Manufacturing ERP Software for SME

A series of primers for prospective implementers

Vendor Selection - what should we be looking for?

Background

In the case of the very largest manufacturers, it is still not unknown for in-house IT resources to design, deploy and develop business software to the exact needs of their organisation. However, most companies have come to recognise the significant advantages in sourcing business applications from established vendors, albeit with varying degrees of process-specific customisation depending on the size of the organisation, and hence the available budget for programming services.

These advantages range from generic functionality already in place, through vendor experience in similar industries, to long term stability and hence security of support. One of the key reasons given for change from in-house or locally written systems is the loss of key project members - through staff turnover or a local IT provider no longer trading.

As a result, the late 1990s saw an established and growing market place with a wide range of applications and vendors to choose from, with growth further fuelled by the looming "Millennium Bug" (Y2K) issue. However, the net result of Y2K was to bring forward the decision process for ERP projects in some cases, and in others to divert IT resources into necessary infrastructure investment. The following lack of confidence in IT investment (worsened by uncertainty arising from e-commerce hype and subsequent disillusionment) led to a significant shake-out amongst ERP vendors, with the usual round of down-sizing, acquisitions and mergers.

In order to establish the winners and losers from this process it is worth asking some searching questions of prospective vendors, such as - How long has the business been trading in it's current form? How many times has the business changed hands? Has there been any significant new product release in your area of interest since Y2K? Is the product under scrutiny subject to ongoing development, or just part of the portfolio through acquisition? The answers to these questions may help identify the degree of stability of the vendor, and the level of commitment to a future in manufacturing ERP.

SME Issues

ERP vendors can be divided into three broad categories - those supplying large tier-one multinational corporations with budgets from £0.5m upwards, mid-range vendors serving organisations prepared to invest around £50k - £500k, and those addressing the remaining Small to Medium sized Enterprise (SME) market. Even allowing for overlap, what can't be denied is that the first two categories are assiduously trying to move downmarket as demand levels out and market saturation occurs.

Therefore, SME manufacturers should try to establish the track record of vendors with respect to organisations of a similar scale. What proportion of the vendors existing sites fall within our category? What is the average number of site concurrent users for the product - is it of the same order as ours? Is the vendors experience of SMEs relatively new, or were they addressing that market from the outset?

Other useful indicators of a good fit with the SME are the use of manufacturing specialists early in the pre-sales process in the place of sales executives, and a general approach which suggests the vendor is mindful of the need to cut through the hype and address the real practical needs of the organisation. If the right vendor is selected, you are well on the road to a successful implementation.