Getting the most out of ERP

Cloud-based and open source enterprise resource planning systems are becoming a force to be reckoned with

Customisation slumps

Customisation levels are dropping as many organisations have realised the implications of it, says Padmanabh.

“The future trend is less customisation, more standardisation. Companies are looking to use as many standard features of the product as possible.”

“The more mature buyers are certainly tending towards avoiding too much customisation, given the cost and control impacts this can have,” says Ovum’s Butler.

IDC has also seen decreased customisation over the years, says Hue. “However, what we are seeing now is an increase in the adoption of ‘bolt-on’ solutions, which are developed to address the gaps within an ERP solution.”

These solutions are often provided by value-added resellers, with a certain expertise in a specific vertical.

An example is e-commerce solutions, which can be integrated into the back office systems to provide a seamless view of the entire business, he says.

“So, this way, the solutions are not being customised in the traditional sense, but are being configured to meet the customers vertical specific needs,” says Hue.

Challenges along the way

Data migration is one of the potential challenges an organisation would face when implementing an ERP solution, says IDC’s Hue. As data migration is a vital component in determining the success of an ERP implementation, a significant amount of planning has to be done, says Hue.

“However, what we find is that most organisations leave data migration to the tail-end of the roll-out of an ERP [system],” he says. “The other critical mistake many organisations make is not strictly an IT mistake; it is the failure to map their business processes prior to embarking on an ERP implementation.”

ERP solutions are designed around standard business processes, and therefore, it is vital for organisations to do a thorough business process analysis, and map this to the vendor, he says.

“The deployment of an ERP solution often requires modifications to business processes and if they have not been properly mapped, then organisations will not realise the expected benefits of the implementation.”

Another critical challenge, which is often ignored, is getting end-users onboard, says Padmanabh. In order to get the full benefits of your ERP system, in terms of improved productivity, you need to get the buy-in for the day-to-day usage of the system, says Padmanabh.

“People might still happily work away on their home-grown systems and this will reduce the end-user’s involvement in the ERP system.”

Therefore, usability of the system is an important consideration, he says.

Tight ERP budgets

The ERP space is showing modest but steady growth, according to Padmanabh.

Enterprises are now making fewer, more selective and strategic investments in ERP systems, and often choosing to upgrade exiting systems, he says.

Hue says organisations are really scrutinising their investments in ERP solutions and keeping a tight rein on budgets.

“Organisations are placing more emphasis on clearly defining a business case. This is in terms of addressing issues on more rapid return-on-investment and also determining the value and business alignment that helps define the success criteria for the initiative,” says Hue.

Manuka Health chose custom-built and on-premise

Contrary to the general trend among SMBs, Manuka Health did not go for a cloud-based ERP system, but a highly customised, on-premise solution.

Te Awamutu-based Manuka Health sells around 60 bee products – ranging from a simple jar of honey to capsules, tablets, toothpastes and suckles – on a global basis, says chief operating officer, Chris Bowman.

Established four years ago, the company now exports to around 40 markets. Growth has been exponential, says Bowman, and the company has been a finalist in both the Deloitte’s Fast 50 and the New Zealand International Business Awards.

When Bowman joined the company 18 months ago, Manuka Health was in a situation where it needed greater visibility and better control over processes – from manufacturing and warehousing to sales and distribution, he says.

“There were so many little bits of the business that weren’t in one basket,” he says. “We weren’t communicating on a global level.”

Bowman, who came from a construction background, looked around the market for an ERP package, but couldn’t find anything that suited the company. He then came across Abel Software in Auckland, which said it could build a system for Manuka Health from scratch. Bowman trusted his “gut-feeling” that Abel Software was the right partner for the company, and so far, that feeling has been right, he says.

Manuka Health gave Abel Software its ideas, as well as the needs and requirements of the business, and Abel designed and built the tailor-made ERP system, which is expected to last for the next 15-20 years, he says.

“We can now clearly see what is happening, when it’s happening, at each part of the company,” says Bowman.

Manuka Health’s 40 distributors spread around the world can log onto the system to access information and marketing material. The system also incorporates each distributor’s sales forecast and evaluates that against the history of the distributor, he says. That way, the tool will grow more and more helpful with time, he says.

After six months of planning and mapping processes, the system went live in December last year. There are still areas to develop, says Bowman. The next stage is the addition of touch-screen and scanning functionality.

The ERP solution also incorporates quality testing – both internal and external test results are run through the system. “If results don’t match up, we can see that instantly,” says Bowman.

The accountancy package is also built into the system for easy access to cash flow and forecasting.

Clarity and speed are the top benefits of the Manuka Health’s ERP system, he says. “We can access information when we need it. We don’t miss a thing now. Everything is there.”

The main challenge on the ERP journey was getting everybody in the company onboard and getting them to give up the information they had saved in spreadsheets and in cardboard boxes, says Bowman.

The projection was to reach return-on-investment in two to three years after implementation.

“But now we are looking at 18 months to two years,” he says. “The return is already a two percent raise of our bottom line.”

Customisation slumps

Customisation levels are dropping as many organisations have realised the implications of it, says Padmanabh.

“The future trend is less customisation, more standardisation. Companies are looking to use as many standard features of the product as possible.”

“The more mature buyers are certainly tending towards avoiding too much customisation, given the cost and control impacts this can have,” says Ovum’s Butler.

IDC has also seen decreased customisation over the years, says Hue. “However, what we are seeing now is an increase in the adoption of ‘bolt-on’ solutions, which are developed to address the gaps within an ERP solution.”

These solutions are often provided by value-added resellers, with a certain expertise in a specific vertical.

An example is e-commerce solutions, which can be integrated into the back office systems to provide a seamless view of the entire business, he says.

“So, this way, the solutions are not being customised in the traditional sense, but are being configured to meet the customers vertical specific needs,” says Hue.

Challenges along the way

Data migration is one of the potential challenges an organisation would face when implementing an ERP solution, says IDC’s Hue. As data migration is a vital component in determining the success of an ERP implementation, a significant amount of planning has to be done, says Hue.

“However, what we find is that most organisations leave data migration to the tail-end of the roll-out of an ERP [system],” he says. “The other critical mistake many organisations make is not strictly an IT mistake; it is the failure to map their business processes prior to embarking on an ERP implementation.”

ERP solutions are designed around standard business processes, and therefore, it is vital for organisations to do a thorough business process analysis, and map this to the vendor, he says.

“The deployment of an ERP solution often requires modifications to business processes and if they have not been properly mapped, then organisations will not realise the expected benefits of the implementation.”

Another critical challenge, which is often ignored, is getting end-users onboard, says Padmanabh. In order to get the full benefits of your ERP system, in terms of improved productivity, you need to get the buy-in for the day-to-day usage of the system, says Padmanabh.

“People might still happily work away on their home-grown systems and this will reduce the end-user’s involvement in the ERP system.”

Therefore, usability of the system is an important consideration, he says.

Tight ERP budgets

The ERP space is showing modest but steady growth, according to Padmanabh.

Enterprises are now making fewer, more selective and strategic investments in ERP systems, and often choosing to upgrade exiting systems, he says.

Hue says organisations are really scrutinising their investments in ERP solutions and keeping a tight rein on budgets.

“Organisations are placing more emphasis on clearly defining a business case. This is in terms of addressing issues on more rapid return-on-investment and also determining the value and business alignment that helps define the success criteria for the initiative,” says Hue.

Manuka Health chose custom-built and on-premise

Contrary to the general trend among SMBs, Manuka Health did not go for a cloud-based ERP system, but a highly customised, on-premise solution.

Te Awamutu-based Manuka Health sells around 60 bee products – ranging from a simple jar of honey to capsules, tablets, toothpastes and suckles – on a global basis, says chief operating officer, Chris Bowman.

Established four years ago, the company now exports to around 40 markets. Growth has been exponential, says Bowman, and the company has been a finalist in both the Deloitte’s Fast 50 and the New Zealand International Business Awards.

When Bowman joined the company 18 months ago, Manuka Health was in a situation where it needed greater visibility and better control over processes – from manufacturing and warehousing to sales and distribution, he says.

“There were so many little bits of the business that weren’t in one basket,” he says. “We weren’t communicating on a global level.”

Bowman, who came from a construction background, looked around the market for an ERP package, but couldn’t find anything that suited the company. He then came across Abel Software in Auckland, which said it could build a system for Manuka Health from scratch. Bowman trusted his “gut-feeling” that Abel Software was the right partner for the company, and so far, that feeling has been right, he says.

Manuka Health gave Abel Software its ideas, as well as the needs and requirements of the business, and Abel designed and built the tailor-made ERP system, which is expected to last for the next 15-20 years, he says.

“We can now clearly see what is happening, when it’s happening, at each part of the company,” says Bowman.

Manuka Health’s 40 distributors spread around the world can log onto the system to access information and marketing material. The system also incorporates each distributor’s sales forecast and evaluates that against the history of the distributor, he says. That way, the tool will grow more and more helpful with time, he says.

After six months of planning and mapping processes, the system went live in December last year. There are still areas to develop, says Bowman. The next stage is the addition of touch-screen and scanning functionality.

The ERP solution also incorporates quality testing – both internal and external test results are run through the system. “If results don’t match up, we can see that instantly,” says Bowman.

The accountancy package is also built into the system for easy access to cash flow and forecasting.

Clarity and speed are the top benefits of the Manuka Health’s ERP system, he says. “We can access information when we need it. We don’t miss a thing now. Everything is there.”

The main challenge on the ERP journey was getting everybody in the company onboard and getting them to give up the information they had saved in spreadsheets and in cardboard boxes, says Bowman.

The projection was to reach return-on-investment in two to three years after implementation.

“But now we are looking at 18 months to two years,” he says. “The return is already a two percent raise of our bottom line.”

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