IT-Branchepublikation: ERP - Nyhedsbrev for Bestyrelser

2011 ERP BUyER’S gUIdE FOR
MEdIUM aNd LaRgE MaNUFaCTURERS
by Gabriel Gheorghiu and Aleksey Osintsev, Technology Evaluation Centers
bUSINESS SOFTwArE ChALLENGES
FOr MEDIUM AND LArGE MANUFACTUrErS
To address the challenges in today’s business market, medium
and large manufacturers often look to their enterprise resource
planning (ErP) system, the proper functioning of which affects
all aspects of the business nolens volens. These companies need
a robust ErP system that can handle complex operations across
departments, the exponential growth of data, etc., optimally
integrating all aspects of the business into one coherent system
to facilitate the entire manufacturing process.
bIGGEr IS COMPLICATED
For the purpose of this buyer’s Guide for ErP for Medium and
Large Manufacturers, we define medium and large companies
as those enterprises with more than 500 employees and more
than $100 million (USD) in annual revenue. Companies of this
magnitude usually operate within a multisite or multinational
environment, and necessitate a system that addresses their
multidimensional reality.
It is erroneous to think that large manufacturing companies
simply produce many more finished products than small
companies in the same industry and that the challenges both
types of companies face are proportional to their size.
The truth is that the complexity of a company’s operations
increases exponentially relative to its size. Larger companies
need to manage not only more inventory, sales transactions,
people, but also different software solutions, business entities,
multiple levels of management, national and international
laws and regulations, local cultures, and unwritten rules. The
interactions among all parties involved, whether within or outside
the company, are so numerous that managing them becomes
extraordinarily difficult.
To add to the complexity, customer behavior and needs are
constantly changing, technology is advancing at a very fast pace,
and companies keep accumulating large amounts of data that, if
not managed properly, verge on becoming overwhelming.
ADDrESSING ThE ChALLENGES
To accommodate the aforementioned changes without
jeopardizing their business activities, medium and large
companies must address the following challenges:
Use of Legacy Systems
Large businesses pioneered the first corporate software packages
some 30 to 40 years ago, the tools of which were cumbersome,
extremely expensive, and only affordable to large organizations.
Later on, with the emergence of less expensive and smaller-sized
computing devices, organizations and businesses of lower scale
started using ErP software.
These software remnants, many of which are still being used and
are running well today, are referred to as “legacy applications.”
Although many users are still satisfied with these legacy systems,
companies are finding them increasing difficult to maintain every
year and want to build on them—they are incredibly stable,
customary, and extremely reliable, but are dramatically outdated,
inconvenient, and inflexible.
COMPLIANCE wITh LAwS AND rEGULATIONS
businesses must address various compliance regulations and
standards (regarding, e.g., areas such as payroll, financials,
asset management, training, hazardous materials, as well as
local, national, and international rules and regulations) and avoid
paying hefty penalties and fines.
As medium and particularly large companies often operate in
more than one region or country, they must follow the rules of
the governing legislation while complying with various security,
financial, safety, workforce, and many other local, national, and
multinational standards. These regulations are intended for
the general purpose of providing a business environment that
stimulates and often directs the production of goods and services
that are of the highest quality and are safe for consumers, society,
and the environment. And, of course, different countries have
different regulations. Even in countries with similar general
compliance standards, differences in specific regulations exist,
as, for instance, in the layout of safety documents or the details
included in accounting reports.
(rE)ENGINEErING bUSINESS PrOCESSES
businesses must be able to quickly and seamlessly integrate
their changing processes (due to changing customer needs
and slow reaction from vendors) within their operations to
maintain their competitiveness in a fierce market. business
effectiveness considerations can lead to the adoption of the
parsimonious production philosophy known as “Lean.” As one
area or department of the business changes, with the supporting
systems in place other areas or departments can easily follow.
In recent years, the ease of accommodating changes to the
business environment has become one of the most important
capabilities of ErP software for companies of any size and in any
industry. This applies particularly to large and upper segments of
medium enterprises. There are a few reasons for this.
Firstly, businesses often need to be able to perform massive and
widely expanded operations or transactions in different ways,
depending on factors such as geography, generally accepted
business practices in certain locations, or regional regulations.
Software systems therefore should have the technical capability
to accommodate a variety of procedures that allow for performing
the same business process in different ways.
Secondly, businesses often face many high-impact changes to
their processes. A company has to be competitive and be able
IT-Branchepublikation: ERP 2013
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