"10 Warning Signs that Your ERP System Is Killing Your Business"

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"Manufacturers benefit from continuous improvement to our flagship product, Plex Online. Plex Online incorporates a continuous feedback loop where users request new features that are immediately deployed into production. This is in direct contrast to the experiences of manufacturers who deploy difficult-to-use legacy systems that hamper operational flexibility."
Source: Plex Systems

Resources Related to 10 Warning Signs that Your ERP System Is Killing Your Business:

• Enterprise Resource Planning (ERP) (Wikipedia)

10 Warning Signs that Your ERP System Is Killing Your Business

Summary:

Today's manufacturing enterprise is challenged by rising material costs, increasing competition, and ever-changing customer requirements.

If a manufacturer's Enterprise Resource Planning (ERP) solution is not up to par, these companies are faced with dizzying levels of complexity, duplication of effort, and in the worse cases, poor quality and customer service.

This paper describes the warning signs that an ERP system is killing a business, and suggests how companies can thrive with a new approach to business systems.

Most manufacturers look to their Enterprise Resource Planning (ERP) system to enhance the organization's overall performance. In many cases, the original drivers that led to an ERP selection were to streamline and simplify business processes for a sustainable competitive advantage.

So why do so many ERP systems fall short of these goals?

In case after case, implementations miss the mark, and instead of delivering promised cost reductions, business agility and performance improvements, ERP systems create complexity, duplication of effort, and in the worst cases, poor quality and customer service and a dangerous lack of visibility into the business.

Likewise, legacy ERP systems don't keep pace with change. The manufacturing sector faces continually changing business processes, data, and requirements which make it nearly impossible for a typical, inflexible ERP system to keep pace with what the business really needs.

Customers are reducing the number of suppliers with which they do business. They are choosing the best and strongest.

Will your ERP and shop floor control prohibit you from being deemed the best?

The Warning Signs

Check these ten warning signs to see if your ERP is killing your business.

1. Your ERP system can't integrate mission-critical business data.

Your data is "locked up" within your outdated ERP system and is difficult to access. You can't easily analyze it for decision making. Worse yet, quality management, engineering and design, EDI, customer orders and release accounting all reside in "silos" of information that exist independently of each other.

A silo environment increases complexity, and ensures duplication of efforts with different versions of the truth, which compromises the quality, reliability and accessibility of vital information.

2. Changes to the system are costly and time-consuming.

The software vendor provides releases every 24 months and rarely provides the new features you need on a timely basis. Any change coming from the vendor seems to cost you six figures and many months to complete.

Nor can you find skilled resources to help with these updates at an affordable rate, so you are stuck using an outdated system and face the costs.

Industry analysts see this as a bad sign, noting in a recent Aberdeen Group study entitled "2008 ERP in the Mid-Market", co-sponsored by Plex Systems.

"While it may be acceptable to skip a release or run one release behind the most currently available, lagging significantly behind on an ERP implementation will leave functionality and technology improvements largely unused.

Not taking advantage of new releases can mean losing a competitive advantage and wasting the money paid in maintenance fees. "

3. Your disaster recovery plan involves tapes.

If your servers or data center burned, you would have to buy new equipment, configure it and then reload your data from tapes. Recovery Time Objective (RTO) is the time it takes to get back up and running after a disaster, and you're in a precarious position when it comes to this metric.

The Recovery Point Objective -- orhow much data you would lose In the case of a failure – is significantly lacking with backup tape methods.

4. Beefy PCs or "Fat Clients" are needed to run the system.

Sure PCs are getting cheaper, but running less memory and disk is always less expensive.

If you need to install and maintain fat clients (a networked computer with most resources installed locally, rather than distributed over a network), you run into IT management difficulties, security risks and high maintenance and licensing costs.

5. Maintenance fees are high.

With rising ERP solution maintenance fees, you're not in control of IT expenditures. Some of the biggest ERP vendors consistently raise maintenance fees, which increases your total cost of ownership over time.

For instance, SAP recently announced it is raising its annual maintenance fees from 17% to 22%. As you review your IT spending, consider multiple support contracts for the same applications, made worse by information silos.

Technical differences among a range of applications also require the hiring of experts to implement and maintain the various applications.

6. You can't access the data easily if you are traveling.

It's obvious that business doesn't stop when you are traveling.

Smart phones help you stay in touch, but it is tough to really do much from such a tiny device, Wireless connectivity is everywhere, yet you're limited because you can't stay in touch with business operations.

7. Upgrades are disruptive to the business.

We already noted that software upgrades from software vendors usually come out every 12-24 months on average.

They often require updates to the operating system, database management system, disk space, hardware, etc.

Upgrades take time to plan and to execute. You're in trouble if the business has to be 'down' for a period of time to do the conversion.

8. Trading partners can't easily interact with the system.

In today's manufacturing sector, the value stream is increasingly interconnected.

More just-in-time replenishment is being done, and suppliers need easy access to your orders and inventory levels.

Do your suppliers need to load special software to connect?

Can they quickly and easily get the information they need?

9. New employees need time to learn the system.

Many older ERP systems are difficult to learn and workers are easily frustrated when they are instructed to 'Press F1 to inquire' 'or Press Enter to accept'.

If you have staff turnover, you are losing money while the new people learn the short cuts to get up and running.

10. Globalization is too difficult.

Many legacy systems require you to run a different version to support China, Eastern Europe or other countries.

Changes to the translation are difficult if possible at all. Rollups of localized, unique financial data are done via spreadsheets which is cumbersome.

This is not acceptable in today's global marketplace.

The Next Step

Chances are, some or all of the issues described above ring true for your business. So what's your next step? Fortunately, a new breed of Software as a Service or SaaS ERP resolves these challenges so manufacturers can thrive by doing what they do best and not writing and maintaining software.

Plex Online is SaaS technology offering robust ERP/MES functionally without the need for expensive servers, operating systems, database software, backup equipment, and the IT specialists to manage all of that. Web-hosted Plex Online is always up to date, and available to customers via a monthly subscription fee. That means no hassle, business disruption or costs with version upgrades.

The Plex Online system integrates and streamlines all aspects of a manufacturing company, including sales, engineering, quality management, production, scheduling, shop floor control, bar coding, part traceability, warranty tracking, shipping and receiving, EDI, human resources, tooling, and more. With no upfront investments in servers or IT infrastructure, Plex Online's integrated manufacturing system can help drive out costs and improve quality in your organization.

Plex Online is organized into 350 modules that can be implemented individually or as an enterprise solution.

It can operate standalone and/or connect with other systems.

The Difference

Plex Online is not software that a company installs, but an online solution. It is accessible by authorized users through the Internet with a standard web browser. No servers, software, databases, backups, or other infrastructure are required. The fact that it is Internet based and requires no infrastructure to implement makes it ideal for managing multiple plants, and for linking customers, suppliers, and employees into a centralized database of real-time information no matter where they are around the world.

Further, Plex Online delivers fully integrated localization capabilities to manage business requirements faced by manufacturers operating in the global economy. The solution easily incorporates and manages data in multiple languages, currencies, and date formats, including local tax and business mandates and other business requirements unique to a specific country or principality.

And finally, the system meets key targets for data continuity and disaster recovery. Plex Online delivers aggressive recovery point objective (RPO) and recovery time objective (RTO) goals of two hours or less. The targets are in line with the world's leading technology providers for continuity and disaster recovery planning. This means your company can be up and running within two hours of a disaster with data that is no older than two hours. This approach delivers a level of responsiveness, redundancy and safety for manufacturers that is virtually impossible for them to match internally.

The Bottom Line

The bottom line is that instead of ERP slowly killing your operation, companies can thrive with a new breed of ERP delivered as a SaaS solution. Plex Online creates a single, unified management system. It controls and streamlines operations. Plex Online helps the manufacturing enterprise increase productivity, improve quality, reduce cost and increase revenue. At the same time, it helps these manufacturers fulfill regulatory requirements, such as ISO, QS-9000, TS-16949, GM compliance, Honda certification, and so on.

In a time when automotive suppliers are beset by recession, rising material prices, and global competition, the Plex Online system is a critical tool for growth and profitability.