Leaving the past behind

Take a look at manufacturers' IT infrastructure and it's not difficult to spot a disquieting statistic. Namely, that the average age of their ERP systems is around eight to 10 years old. So says Gordon Fleming, the ever-affable chief marketing officer at specialist manufacturing ERP vendor QAD, who quickly follows the statistic with an equally disqui­eting question. "Go to any of these companies and ask: 'Is your business the same as it was back in 2003 when you were choosing or implementing your existing ERP system?' And they'll reply: 'No, of course not.' To which I'd say, well, if your business isn't the same, why are you running the same ERP system?" Such a disparity isn't new, of course. As Fleming points out, ERP systems have always exhibited a gradual decay in terms of their relevance and applicability. "At the point of implementation, an ERP system should – hopefully, anyway – be perfectly matched to the business's processes and requirements," he notes. "But gradually, things change: Processes change, businesses change and people move on or have different priorities. The ERP system becomes gradually less appropriate, and that gradual drift has been known about for a long time." But the situation today is subtly different, he argues. For, in addition to this natural and inevitable drift in an ERP system's applicability and relevance, the last 10 years have seen several significant technology shifts. Shifts that are better characterised as step changes rather than drift or decay. "Look at mobile, for instance, or cloud deployment, or embedded analytics, or any one of a number of such developments over the past 10 years," he argues. "The rate of change has been breathtaking – far more than in the 10 years before that, during which conventional client/server ERP stayed pretty much the same." In short, says Fleming, manufacturers today have an opportunity to address a radically different business world with a radically different ERP platform, one that embodies or reflects this extensive change in technology. "It changes the whole nature of the debate about upgrading or refreshing ERP systems," Fleming stresses. "It's no longer a question of getting ERP to replicate what the business does – it's about asking how to actually improve what the business does, by adding more, better, and different capabilities." A gap in efficiencies and capabilities Simply put, he says, the evidence shows that companies that haven't upgraded, and which haven't yet taken advantage of the opportunity to harness these new technologies, are less efficient than those of their competitors who have. And longer term, that is a gap in efficiencies and capabilities that can only end one way. Even so, Fleming certainly isn't advocating adopting new technologies – or a new ERP system – without very careful thought. Before you can advance to a destination, he points out, it's necessary to know what that destination is and how best to get there. And, in the context of ERP systems, that road map takes the form of business processes – moving from the business processes that a business has now to the better and technology-enabled processes that it wants to have in the future. "Look at best-in-class companies and you'll see that they have a better grasp of their business processes," stresses Fleming. "Thinking in terms of business processes has been 'hard-wired' into them and they understand that, if you don't know what your business processes are, you won't be able to improve them. "Quite simply, best-in-class businesses have a strong grasp of their business processes at a very granular level – the inputs of those processes, the outputs and their objectives." Which is why, he explains, QAD has embedded into its ERP system a business process management (BPM) solution – and one which takes a subtly different view of BPM compared to similar systems from other vendors. "Fundamentally, ERP is about business processes and QAD has always taken the view that better business process management can unlock sizable opportunities," he argues. "Where we differ from other companies is that we provide detailed tools for measuring and optimising business processes so that manufacturers can look at their processes throughout and efficiency at every step of those processes." Seeing where the logjams and improvements lie In other words, as well as graphically representing business processes, the solution lets manufacturers not only see where their current logjams and potential process improvements lie, but also allows them to model those improvements – seeing for themselves how re-designed and technology-augmented processes could boost efficiency, increase throughput, and cut costs. That said, adds Fleming, some of today's new technologies play a dual role, with the cloud being a case in point. Yes, he notes, cloud deployment helps in the push to go mobile, helps to get suppliers and customers hard-wired into a manufacturer's ERP system and helps to deliver embedded analytics. But, for many manufacturers, cloud deployment does much more, he points out, adding that many of QAD's new customers are opting for cloud-hosted ERP, not on-premise. Because by deploying to the cloud, it's not just on-premise server capabilities that are no longer required, it's also on-premise ERP administration. "Skilled ERP administrators are an expensive – and ageing – resource," observes Fleming. "But what we're seeing is that moving away from in-house ERP administration delivers a major advance in agility: it's simply much easier and quicker for manufacturers to roll-out new users, divisions, companies and capabilities. In-house administration capacity is no longer a constraint or bottleneck: the business can move at the speed that it wants to, not the speed which in-house ERP administration can deliver." Even so, despite the undoubted allure of an ERP system – cloud-based or not – replete with slick new processes and slick new technology, Fleming accepts that, scarred by their last ERP implementation, many businesses may be tempted to hang onto their existing platform until forced to move. "And they're right: Their last ERP implementation probably was painful," he concedes. "But that was ERP then and not ERP today. Contemporary ERP is a far cry from an ERP implementation of 2003 or 2004." Granted, that's a view that's now commonplace across the ERP marketplace, with most vendors seeing that painful and risk-prone implementation processes were giving them, their products and the industry a bad press. Consequently, most have rolled out templates, implementation methodologies and industry-specific pre-wired best practice that work 'out of the box'. Faster, simpler, less risky implementation QAD, though, has gone further, insists Fleming. "We've put in a lot of effort and investment, under what we've call the 'Easy On Boarding' initiative, to make QAD ERP implementations faster, simpler, less risky, and less resource-intensive – which also makes it cheaper to implement," he stresses. "Often, you can do it just with internal people, using scripted tools, that guide you through the installation process." In other words, he sums up, the pain of implementation is no longer a barrier to upgrading. In which case, given that so many companies are running 8 to 10-year-old ERP systems, the attractions of an upgrade to 2013 technology are obvious. "Just do it," he urges.