ERP Solutions Can Help Manufacturers ‘Integrate, Innovate and Accelerate’

In addition to ERP software vendors and consulting firms, there are also firms that focus on integrating ERP systems into the overall IT infrastructure, note Forrester’s vice president and principal analyst Liz Herbert and researcher Nate Fleming.

Manufacturers account for a significant portion of that business—70 percent, according to SAP integrators HP and ITC Infotech. The ERP space is also evolving to focus on capabilities such as “customer journey mapping,” which tells the story of the customer’s experience from initial contact through the process of engagement and into a long-term relationship, as well as design-
thinking sessions and studio approaches to working, according to Forrester.

Manufacturers can improve process efficiency and variability by adjusting how the ERP works to determine which steps to keep and which to eliminate, notes Brian Dunn, a partner with A.T. Kearney’s strategic information technology practice. “This enables manufacturers to take ‘off-the-shelf’ solutions for a given area of their business, then overlay world-class practices, as well as the manufacturer’s own tweaks based on the specifics of that company, to irk out the last mile of efficiency,” Dunn says.

With ERP cloud solutions, manufacturers cannot do as much tweaking and customizing of the solution’s source code, but they still have access to leading practice and fairly robust configuration options, he says. Cloud solutions have also “radically accelerated” implementation timeframes and “pay-as-you-go” economics.

The prime objective of ERP has evolved from “standardizing, simplifying and automating” business processes, toward “integrating, innovating and accelerating” around business performance, Dunn says. “Increasingly, we will see manufacturers look to ERP vendors to help them both be and stay competitive in today’s increasingly disruptive world. Many ERP vendors aren’t frankly geared-up for this new world, and we should expect further consolidation in the market until those types of capabilities are more widely available.”

As cloud ERP solutions gain popularity because of the lower costs and flexible subscription models, it’s still unclear how cumbersome it might be for manufacturers to switch vendors, as the data is controlled by the vendor, says Arun Rangaraju, senior vice president and head of package solutions at Mindtree. With on-premise solutions, the software and data always stay with the customer even if the version is no longer supported by the vendor. A hybrid of on-premise and cloud ERP is likely to become more popular in the coming years.

“The demands on today’s established ERPs are related to building enterprise-class mobile apps, improving the end-user experience, providing high quality analytics and integrating with cloud products,” Rangaraju says. “This is where opportunities exist for startups to build niche solutions and accelerators.”