vital.
Early attempts at developing an enterprise resource planning system can be traced back to the 1940s with the advent of calculating machines. This effort evolved into an early version of an ERP system in the 1960s through a collaboration between tractor manufacturer J.I. Case and IBM. The challenge at that time was to get a better handle on planning and scheduling materials for complex manufacturing operations. By the 1970s, companies such as JD Edwards, Lawson Software, SAP and Oracle were building ERP systems.
SAP and Oracle both invest heavily in cloud technology. However, our client was skeptical about cloud scalability and unsure if the products were mature and proven.
Today, ERP solutions are helping companies in various industries improve efficiency and help managers deliver on the promise of increased profits. Our clients in the manufacturing industry have seen many benefits from implementing enterprise software:
Effectively managing the inflow and outflow of materials is vital to any manufacturing organization.
In addition to managing materials, a robust ERP solution can manage a global supply chain that requires an understanding of multiple languages and currencies. Every country does business differently. For example, some countries incorporate a value-added tax while others don’t. Rather than having staff focus on the minutia of manually managing every detail of every transaction, you can implement an ERP system to automate operations. As a result, staff is freed up to focus on higher-value work.
To ensure materials coming into the organization are used when ordered and excess inventory does not accumulate, those materials must be planned into production. Enterprise software not only helps manage the procurement, pricing and payment of raw materials, it also helps manage scheduling of staff as well as machine operation and maintenance to maximize production schedules.
Some of our manufacturing clients use an engineer-to-order process where the order is placed prior to the product being designed, engineered and finished. These organizations benefit from ERP solutions that incorporate just-in-time inventory and an automated ordering system for customers. Depending on the items being produced and supply chain capability, a customer could place a tailored order on Monday and have the final product delivered by Friday – all with little to no waste.
A manufacturing ERP implementation also can help you utilize a just-in sequencing process, where materials are ordered and utilized in a production schedule as they arrive. If your system has serial genealogy functionality, you can trace the location and constituent components of completed goods to build complex products at scale.
The manual intervention and ensuing paperwork would be unmanageable without automation of these processes.
Many enterprise systems allow customers to access a customer portal and inquire about product availability, delivery and price. This data can then be used to dictate production schedules. When a customer can easily place orders and have them quickly delivered, that customer will be more inclined to be loyal to your organization.
We always recommend that our manufacturing clients not allow customers to place orders by phone. Organizations with millions or billions of dollars in revenue and an extensive global supply chain require automation.
A manufacturer can be both a customer and a supplier. In these cases, it’s important to implement an integrated system with the modules necessary to manage both sides of the business. When evaluating ERP vendors, look for a system that manages the order-to-cash process for the supplier side, as well as the procure-to-pay process for the customer side. This is especially helpful for organizations that have incorporated a shared services model, where management of customer and supplier functions is managed centrally.
Most suppliers prefer to be paid as quickly as possible, while most customers wish to hold onto their cash for as long as possible. An organization with separate supplier and customer financial operations can be disconnected from this financial philosophy. An ERP system, especially if deployed in a shared services department, can alleviate siloed mentality and integrate decision making.
No manufacturing organization, no matter how much automation is introduced, can adequately function without appropriate staffing. An ERP solution can help with staffing issues, such as scheduling, hourly wages, time off/vacation, skill set, etc.
When managing a particular margin for products being shipped to a customer, a manufacturer with an enterprise system might only schedule certain staff to handle certain production lines. Without an ERP system, an organization might allow any staff at any hourly wage to operate any line, which might throw off and endanger margins, profits and overall staff availability.
During the ERP selection process, manufacturers may be overwhelmed by choices. However, focusing on finding a system that helps you achieve these five benefits is a good place to start. If you’re considering implementing a manufacturing ERP solution, be sure to contact us to help you develop a digital strategy and select the best system to meet your organization’s unique needs.
If you’re in a similar situation, you’re probably wondering how to transition to a new system. Before you make any decisions, you’ll want to read this post to learn about the potential risks of ERP transitions.
A vendor may have 30 different systems they’ve built or acquired over the years. Some of these are older applications. Consolidating these products and moving them to the cloud is one way for vendors to simplify their product offerings. It also allows vendors to reallocate funds to what they believe will be most profitable in the future.
SAP and Oracle both invest heavily in cloud technology. However, our client was skeptical about cloud scalability and unsure if the products were mature and proven.
The process of retiring an ERP system can take several years – sometimes up to eight. During this time, a vendor cuts back on their implementation resources, removes technical support and reduces R&D funding. The product may still have new releases but these are not major. They are bug fixes or minor tweaking of the IP. If the product is moving to the cloud, the vendor will take best practices from this product and combine it with best practices from other products.
Here are four tips for responding to the phasing out of your ERP system:
It’s important to know what the sunsetting looks like in terms of timing and support. There are several questions you should ask your vendor:
Your transition team should include stakeholders from every department that will be affected by the change. The team will need to make decisions about how much to invest in the current ERP software in the interim. Most organizations decide to invest in fewer upgrades and less technical configuration. Each stakeholder should have input commensurate with their use of the ERP system.
Does your current ERP vendor offer a comparable solution that your organization could migrate to, or will you make a wholesale transition to another vendor’s solution? While your vendor may offer you discounts for transitioning to their cloud offering, it usually comes out to be a similar cost as moving to another vendor.
Besides cost, another important factor for many organizations is ease of transition. However, the transition to your vendor’s cloud offering won’t necessarily be easier than the transition to another vendors’ product. In many cases, an upgrade is just as extensive as a full ERP implementation.
Whichever path you choose, you should ensure the new ERP solution aligns with your business requirements and organizational strategy. If you haven’t looked at your business processes in a while, you may want to spend time on business process reengineering before selecting a new system. This takes time, so don’t abandon your current solution too quickly.
Many organizations think a new system means more functionality, but this isn’t always the case. Some cloud ERP solutions are still being developed and may not have all the functionality you need.
As with any ERP implementation, employees need to be informed of upcoming changes. Personalized communication and training are essential.
While the new ERP solution offered by your current vendor may have familiar features, don’t discount the possibility that a different vendor might offer a solution that is more user-friendly. Either way, it’s important to invest in change management before selecting and implementing new enterprise software.
A mid-sized agricultural distributor was using an old version of Microsoft Dynamics GP for accounting and finance. The organization knew this product was on the sunset path, so they implemented a new system without engaging an ERP consultant.
The organization eventually discovered that the new system did not have the right functionality. As a result, they invested in extensive customization. They also implemented niche solutions for warehouse management, transportation management, advanced forecasting and demand planning. It wasn’t long before they decided to hire an ERP consultant.
The organization hired us to help find a single solution to replace their best-of-breed solution. The hurried transition off GP had created a mess of disparate solutions.
How did this happen? The organization had replaced GP too quickly. If they had taken their time and sought third-party guidance earlier, they would not be in a position of needing another replacement so soon after the first.
When transitioning off an old ERP, be sure to implement a solution that will last your organization at least five
If you’ve just discovered your ERP system is being retired, don’t panic. Vendors’ sunsetting timeframes are long on purpose. They know they have a large install base, and they know it takes organizations significant time to assess and transition to new solutions.
You have enough time to find a solution that aligns with your digital strategy.
As you begin ERP selection, you’re probably wondering how long the process takes. If you want to set realistic expectations, you need to plan for some of the overlooked aspects of ERP selection. This includes defining organizational goals, developing an IT strategy, evaluating deployment options, defining business processes and reviewing statements of work.
Many organizations decide to evaluate ERP systems because their current system cannot scale to support the company’s growth. However, this reason alone doesn’t justify an ERP investment. You must be able to articulate how a new ERP system aligns with your organizational goals.
While enabling business growth may seem like a legitimate goal, it’s not specific and measurable enough. Consider goals such as improving data visibility or improving the customer experience. These goals are legitimate because you can measure the return on investment.
Before evaluating ERP systems, you should develop a business case to justify the investment and to estimate business benefits and return on investment. (You can use our ROI Calculator for these initial estimates). Defining your goals and developing a business case ensures you realize the full potential of ERP software. It also ensures organizational alignment.
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Once you understand your organization’s overall strategy and goals, you can develop an IT strategy. Now, you have a lens through which to evaluate your current enterprise systems and infrastructure. Determine what’s working and what needs to change if you are going to pursue new organizational goals.
Understanding your current state is essential as you’ll need to determine how new ERP software will integrate with your current IT infrastructure. For example, a best-of-breed solution may require many more integrations to your existing systems than a single ERP solution. Additional software integrations are worth the investment if a best-of-breed strategy aligns with your organization’s long-term goals. In fact, a standalone CRM system may have more robust functionality than a CRM application within a single ERP system.
When selecting best-of-breed ERP software, one mistake many organizations make is looking for software for one particular functional area without considering other functional areas. While all your business functions may not be in need of improvement at this current juncture, they likely will require new technology in the future. The functional area you’re focusing on now needs technology that will align with technology you implement in the future. If you define your long-term IT strategy, you will know what to look for in a standalone CRM system or HCM system.
The final step in developing an IT strategy is defining key performance indicators (KPIs). This will help you measure your return on investment throughout your ERP implementation. It’s also important to develop a benefits realization plan.
While evaluating deployment options is part of developing an IT strategy, it deserves to be mentioned separately. There are some important market trends of which you should be aware.
Lately, ERP vendors have increased their investments in cloud and SaaS ERP. As a result, many organizations who’ve been partial to on-premise software are now considering moving to the cloud.
Different deployment options each have their risks and benefits. Your decision should depend on your organization’s unique needs and goals. While cloud and SaaS solutions can be easier to deploy, they can limit your flexibility. ERP vendors may claim they will only support cloud solutions in the near future, but we have found this is purely a sales tactic. Cloud ERP is more profitable for vendors, so they provide higher compensation to sales reps who successfully sell cloud technology.
The truth is, on-premise software isn’t dead. We work with several VARs and system integrators that still sell and support on-premise solutions. These solutions are viable. In fact, some have ten- to twenty-year roadmaps, which is great news for their large install bases. As you’re evaluating deployment options, be sure to take the cloud sales hype with a grain of salt.
Many organizations choose cloud deployment for some but not all their business functions. This is called hybrid deployment. In these situations, organizations keep their back-office functions on-premise and implement cloud solutions for functions like sales and marketing.
How can you know what enterprise technology you need without knowing what business processes it needs to support? You can’t. That’s why it’s important to define your business processes before selecting ERP software.
Start by mapping your current processes and looking for pain points. Involve all departments and ensure managers seek input from their teams. This collaborative approach results in process improvements that align with your organizational goals. Your future state will be a combination of optimized and standardized processes from which you can define business requirements. Prioritize these requirements so you can evaluate the functionality of various enterprise systems and determine which systems are most effective at addressing your highest-priority requirements.
Business process reengineering is a complex activity that can increase your selection timeframe. However, you will make up for this time during implementation since you won’t have to spend time defining your processes after selection.
Once you have statements of work from your top vendors, you may think the worst is behind you. Unfortunately, one of the most challenging tasks of selection remains: You must compare cost estimates that each make different assumptions about your implementation approach and desired level of customization.
When reviewing statements of work, you should ensure that the estimates include essentials, such as support and maintenance fees. You don’t want your system to go down just because you didn’t keep it updated. You also don’t want a security breach.
As you can imagine, this process is confusing and time consuming. Many organizations hire an independent ERP consultant to analyze statements of work and negotiate with vendors.
These five activities don’t encompass the entire ERP selection process. ERP selection also requires you to conduct organizational readiness assessments, develop a data management strategy and attend ERP vendor demos, among other things.
All these activities can add up to a selection process that takes a minimum of fourteen weeks. Larger organizations with multiple locations typically need at least sixteen weeks to select the right system.
Now that you have realistic expectations, you can find the right expert to assist you. Look for an ERP consultant that focuses on all the necessary success factors of ERP selection.
You know you need new ERP software, but before you dive in, you should understand the basics of this often-misused technology. Once you understand the basics, you can develop an ERP strategy.
Enterprise resource planning (ERP) software is used by organizations to integrate and organize the data necessary for front office and back office operations. ERP software integrates organizations’ key operations, including the manufacturing, distribution, financial and human resources, into one software system.
When properly implemented, an ERP solution increases organizational efficiency, performance and profitability. However, ERP implementations are challenging and often require an ERP consultant to manage the software selection, implementation, process management and organizational change. A large enterprise software implementation is particularly difficult when multiple, global locations are involved. Strong project management is key to achieving an integrated enterprise.
SAP, Oracle, Microsoft Dynamics and Infor are among the most popular ERP vendors. One of the most searched terms on Google is “SAP vs. Oracle.” That should tell you something about the popularity of these vendors.
Niche software vendors are also popular, especially for smaller organizations or organizations looking for industry-specific functionality. Niche products are designed for specific industries or business functions. For example, Syspro, IQMS and Plex are specifically built for the manufacturing industry.
While you may want to select a well-known enterprise resource planning system, the best solution depends on your unique business needs. A better question is, “What are the best ERP vendors for my future-state processes and organizational goals?”
SAP and Oracle both invest heavily in cloud technology. However, our client was skeptical about cloud scalability and unsure if the products were mature and proven.
ERP software is beneficial to organizations regardless of size or industry. In recent years, small- to mid-sized organizations have fueled most of the growth in the ERP industry. While large enterprises dominated ERP usage in the past, niche solutions have made it possible for smaller organizations to implement ERP software.
Organizations pursuing digital transformation often implement ERP software to enable their digital strategies. These organizations use technology to create new business and operating models. Their goal in implementing new technology is to improve data insights and the customer experience.
Customer relationship management (CRM) software is a type of enterprise software that automates the sales and marketing functions of an organization. Many vendors include CRM software in their full suite of solutions, but some organizations take a best-of-breed approach. They’ll implement a CRM system from another vendor and integrate it with their main system.
CRM software provides real-time data on lead behavior and demographics allowing organizations to personalize their communication with leads and customers. CRM functionality enables organizations to maximize the benefits of their ERP implementations. Improving the customer experience is a common reason organizations implement software solutions.
MRP software is included in most ERP systems. While ERP automates the entire supply chain, manufacturing resource planning focuses on the manufacturing processes involved in product conception through production planning. For example, when you need to purchase raw materials to build a product, MRP software allows you to create an accurate bill of materials.
An MRP system can be purchased as a standalone system or as part of a full ERP system. Some organizations take a best-of-breed approach when it comes to the individual modules within an MRP system. For example, they may look for a specialized solution for a function like materials costing.
ERP software for larger organizations tends to cost more than niche software. However, even the larger vendors offer point solutions that can be implemented individually. Organizations can save money by only implementing the functionality they need instead of implementing a full suite of solutions.
Licensing costs also depend on the deployment model. While cloud computing may be cheaper in the short-term, it is more expensive than on-premise software in the long-term. Cloud and SaaS ERP is subscription-based so you pay per user or per module. If you plan to implement software in phases, be sure you’re not paying for all licenses upfront.
Maintenance, customization and resources are other costs to consider. You’ll need resources for configuration, data migration and implementation. Beyond these technical components, you’ll need to budget for business process reengineering and change management. The ideal ratio of software costs to service costs is 2:3.
If a vendor’s proposal seems unreasonable, you can negotiate a better price by hiring an independent enterprise software consultant. An ERP selection consultant can facilitate apples-to-apples comparisons of vendors’ statements of work, so you know your points of leverage. Some ERP consultants save clients as much as 30-60% of what they would have paid otherwise.
While ERP software is expensive, cost shouldn’t be your main concern when deciding whether to initiate an ERP implementation. You likely will recoup your costs within three years due to the business benefits you achieved.
While ERP has the potential to provide numerous business benefits, it can also be a risky proposition. If not managed properly, ERP projects can cost more and take longer than expected. They can also cause operational disruption and employee resistance.
Organizations assume the most risk when they approach their ERP project from a technical perspective instead of business perspective. If you don’t align new technology with your people and processes, you may not realize expected business benefits. You can’t improve data visibility if your ERP system can’t support optimized processes. You also can’t improve the customer experience if your employees don’t know how to perform optimized processes. Other than ERP failure, the biggest risk of ERP implementation is a low ROI.
Once you’ve recognized your need for new ERP software, you should define what kind of technology you need based on your digital strategy. This will help you develop a business case convincing executives to make the investment. Be sure to highlight not only benefits of ERP software but also the costs and risks. With a strong business case, you’ll have the executive support necessary for a successful ERP selection.
How do you decide which ERP system to implement when internal bias and vendor enthusiasm threaten to sway you? The best way to evaluate ERP systems is to weigh the strengths and weaknesses of each according to the following six criteria.
Most Tier I ERP vendors are heavily investing in cloud technology, but functionality is still limited compared to many on-premise solutions. This doesn’t mean every organization should select an on-premise solution. In the future, your ERP vendor may stop developing or even supporting their on-premise products. At that point, you’ll have to transition to the cloud, which is more complex and time-consuming than vendors claim.
While vendors are heavily investing in their cloud offerings and providing more robust functionality, the novelty of the cloud is still intimidating to many organizations. No one wants to be among the first to take the leap. They want a long list of references from companies of similar size and industry. A vendor’s cloud implementation resume for large organizations may be smaller than you expect.
SAP and Oracle both invest heavily in cloud technology. However, our client was skeptical about cloud scalability and unsure if the products were mature and proven.
Software scalability refers to a system’s ability to handle an increasing amount of work and increasing number of users.
Some ERP vendors target large organizations with complex operations, but do you know which products and deployment models can continuously scale to support your growing business? If your customer base increases, the software should be able to handle an increasing number of users and transactions. It should continue to provide real-time data despite an increase in data volume.
Scalability can be expensive for some on-premise solutions. You might need to purchase additional servers to support the increased workload. It’s important to ask vendors what their products can support out-of-the-box and if they can be scaled.
ERP vendors have different functional strengths that make them well-suited for certain industries. While industry focus is a strong indicator of technical fit, your business requirements should have the final say.
If you take the time to map your step-by-step processes and define your ERP requirements, you can ask vendors to demonstrate specific functionality. You’re not expecting too much by asking a vendor to demo their ERP system based on your requirements list rather than presenting a canned sales demo. Sharing your business requirements with vendors and allowing access to subject matter experts ensures vendors fully understand your business.
While no ERP system can address every possible business requirement, you should look for a system that addresses your highest priority requirements. In addition, you should determine which processes should be standardized based on ERP functionality, and which processes are competitive differentiators that could require software customization.
Vendors will make many claims about their system’s capabilities and ease of use. If you want to validate these claims, you should request references, so you can ask previous customers about their experience.
What functionality did they implement, and did they achieve the desired results? Did the vendor offer ongoing support and training?
References should be from organizations similar to your own that have implemented similar functionality. If you’re considering cloud ERP, ask for references that have deployed their software in the cloud.
While total cost of ownership is a common consideration during ERP software selection, return on investment (ROI) is even more important. If you choose an ERP system based on ROI rather than total cost of ownership, your ERP project will result in increased business benefits.
Developing a business case will help you quantify the benefits you expect. This will guide you in improving your processes and defining your business requirements. Your ERP system will be more likely to deliver a high ROI if it’s configured based on optimized processes.
If you’re comparing the ROI of several different ERP systems, you may find Panorama’s ROI Calculator useful.
Do you know the long-term outlook of the ERP software you’re evaluating? While SAP and Oracle aren’t likely to go out of business any time soon, they may stop supporting certain products.
It’s also worth knowing where a vendor plans to invest their R&D in the future, as it’s your responsibility to select a product that will support your organization in the long-term.
You should conduct industry research to determine if a software product is on par with its competition. If not, the vendor may be planning to discontinue the product. In the short-term, product stagnation hurts your business as you’ll spend a fortune on customization just to remain innovative.
Before beginning the ERP selection process, you should define a digital strategy. What are the pain points of your current IT infrastructure, and what needs to change to support your organizational objectives?
While an ERP implementation can bring much needed change, the only way to enable long-term, large-scale change is through business process reengineering and change management. Even if you select one of the top ERP systems, you won’t transform your organization unless you enable change by focusing on your people and processes.
The SAP vs. Oracle debate is common among large, complex organizations. Clients often ask us, “which is the better ERP system?” Of course, as an independent ERP consultant, we determine the best fit for our clients based on their unique business requirements. Nonetheless, we’d like to provide a comparison of SAP and Oracle based on industry benchmarks, client experience and vendor demo scores.
SAP primarily builds its products from the ground up rather than through acquisition. The vendor targets organizations with at least $1 billion in annual revenue. SAP ERP software has deep functionality, so it requires a very technical, time-consuming implementation.
Fun Fact: SAP S/4HANA Cash Application enables real time, intelligent invoice-matching powered by machine learning.
Oracle’s primary strength is acquiring product lines that can provide flexible functionality to a variety of industry niches. However, niche functionality is still transitioning from EBS and JD Edwards into Oracle’s newer products. Oracle targets organizations with at least $750 million in annual revenue.
Fun Fact: Oracle Business Intelligence 12c provides seamless analytics across cloud and on-premise solutions.
Both SAP and Oracle provide a full business suite of solutions, including HCM software, CRM software, SCM software, etc. Both vendors were featured in our manufacturing report and distribution report on the top ERP systems for those industries. The vendors in these reports have robust supply chain management functionality and inventory management functionality. They also offer strong production management software.
When evaluating ERP vendors, it can be helpful to consider industry benchmarks and independent research. Panorama’s 2019 Clash of the Titans report provides benchmarks on some of the challenges organizations experience when implementing SAP or Oracle:
According to our report, SAP implementations last around 14.7 months, while Oracle implementations take about 12 months. One possible reason that SAP implementations take longer is because its clients are typically global and complex organizations. These organizations choose SAP because of its scalability and robust functionality. Global implementations naturally require a longer time commitment due to the number of locations and decisions about standardization vs. localization.
ERP implementations can cause operational disruptions, such as the inability to manufacture or ship products.
Disruptions that occur during SAP implementations last about 128.5 days, while disruptions that occur during Oracle implementations last about 121.7 days. This might reflect the fact that SAP works with large organizations with complex, global operations. An operational disruption at a large organization can affect multiple locations, which can take more time and effort to resolve.
To reduce the risk of operational disruption, organizations should take a phased implementation approach. It’s also wise to conduct multiple conference room pilots before go-live.
Resource allocation is one of the most common struggles for organizations implementing enterprise software. While ERP vendors typically recommend at least eight to twelve full-time internal resources, this isn’t feasible for most organizations. Many organizations heavily rely on external resources from the vendor and systems integrator. Unfortunately, this increases implementation costs.
Organizations implementing Oracle use slightly more internal resources than organizations implementing SAP. In both cases, respondent organizations reported that their team was almost an even split between internal and external resources.
Complex customization is a major reason why organizations rely on external resources. Oracle is a flexible solution that typically requires simple customization and configuration that can be done in-house.
More than half of SAP customers reported that their ERP project played a significant role in their digital strategies. However, this was true for less than half of Oracle customers.
Oracle’s marketing strategy seems to focus on promoting specific functionality, such as finance. This might attract more organizations looking to automate particular processes and fewer organizations looking to transform their entire operating model.
SAP and Oracle both invest heavily in cloud technology. However, our client was skeptical about cloud scalability and unsure if the products were mature and proven.
SAP and Oracle both provide robust ERP systems that can transform your organization. These benchmarks don’t prove one vendor is better than the other, but rather highlight challenges organizations may face when working with these vendors.
Diving deeper into these challenges, it’s apparent that they’re not caused by technical shortcomings. Both of these vendors have rich functionality providing value to organizations that understand how enterprise resource planning software aligns with their goals.
Based on our experience evaluating and implementing these ERP solutions for clients, we’ve gleaned some interesting insights:
SAP and Oracle both have products with multiple deployment options. They typically encourage our clients to consider cloud-based technology even if they’ve expressed interest in on-premise technology.
Focusing on cloud ERP is a smart move for SAP and Oracle as the market is increasingly demanding flexible deployment options. However, we’ve found that neither SAP nor Oracle have very many references for cloud implementations at large, complex organizations.
While SAP and Oracle aren’t likely to go out of business any time soon, they occasionally discontinue certain products.
SAP S/4HANA is a fairly new platform for SAP. The product has strong R&D funding as does Oracle ERP Cloud. However, R&D spending on Oracle EBS on-premise, is waning as the product is moving exclusively to the cloud. It’s difficult to find technical resources to implement EBS on-premise as most Oracle system integrators are focused on the cloud.
Want to learn more? Our SAP vs. Oracle white paper features a case study on a client in the distribution industry.
We regularly coordinate ERP vendor demonstrations for clients. After each demo, clients score functionality on a scale from 1 to 5. The highest score a vendor can receive is a 5. The following metrics are based on clients’ ratings of SAP and Oracle functionality during the last two years:
Industry Intelligence – IBM partnered with SAP to create a Cognitive Demand Forecasting Solution for the retail industry. The solution can be integrated into SAP S/4HANA and the SAP Customer Activity Repository. Oracle Demand Management Cloud is a supply chain management solution that accurately predicts customer demand for a broad range of industries.
Industry Intelligence – SAP recently updated its material requirements planning (MRP) functionality within SAP S/4HANA. Oracle NetSuite also has recent updates to its MRP functionality.
Industry Intelligence – SAP Business One has a fixed asset management function that eliminates the need for repetitive manual data entry. Oracle NetSuite Fixed Asset Management automates asset acquisition, depreciation, revaluation and retirement.
Industry Intelligence – SAP Upscale Commerce allows manufacturers and merchants to quickly launch “pop-up” e-commerce stores. Oracle Commerce On-premise, has likely stopped releasing updates. However, Oracle Commerce Cloud is frequently updated, with its last update this month.
Industry Intelligence – SAP ECC has improved precision in currency conversion of foreign exchange rates.
Industry Intelligence – SAP Audit Management instantly captures audit documentation while providing drag-and-drop tools. You can access the application through mobile devices.
Industry Intelligence – Not all BI vendors provide user-friendly dashboards. However, SAP BusinessObjects allows you to create interactive, role-based dashboards accessible from any device. An alternative is SAP Analytics Cloud, which allows you to easily create predictive models and integrate them into workflows.
Industry Intelligence – Oracle has a new set of artificial intelligence applications that automate processes within its cloud suite.
Industry Intelligence – Oracle Project Contract Billing Cloud provides pre-built templates and automates project billing. The application ensures contracts are compliant with project billing requirements.
Industry Intelligence – Oracle Purchasing Cloud automates routine transactions, such as invoice validation. The application fully integrates with accounts payable functionality.
Industry Intelligence – Oracle Product Lifecycle Management Cloud allows you to define inspection plans by connecting product design standards and quality specifications.
While these scores are just averages of more detailed metrics, they provide a sense of the perceived strengths and weaknesses of each ERP system. Demo scores are one of several factors to consider during an evaluation of SAP and Oracle.
Comparing Oracle and SAP requires an in-depth understanding of software functionality, deployment options and vendor and product viability. An informed decision also requires business process reengineering and requirements definition prior to selection. Armed with this insight, an organization can decide whether SAP, Oracle or another system altogether best fits their business needs.
However, there are many activities that should precede ERP selection. Before you start thinking about ERP vendors or perusing top ERP systems lists, consider focusing on these seven activities:
The key to a successful ERP selection is ensuring that stakeholders across the organization understand and agree with the organization’s strategy objectives. Then, you can consider how you might use technology to achieve objectives, such as improving the customer experience, creating new business models or generating new revenue. This isn’t the time to focus on specific technologies but to establish a foundation that ultimately will help you evaluate ERP vendors based on their ability to enable your strategy.
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What business benefits do you expect to realize from new ERP software? What are the expected costs? Knowing the answers to these questions is critical to justifying an ERP investment when executives ask about ROI. To really win them over, you should outline exactly how new technology will enable your organization’s strategy objectives. Most ERP failures can be prevented by ensuring stakeholders understand technology’s role in digital transformation.
As soon as you’ve made the decision to implement new ERP software, you need to inform employees. You may not know what specific technologies will be involved, but it’s never too soon to start communicating about the overall goals of the future ERP implementation. By evaluating your organizational culture and employees’ openness to change, you can develop an organizational change management strategy that helps employees embrace change. Encouraging employee buy-in is not just about increasing system usage. Employee buy-in is critical long before implementation. For example, employees can provide useful input during the selection process. Building enthusiasm before selection can maximize their future engagement.
Many organizations do not have clearly-defined processes, but as they embark on their ERP project, they realize the necessity of business process mapping. Documenting current business processes helps you prioritize functional requirements and identify opportunities for improvement. While no ERP system will address every business requirement, process mapping gives you an idea of which requirements are most important. Process mapping also helps you understand who owns processes and data, so you know who to involve in the selection process.
While some processes may only need incremental improvements, processes related to your competitive advantage may need a complete overhaul. In other words, they need business process reengineering. This is an approach to business design that focuses on breaking down functional silos and providing end-to-end process understanding. It involves thinking about the purpose of each process and the hand-offs between functions. Ultimately, this approach builds process efficiencies that will guide your selection of ERP software. If a system can’t support your optimized processes, then it’s not right for your organization.
Do you want to house ERP software within your IT department or host it externally? Complex organizations that need heavy IT control, gravitate toward on-premise deployment, while organizations that need less control generally outsource their IT functions. Here’s some of the terminology you might encounter as you’re evaluating deployment options:
Software hosted in an external environment that is either single tenant or multi-tenant
Software managed by a specific vendor in a multi-tenant cloud environment
Software hosted within your organization
A combination of on-premise hosting and cloud hosting
All platforms and technologies hosted by external provider
In addition to deployment options, there are several other IT strategy decisions to make before ERP selection. For example, you’ll need to determine an integration strategy – do you want a single ERP system or several best-of-breed systems? While best-of-breed ERP systems can help you build competitive advantage, they also create technical complexities, integration challenges and data issues. Many organizations implement single ERP systems since they enable standardization, which can reduce change resistance. However, single ERP systems don’t allow you the flexibility to choose the best software for each of your functional areas. This means you might need more software customization, which is costly.
These seven activities will help you establish a foundation from which you can effectively evaluate ERP vendors. Now you have the necessary information to analyze the functional and technical fit of any digital technology on the market. You know what criteria are most important to your organization, so you can narrow down your potential options until you find the technology that supports your digital strategy and improves your competitive advantage.
However, choosing the right ERP consultant can be just as confusing as selecting an ERP system. Any ERP consultant can claim to deliver vendor negotiation services, but not all consultants have an effective methodology. When evaluating an ERP consultant’s vendor negotiation methodology, consider whether it includes these four activities and deliverables:
They’ll also help you determine which contract terms are most important to you. These may include terms, such as:
A negotiation workbook helps you understand statements of work based on your unique requirements instead of vendors’ assumptions. Your ERP consultant should help you understand your requirements by facilitating activities, such as:
Below is a sample negotiation workbook. The spreadsheet allows “what if” scenarios (i.e., what if you get a 30% discount):
SAP and Oracle both invest heavily in cloud technology. However, our client was skeptical about cloud scalability and unsure if the products were mature and proven.
Whichever method you choose, you should aim for cost savings of 30-60%. Your savings will vary depending on your organization size and your chosen ERP vendor. Some vendors don’t go below a 20% discount. You can achieve additional cost savings overtime by ensuring maintenance costs are based on purchase price rather than list price.
Panorama clients typically go through three to four rounds of negotiation, which can last anywhere from three weeks to several months.
It’s not easy finding an ERP consultant that focuses on all four of these activities. If you’re not convinced these activities will save you money, take a look at these case studies:
Typically, Panorama clients achieve cost savings that are ten times the cost of the negotiation services. And Panorama’s performance warranty ensures every client gets a significant discount on their software purchase or they don’t pay us a dime for our time spent negotiating on their behalf.
While this post focuses on the benefits of cloud ERP, it is by no means superior to on-premise software or hybrid cloud environments. The benefits you realize from any technology will depend on your project execution before, during and after implementation.
Here is a technology-agnostic perspective on the reasons some organizations choose to implement cloud ERP:
When it comes to data access and data storage, cloud ERP has several advantages over on-premise ERP. Cloud technology is more scalable for storing large amounts of data and can provide access to data gathered by IoT technology.
While researching cloud ERP systems, you’ll likely run across many lists of “top ERP systems.” These lists are often based on the amount of research and development vendors are investing in their products. The most innovative ERP vendors are heavily investing in cloud BI.
This gives organizations more time to focus on the business side of transformation. Change management and business process management require the same time and resources whether you’re implementing cloud or on-premise ERP.
Cloud technology allows organizations to outsource their IT function and focus on their core business. Retailers, for example, typically like to dedicate more focus to the customer experience than IT maintenance.
SAP and Oracle both invest heavily in cloud technology. However, our client was skeptical about cloud scalability and unsure if the products were mature and proven.
For smaller organizations, the long-term cost of cloud ERP may actually be less expensive than on-premise ERP – the fixed infrastructure costs of on-premise ERP can’t be spread over enough volume to justify the cost.
In any technology initiative you should communicate with employees about the benefits of new technology, emphasizing how their jobs will become easier. Are you implementing robotic process automation in conjunction with cloud technology? Focus on how these bots will streamline menial tasks and enable employees to work more efficiently.
Manufacturing organizations today have more than 200 different manufacturing ERP software solutions to choose from. To help navigate this challenge, we developed a report highlighting what we believe to be the top ERP systems for the manufacturing industry based on our experience and research. The report includes Tier I, II and III ERP systems as well as niche applications. We discuss considerations such as user experience, cultural fit and functional strengths.
Before you download the report, here’s a quick overview of some of the highlights from the Tier I ERP vendors:
Another strength of SAP is the ability to configure and centrally manage a hierarchy of resource reason codes across plants.
One thing to consider when evaluating SAP is the systems’ complexity. In our experience, implementation durations can range from nine months to more than 18 months, depending on complexity as well as the rollout methodology.
Earlier this year, Infor enhanced its supply chain management (SCM) functionality to leverage digital technologies, such as big data, machine learning and IoT. The SCM system can be purchased as part of a full suite of solutions.
While both Infor LN and Infor M3 provide deep out-of-the-box functionality, organizations may need to implement an additional Infor product to access more advanced functionality.
SAP and Oracle both invest heavily in cloud technology. However, our client was skeptical about cloud scalability and unsure if the products were mature and proven.
Oracle’s manufacturing products use artificial intelligence and predictive analytics to rapidly identify issues, pinpoint the root causes and predict events before they occur.
While Oracle’s cloud applications consolidate best practices from their various business applications, Oracle’s cloud functionality is not yet as rich and deep in functionality as historical JD Edwards or EBS functionality.
This October, Dynamics 365 for Sales will be enabled with artificial intelligence, which will give manufacturers better visibility into their supply chain. Dynamics D365 continues its reliance on a partner ecosystem to develop niche functionality. Partners are currently in the process of understanding niche IP development for the new version of Microsoft Dynamics.
The ideal manufacturing solution should address the entire supply chain, from product inception to customer delivery. It should have functionality to track suppliers, materials, production costs, maintenance and customer relationships. Ultimately, it should increase operational efficiency and provide full visibility into manufacturing processes and business data. Transforming your manufacturing organization requires technology that drives efficiency and enables full supply chain visibility.
While it’s helpful to compare the strengths of various ERP systems, the best solution for your business depends on your unique needs and situation. We hope this report helps you evaluate the solutions we’ve deemed the most viable manufacturing ERP vendors in the market.
The SAP vs. Oracle debate is common among large, complex organizations evaluating ERP software. How do you decide between these two viable options when internal bias and vendor enthusiasm threaten to sway you?
The best way to evaluate ERP systems is to weigh the strengths and weaknesses of each according to the following six criteria.
Many ERP vendors have a flagship product where they invest most of their R&D. It behooves you to know which product this is and how it can be deployed. For example, Oracle ERP Cloud can only be deployed in the cloud. SAP S/4HANA, on the other hand, has multiple deployment options.
Most Tier I ERP vendors are heavily investing in cloud technology, but functionality is still limited compared to many on-premise solutions. This doesn’t mean every organization should select an on-premise solution. In the future, your ERP vendor may stop developing or even supporting their on-premise products. At that point, you’ll have to transition to the cloud, which is more complex and time-consuming than vendors claim.
While vendors are heavily investing in their cloud offerings and providing more robust functionality, the novelty of the cloud is still intimidating to many organizations. No one wants to be among the first to take the leap. They want a long list of references from companies of similar size and industry. Whether you’re evaluating SAP or Oracle, their cloud implementation resume may be smaller than you expect.
Software scalability refers to a system’s ability to handle an increasing amount of work and increasing number of users. SAP and Oracle are built for large organizations with complex operations, but do you know which products and deployment models can continuously scale to support your growing business?
For example, if your customer base increases, the software should be able to handle an increasing number of users and transactions. It should continue to provide real-time data despite an increase in data volume.
Scalability can be expensive for some on-premise solutions. You might need to purchase additional servers to support the increased workload. It’s important to ask vendors what their products can support out-of-the-box, and if they can be scaled.
SAP and Oracle have different functional strengths that make them well-suited for certain industries. While industry focus is a strong indicator of technical fit, your business requirements should have the final say. If you take the time to map your processes and define your business requirements, you can ask vendors to demonstrate specific functionality. You’re not expecting too much by asking a vendor to demo their ERP system based on your business requirements rather than presenting a canned sales demo.
While no ERP system can address every possible business requirement, you should look for a system that addresses your highest priority requirements. In addition, you should determine which of your processes should be standardized based on ERP functionality, and which processes are competitive differentiators that could require software customization.
Sharing your business requirements with vendors and allowing access to subject matter experts ensures vendors fully understand your business.
SAP and Oracle both invest heavily in cloud technology. However, our client was skeptical about cloud scalability and unsure if the products were mature and proven.
Vendors will make many claims about their system’s capabilities and ease of use. If you want to validate these claims, you should request references, so you can ask previous customers about their experience. What functionality did they implement, and did they achieve the desired results? Did the vendor offer ongoing support?
References should be from organizations similar to your own that have implemented similar functionality. If you’re considering cloud ERP, ask for references that have deployed their software in the cloud.
While total cost of ownership is a common consideration during organizations’ ERP evaluations, return on investment is even more important. If you select an ERP system based on your organizational vision rather than total cost of ownership, you’ll realize more business benefits.
Developing a business case will help you quantify the benefits you expect. This will guide you in improving your processes and defining your business requirements. Your ERP system will be more likely to deliver a high ROI if it’s configured based on optimized processes.
If you’re comparing the ROI of several different ERP systems, you may find Panorama’s ROI Calculator useful.
Do you know the long-term outlook of the ERP solutions you’re evaluating? While SAP and Oracle aren’t likely to go out of business any time soon, they may stop supporting certain products. It’s also worth knowing where a vendor plans to invest their R&D in the future, as it’s your responsibility to select a product that will support your organization in the long-term.
You should conduct industry research to determine if a software product is on par with its competition. If not, the vendor may be planning to discontinue the product. In the short-term, product stagnation hurts your business as you’ll spend a fortune on customization just to remain innovative.
Before evaluating ERP software, you should define a digital strategy. What are the pain points of your current IT infrastructure, and what needs to change to support your organizational objectives?
While new technology can bring much needed change, the only way to enable long-term, large-scale change is through business process reengineering and organizational change management. Even if you select the best solution from among SAP and Oracle, you won’t transform your organization unless you enable change by focusing on your people and processes.
So, what metrics should you measure? What technology should you use? And, what obstacles should you expect?
Common sources of data include billing, help desk, web analytics and social media. Some organizations gather additional data from focus groups and customer surveys. Ideally, all of these data sources should flow into an ERP system to ensure a single version of truth.
Some technology falls short when it comes to measuring customer experience. Based on your business strategy and IT strategy, you can evaluate your current systems to determine where you should invest in new technology.
The best technology for measuring customer experience integrates data from multiple channels and supports customizable dashboards. The technology should also include business intelligence functionality, as this will help you diagnose root causes and predict potential outcomes.
What other functionality should you consider? Requirements gathering workshops can help you determine this. Some organizations involve their customers in the requirements gathering process by asking them how they’d like to interact with the company and what would make their lives easier.
Most importantly, don’t look for the lowest cost solution, but the solution with the highest ROI potential.
SAP and Oracle both invest heavily in cloud technology. However, our client was skeptical about cloud scalability and unsure if the products were mature and proven.
Customer satisfaction and net promoter score can each be measured through a single, straightforward question on a customer survey. Net promoter score measures customer loyalty and likelihood to recommend. You can divide responses into three categories: Promoters, Passives and Detractors.
In addition to top-level metrics, you should determine metrics for each stage of the customer journey as well as each transactional touchpoint. You can correlate these with top-level metrics as well as operational data, such as sales figures and HR data.
A customer journey map is useful in this process as it helps you make sense of both quantitative and qualitative data. As you identify pain points throughout the customer journey, you may generate ideas for new product or service offerings. This may also give you ideas for process improvements, in terms of customer interaction processes as well as product or service rollout processes. You may also want to track customer buying histories and preferences as this will help you improve targeting and personalization.
Almost as important as what to track is who should track it. Your sales and marketing departments should each be accountable for tracking and communicating certain KPIs. These departments should agree on how metrics should be interpreted and acted upon. One way to interpret customer experience metrics is by benchmarking against your direct competitors as well as industry leaders. This insight may help you think of innovative ways to serve customers.
Customer satisfaction is not just the responsibility of sales and marketing. Your entire organization should have a customer-focused mindset, but this doesn’t happen overnight. If you appoint change agents in every department, they can ensure that actionable insights make their way to decision makers.
Creating customized dashboards for decision makers and holding regular meetings will enable you to act on data in real-time and make continuous improvements. If you have a call center, your reps should have easy access to customer feedback, so they can make informed and timely decisions.
If your organization is customer-centric and dedicates time and resources to measuring customer experience, you may want to consider a digital transformation initiative – you can use customer metrics to design new service offerings and new ways of interacting with customers.
Have you ever considered which of your employees (non-decision makers) will have the greatest influence your ERP software selection? It may not be who you expect.
The largest generation in the American workforce is the Millennial generation. Depending on your industry, they likely comprise about 35% of your workforce. Naturally, this generation’s preferences and propensities will significantly influence your ERP software selection – if you put any weight on user experience when making IT decisions.
User experience should be a consideration during any IT project, but it is especially important during ERP software selection. End-users across departments and across generations will use the new software. You have a lot of people to please as the software will touch every part of your organization.
While people pleasing isn’t generally a fruitful pastime, the rules change when it comes to ERP software. Your evaluation criteria should consider user experience as a factor equally as important as functional requirements and total cost of ownership. The risks of not considering user experience include low employee morale, low system usage and process inefficiencies.
The influence of the Millennial generation isn’t relegated to its size – its unique characteristics also contribute to its power. Millennials are “digital natives,” meaning they’ve never known life without digital technology. This unique characteristic makes them critical of technology that doesn’t meet their expectations.
Millennials expect software to be intuitive, much like their favorite social media platforms. Their familiarity with social media also primes them to expect software features that promote collaboration. Additionally, they expect accessibility – your ERP software better be mobile-friendly! They also crave efficiency. If it takes more than two clicks to navigate somewhere, they may throw their laptop across the room.
SAP and Oracle both invest heavily in cloud technology. However, our client was skeptical about cloud scalability and unsure if the products were mature and proven.
Many ERP vendors have responded to feedback from Millennials by building user interfaces that resemble social media platforms, adding social collaboration features, improving their mobile-compatibility and reducing users’ click-fatigue.
If you want to gauge the more specific needs of your workforce, you can conduct anonymous surveys, encouraging employees to provide honest answers. Monitoring your employee attrition rate also will help you measure dissatisfaction.
Deciding to begin an ERP software selection is the first step to meeting the needs of your Millennial employees. Many organizations avoid ERP implementations because their legacy applications are “fit-for-purpose,” and seem too expensive to migrate. Some of these organizations resort to time-consuming workarounds to please Millennials. They’ve built new front-end applications to improve the usability of their software, while overlooking inefficiencies throughout the entire ERP system.
If you’ve chosen to implement new ERP software, you have an advantage over these stubborn organizations. Most ERP vendors have modern products at reasonable costs. You surely will find a solution that meets your business needs – and the needs of the largest generation in your workforce.
Panorama’s next ERP Boot Camp is just around the corner on May 22nd-23rd in Chicago, Illinois. Boot Camp is two days of intensive, interactive ERP education in an informal setting. The subject material covers everything from software selection to implementation to organizational change management. We ensure guests walk away with a robust understanding of what constitutes ERP project success. Still not convinced that ERP Boot Camp is necessary for you and your team? Read on for other reasons to attend:
Too many teams go into an ERP implementation with little or no ERP project management background. An ERP implementation can be a defining point in your career — don’t you want to be armed with all the information you need to make it a success?
Panorama instructors are ERP consultants with boots-on-the-ground experience. They will discuss the variables that can mean the difference between success and failure. Their goal is to provide best practices on everything from negotiation to licensing to customization . . . and more.
SAP and Oracle both invest heavily in cloud technology. However, our client was skeptical about cloud scalability and unsure if the products were mature and proven.
Forget giant auditoriums. Panorama’s ERP Boot Camp is an intimate, collegial experience with plenty of time for interaction, networking and relationship-building. Presenters are accessible, and presentations are interactive. We limit attendance to ensure a small group format. If you are looking for personalized training, you have found the right place.
One of the most challenging tasks for a project manager is to cut through all the hype to discover what their ERP software truly can provide. Because our instructors are independent consultants, they are not afraid to give you the real story on software selection and implementation. Our collective opinion is based on hundreds of ERP implementations.
Panorama’s expertise in salvaging failed ERP implementations and our expert witness work in ERP lawsuits gives us an unparalleled breadth of knowledge to help you avoid pitfalls and build a framework for ERP success. If you are still on the fence, consider this: Is an ERP implementation really something you can do without proper training? You become licensed before flying an airplane and certified before diving in the ocean. Why assume an ERP implementation would be any less risky?
As you begin your journey to select and implement ERP software for your company, there are several factors to consider. As you get started, it’s important to have selection criteria to help you choose the ERP option that is the best fit for your business. Below are five things you don’t want to overlook in your ERP software selection:
The biggest reason you might be considering a new ERP system is to help you achieve your business goals in terms of growth and efficiency. This should be the central focus of your selection process, as well as increasing customer satisfaction.
However, there are other important aspects to consider when making your selection as well. Considerations like company size, number of locations and annual revenue are important factors when considering various ERP software. Look for software that has worked for other businesses with a similar profile to yours for maximum success.
You’re probably already considering the functionality of potential ERP software in your decision-making process. But don’t forget to consider the underlying technology as well. Technology changes so rapidly that an ERP software using newer technologies may benefit you in the long run.
It’s also important to consider how the technology of your potential ERP system will mesh with the technology strategies and preferences already in place with your IT department. This will make an ERP implementation a much smoother process.
Cost is always a major concern when considering your ERP selection, and it should be. There are ERP software options at a variety of price points, so it’s important to consider your budget when assessing options.
Make sure you factor vendor fees into your bottom line. Get the scoop on annual support fees and implementation costs, and make sure that’s a part of the conversation when considering the overall cost and value of an ERP system.
SAP and Oracle both invest heavily in cloud technology. However, our client was skeptical about cloud scalability and unsure if the products were mature and proven.
When assessing how a potential ERP system might work with your business, make sure you look at best practices in your specific industry. ERP systems all provide support for business areas that are utilized across the board, like accounting and marketing. But not every option is going to offer you the best fit for all the daily functions your business uses. Be sure to consider all the unique and specific needs of your business when trying to find the best ERP system for you.
The people involved in your ERP software selection process will be key to a successful implementation. You want to make sure that you are going to be well supported by a potential vendor.
When trying to determine whether you’ll receive maximum support, consider all the support systems a vendor has to offer. This means everything from consulting and implementation, to user groups and phone support. Having the right kind of support will maximize the success of your implementation.
There are so many factors to consider during the ERP selection process that it’s easy to overlook some of these important things. Make sure to add these areas of focus to your list if you want to choose the best ERP system for your business.
As the top software company in the world, it only makes sense that Microsoft would offer its own version of ERP software [1]. Microsoft Dynamics was first released in 1993 [2]. Since then, it has undergone significant changes and upgrades, primarily to stay ahead of the many other ERP software vendors that have entered the market. So, how does Microsoft Dynamics stack up against the competition? Here’s a look at how Microsoft Dynamics compares to other ERP software.
Microsoft Dynamics offers four ERP solutions: AX, NAV, GP, and SL plus CRM software (Microsoft Dynamics CRM) and software for retail businesses (Microsoft Dynamics RMS). Although any of the four ERP solutions can work for any size business, GP, NAV, and SL are better suited for small to medium-sized businesses. AX is the preferred option for large companies that operate in multiple sites and/or countries.
Each ERP has unique features to suit different business sectors. NAV offers the functional support that is often needed in manufacturing and distribution industries. GP has significant HR and financial management abilities. SL is a great fit for project-based businesses, such as construction companies. This array of choices makes it easier for businesses to select the specific ERP solution that will work best for their needs.
Dynamics can be challenging to implement. One reason is because it is an expensive and complex ERP program. If the initial parameters are not correct, the long term results could be costly. Those mistakes won’t be apparent until it’s much too late. It is unwise to attempt implementation without the guidance of an expert. While Microsoft has several Value Added Resellers (VARS), finding who is competent with Dynamics and your industry can be difficult.
Dynamics easily integrates with other Microsoft products that you are likely already using, including QuickBooks, Outlook, Excel and Word. This streamlines processes and increases business efficiency. Also, this allows your employees to access and use Microsoft programs without going outside the ERP software. Integrating other ERP systems with Microsoft products is often a difficult and time-consuming process.
SAP and Oracle both invest heavily in cloud technology. However, our client was skeptical about cloud scalability and unsure if the products were mature and proven.
It is important to identify the level of service your vendor is going to provide. As stated above, Dynamics is a complex, intricate program. Your employees are going to need guidance and support well beyond the initial implementation.
Larger companies using AX will find there are several competent, customer-focused VARs in the marketplace. They will provide on-site training and support. However, smaller businesses often have to rely on Microsoft’s rapid deployment program. Training usually doesn’t extend beyond self-service training videos. This can leave your employees with more questions than answers.
Dynamics makes good use of artificial intelligence, including Azure Machine Learning and Power BI. This greatly enhances the system’s intuitiveness. Your team will gain insight into customer communications, transactions, and other pertinent data. The result is accurate predictions and inferences allowing you to anticipate client needs. Businesses benefit from streamlined operations and reduced costs.
Compatibility with your legacy system is critical when transitioning to an ERP system. Unfortunately, not all ERP systems are compatible with legacy systems. Dynamics has shown the ability to be compatible with some legacy systems. This can help the transition by reducing time, money and effort. Again, it’s imperative to have an expert guide you through this process.
Dynamics gives businesses a wide selection of tools for productivity that can enhance every facet of a company. The functions available through Dynamics are numerous. Businesses can accomplish useful tasks, such as control general ledger, sales and finances. Manufacturing has the ability to manage their supply chain, schedule and plan production. It can even assist HR by tracking employee training, development and performance.
Overall Microsoft Dynamics is a powerful ERP. But due to its complexity, it requires expert guidance. Is Dynamics right for your business? Panorama Consulting can help you decide.
Twenty years ago, organizations didn’t have many choices when it came to ERP systems. SAP and Oracle had a pretty tight hold on the market, especially among the blue chip Fortune 500 clients. Smaller to mid-sized organizations were even more out of luck since most could not afford SAP and Oracle. Instead, they were forced to settle for homegrown systems, Microsoft Excel spreadsheets and Access databases.
The good news is that times have changed. Companies of all sizes, geographies and industries have a multitude of options to choose from. SAP and Oracle continue to provide very viable options for organizations large and small, while Tier II solutions provide viable alternatives for organizations looking for new ERP software. Throw in the Tier III, functional point systems and industry-focused solutions available, and organizations now have quite the variety of options to choose from.
Fortunately for CIOs, CFOs and the organizations they represent, there are a number of factors driving increasing competition and options in the market. Here are a few trends that bode well for companies hoping for viable alternatives beyond the top ERP systems:
Scalability. One of the biggest lingering concerns among C-level ERP software buyers is the scalability of the software they purchase. This concern isn’t isolated to larger organizations, either. Even Panorama’s small to mid-size clients want the comfort of knowing that their ERP system can scale to meet their business objectives. Fortunately, technical scalability is not nearly as much of an issue as it once was for Tier II and Tier III ERP vendors. For example, we’ve implemented Epicor for just as many small to mid-size organizations as we have for our larger, global clients. Further, it’s been quite some time since we’ve recommended that a client not consider a Tier II or Tier III ERP vendor because we felt the software couldn’t scale from a technical perspective. We are more concerned with how the organization will adapt to the new technical needs of the ERP software rather than whether or not it will scale with the company.
Versatility and flexibility. Just as high-growth and larger organizations are concerned with scalability, smaller, more nimble organizations are concerned with versatility and flexibility to change with their evolving business requirements. In fact, this is probably a more relevant concern than the scalability issue mentioned above. Tier I ERP systems have done a good job of creating and investing significant R&D dollars into industry-specific solutions, which evolve with the needs of the industry over time. In addition, plenty of niche solutions provide alternatives. Plex Systems for the automotive industry, ProcessPro for process manufacturers and Deltek for aerospace and defense contractors are just three of many examples of software solutions that have carved out niches. Not only is this topic not nearly as much of a concern as it was several years ago, but the bigger concern for organizations is how to facilitate business process reengineering to capitalize on the flexibility of ERP systems.
Vendor viability. Many of our clients are often scared of Tier II and III ERP vendors because they’re worried that the vendors won’t be around in five or ten years to support their software. This fear is unfounded. In recent years, we have seen a wave of private equity money rushing into smaller ERP vendors. This provides some certainty that most vendors will be around for some time. The rapid growth of Tier II and Tier III vendors helps increase the likelihood that if they are eventually acquired, their acquiring parent will preserve the software to appease the relatively large customer install bases. While this topic is still a viable concern, it’s something that can easily be mitigated as part of an effective ERP selection process.
These three issues have in some ways helped Tier II and Tier III ERP vendors gain more market share in recent years. This is not to say that these three topics are moot points nowadays, but instead, it is to say that many of the risks can be mitigated. The upside of having more ERP vendor options to choose from almost certainly justifies the potential risks associated with a larger pool of potential systems.
The key is to objectively weigh the pros and cons of your various options using ERP consultants that are independent experts in this space. It is also important to remember that how you implement your chosen ERP software is just as (if not more) important as the actual software you choose.
Lets say you work at a large-scale manufacturing company…..
In most manufacturing companies, the top three expenses are: salaries / employee pay, facility cost and material cost. An ERP system can help alleviate at least two of those major costs. By lessening a major overhead cost, ERP software is a great investment which will continue to help save money both in the long-term and short-term.
The average investment for a newly implemented ERP system for 10 users can be around $30,000 to $40,000. The cost can fluctuate, depending on amount of users, customization, ERP brand and overall need.
Aside from cost of the software, there should also be time accounted for time employees to learn the new system as well as the initial time for the implementation to occur.
The ERP system which you and your company decide to implement should be known beforehand so that you can map out an appropriate strategy. If you’re not completely sure what you need, this can best be determined by working with your ERP consultant. He or she can help you determine an overall digital transformation strategy, goals of implementation and common pain points which ERP can help to address. Most ERP Consultants at Panorama have a background in both business and technology plus have many years in a multitude of industries.
For skilled labor, the hourly cost can vary but the national average for a variety of skilled labor positions can be between $17 to $25 per hour according to the Bureau of Labor Statistics. In manufacturing, having skilled labor is key.
Assuming that all workers in your facility earn hourly pay that is somewhere within this range, these costs can add, especially if many of them regularly work overtime. Not to mention if your manufacturing company is large and you have 1,000, 10,000 or 100,000 laborers. Regular overtime can put strain on company budgets not to mention it indicates that there is some inefficiency somewhere.
With ERP implementation, your employees can more easily track jobs, material and track efficiency which can cut down on overtime while improving efficiency.
In some cases, ERP implementation can help companies save up to 20% in labor costs while making employee efficiency go up as well.
SAP and Oracle both invest heavily in cloud technology. However, our client was skeptical about cloud scalability and unsure if the products were mature and proven.
With ERP software, many functions are combined all on one platform which means that employees can spend less time researching questions for clients, less time switching between individual systems and less time tracking down invoices and payments. These sorts of admin costs can eat up a lot of time which is usually superfluously spent time anyway.
In some cases, admin costs can be reduced by 10% and again make for more efficient operations as well as lessening employee stress by allowing them to constructively use their time.
Along with staff and salary-based cost savings, ERP also helps employees track material costs as well as helps with material planning. It is not uncommon for a manufacturing operation to order too much or too little material to fulfill an order. If too much material is ordered then it may just sit in a corner unused. If too little material is ordered, the cost of ordering more on quick demand can get expensive.
ERP software can help with material planning and inventory tracking and save, on average, 10 to 15%.
Clearly, the savings that ERP can provide outweighs the initial investment required to start its implementation. Shaving these percentages from your facility helps save both money and time not to mention will make for happier employees who no longer need to spend their time inefficiently.
If you’re new to the world of ERP software, welcome! At Panorama Consulting, we’ve been guiding novice users through the education process and implementation for years. Our team of independent ERP consultants have backgrounds in both business and technology and have what it takes to guide any novice user, in any industry, with education and implementation every step of the way. During your time with an ERP consultant, be sure to let him/her know what kinds of benefits you are seeking if you have any in mind. ERP System benefits and features are bountiful and can be made to fit any need your organization has.
As a novice user, the best definition of ERP (or Enterprise Resource Planning) software
handles management, accounting, human resources, customer relationship management system and more. An all in one solution, ERP software has evolved a lot over the years just like any technology. Even if you’re not a complete novice, if you haven’t used it in a while then there’s probably a lot of new information to take in.
We have great resources on our website which we encourage you to check out including blog posts, videos, white papers and in-depth research and comparisons about options you may consider. For example, should you go with a completely customized option or one that is off the shelf or is cloud technology right for your project?
We also encourage you to consider attending ERP boot camp, held January 24-26 2018 in San Diego, California. This will give you great insight about options you have, choices available to you, project implementation and more. We also offer one on one sessions between you and our consultants if you desire a more private setting.
SAP and Oracle both invest heavily in cloud technology. However, our client was skeptical about cloud scalability and unsure if the products were mature and proven.
Overall, as you go through the process of learning more about ERP solutions and then eventually implementing it in your organization you will find that this system will save you both time and money. Every organization in every industry must appreciate the idea of saving time and money. After a successful implementation, an ERP solution can save administrative time, with better organize records and invoices. ERP solutions can also manage inventory and costs for large and small scale manufacturing organizations. ERP solutions can also help out a busy sales and marketing staff with CRM capabilities. All of these benefits are in one totally convenient package too, which eliminates the need for multiple programs that don’t communicate. Check out our 2017 Clash of the Titans report for a comparison of top choices.
Truthfully, the main benefit of ERP systems is completely personal. Possibly, the thing which attracted you to ERP software at the start of your project is not your favorite thing about it towards the end of the project. Because ERP software offers such a wide array of benefits and features, there’s no one answer of the greatest benefit. However, if you’re looking for a key functionality within ERP, make sure to let your consultant know that during your initial discovery process.
Recently, I was working with a potential client whose ERP evaluation process was rigged. The potential client didn’t realize it at the time, which made the situation especially risky.
I started Panorama 12 years ago, because of this very concern. Most ERP consultants, system integrators, and value-added resellers represent the software vendors rather than clients’ best interests. It concerns me that so many firms operate with economic incentives. These “incentives” can be misaligned with what’s best for companies. Keep in mind that these are often multi-million-dollar ERP initiatives with a lot at stake.
Part of the conundrum is that it’s not always obvious when a third-party is biased. There are a host of things that can lead to a rigged evaluation process, but here are some common ones to watch out for:
This is probably the easiest one to sniff out, but one that is often overlooked. If your software vendor is a reseller of software or has any sort of economic incentive to sell a certain software, then you’re probably not getting a truly agnostic and unbiased recommendation. Be especially aware of companies that claim to be agnostic because they represent more than one solution (see point #2 below).
Even if a consulting firm or system integrator isn’t a formal partner, there still may be other economic or political incentives that cause bias. For example, many large consulting firms are resellers of both SAP and Oracle. In theory, they could help you decide between the two systems, but you will always be nudged toward the group with the most internal political clout or the one that provides the biggest economic incentive.
Before launching Panorama, I worked for one of the big consulting firms. We helped clients evaluate multiple systems that we represented, but we had our preferred solution. The prevalent choice was often pointed to the one with the biggest bench of resources that we had to keep busy. The only way to receive a truly independent ERP recommendation, is to ensure that there are literally no financial ties with vendors or any solution-specific resources on the consulting team.
SAP and Oracle both invest heavily in cloud technology. However, our client was skeptical about cloud scalability and unsure if the products were mature and proven.
Whether you work with a consulting firm or not, you will want to make sure that your vendor demo process doesn’t create a biased view of your software options. Your internal employees will form opinions based on emotion or sales spin if you let this happen. It’s important to have a structured and disciplined demo process based on your specific needs and requirements, rather than what a software vendor might want to show you. It is not unheard of for demos to contain “future-state” features. These future-state applications may not even exist in the current software, but are a glimpse of what might exist in the next release.
This is all about having the right people in the room. If you or your team haven’t been through an ERP implementation (or better yet, several implementations), you may have very different expectations within your group. Unfortunately, an uninformed view can become misaligned with reality and create a high-risk backdrop for your project.
This sort of bias leads to a number of challenges, including an incomplete or misguided plan of how to implement the solution. For example, you may not know enough to realize how important business process management, organizational change management, program management or data migration are to a project. You may also not understand what level of effort these work streams will entail. The symptoms of unrealistic expectations often don’t emerge until the project is underway. The amount of time, money and resources required to make your implementation successful, are also common risk factors for teams that struggle with this bias (see #5 below).
Someone in your company has probably designated a timeframe and budget for your ERP initiative. While not arbitrary, it is also unlikely the work of an experienced ERP implementer. A software vendor is not going to tell you if it’s realistic or contradict your wishes. Unrealistic expectations are often a root cause of many ERP implementation challenges. Wouldn’t it be great if the project took less time, money, and resources than planned? Rarely is this the case. Forcing a timeline could lead to some bad decisions later.
For example, if you find that you can’t complete your project within that unrealistic timeframe or budget, you’ll be more inclined to cut organizational change management activities, which are arguably the most important critical success factor for an implementation. These pressured decisions are often forced upon you. An initial bias in planning your implementation is where the downward trajectory begins. Relying on a biased software vendor or ERP consultant’s opinion to validate your planning process only adds fuel to the fire.
There are ways to combat and mitigate biases. The straightforward answer: hire experienced independent ERP consultants (like Panorama Consulting) to help you with your evaluation, implementation planning and implementation process. This is the best way to smoke out biases while adding valuable resources to your bench.
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Deciding between SAP and Oracle is difficult. This the client needed software that would position their organization for continued growth, but internal bias put functional fit in the back seat. Ultimately, Panorama’s independence and expertise gave the client the insight necessary to make an objective decision.
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Panorama’s 2018 ERP Report reveals best practices and lessons learned from nearly 300 organizations across the globe that have recently implemented new ERP systems, including SAP S4/HANA, Oracle Cloud, Microsoft Dynamics, and Infor CloudSuite.
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Now that you have decided it is time to invest in ERP Software, it is time to make a huge decision that could greatly impact your business’s success and growth. Which Enterprise Resource Planning (ERP) software system should you opt to use? Use this guide to your ERP software selection.
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The ERP systems featured in this report were chosen based on the strength of their manufacturing functionality as well as the amount of research and development invested in these products. We include top ERP systems for not just large companies but companies of all sizes.
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The ERP systems featured in this report were chosen based on the strength of their distribution functionality as well as the amount of research and development invested in these products.
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SAP, Oracle, Microsoft Dynamics and Infor each provide robust ERP systems that can transform your organization. The data points in this report highlight common challenges that implementing organizations face when working with each of these ERP vendors.
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Deciding between SAP and Oracle is difficult. This the client needed software that would position their organization for continued growth, but internal bias put functional fit in the back seat. Ultimately, Panorama’s independence and expertise gave the client the insight necessary to make an objective decision.