ERP on the company's IT agenda - replace or renew?

18 March 2019

ERP is often not IT-topic #1 for a manufacturing business nowadays. It is either perceived as ‘already solved’ or ‘too complex, so don’t touch’. But if you want to stay competitive in the era of Industry 4.0 you need to have adequate processes supported by high-performing ERP.

For manufacturing companies, the topic ERP (Enterprise Resource Planning) has been on the agenda for a long time already. Since the 90s of the previous century, many companies have prepared themselves for an integrated IT-system across business processes. The implementation led to a wide variety of experiences and results, not always positive. Since 15 years, managing the ERP system life cycle is a priority on the agenda of the CIO and functional leader.

Currently, we see an increase of activities in companies regarding their next step with ERP. Is ERP still important for our company, should we apply niche solutions (best of breed), should we move to the cloud, is the current system still fitting with our business, etc.? What are the drivers behind this new wave of attention? There are different sources. First of all, there is the major shift in technology towards cloud computing. Companies want to get rid of their on-premise system. There are also plenty of Business drivers. Major strategic shifts like mass customization instead of single customer-specific products is often seen today. But also, the introduction of innovations like robotics and Virtual Reality. Last but not least, companies are increasingly looking for opportunities to improve shop floor performance. This trigger increasingly leads to Manufacturing Execution Systems (MES).

What are the options a manufacturing company has to improve their ERP solution for a better fit between their business and IT-strategy? The most radical approach is of course to select and implement a new system. This option often becomes interesting when either the vendor or the product is at its end of life, but the main reason to go for a radical path is the mismatch between the DNA of the business and the core characteristics of the ERP system. The identity of a business lays in its DNA. What is the nature of the product we manufacture and deliver; how does the customer affect our process and product specifications and what is the basis of our production systems? Surprisingly, companies are seldom aware of the match between their business DNA and the core characteristics of their ERP system.

The other option is to improve what you have. You have to understand in detail the characteristics of your current and future business and transfer those to key system requirements. The comprehensive process of gathering the details of your business bottom-up until the re-set-up of your ERP system must be effectively supported by the right approach and tools. Finally the requirements must be matched with the functional and technical capabilities of today’s releases of your ERP platform. It will lead to decisions in terms of reconfiguration, additional modules, intelligent integrations or a release change of your ERP solution.

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