Accelerating Business Change Through Next-Generation ERP — Call to Action for the High Tech Sector
© IDC Manufacturing Insights Page 2
Our Worldwide Study of the High Tech Manufacturing Sector
� The research objective: – Understand the IT role — ERP in
particular — in respect to the dramatic increase in complexity in the industry.
� Global survey across multiple regions and countries:– Automotive, aerospace, industrial
machinery, and high tech
– Western Europe, the U.S., BRICs, Australia, Japan, and the Middle East
– Company size ranging from 100 to 5,000+
© IDC Manufacturing Insights Page 3
Industry Performance
Source: IDC Manufacturing Insights, GPI index, 2012
-2
-1
0
1
2
3
4
5
6
7
80
90
100
110
120
130
140
1Q02 1Q03 1Q04 1Q05 1Q06 1Q07 1Q08 1Q09 1Q10 1Q11
(%)
Index (1Q02 = 100)
High Tech GPI Index, 1Q02–3Q11
Revenue Net profits
© IDC Manufacturing Insights Page 4
Source: IDC Manufacturing Insights, 2012, n = 378
Most Critical Areas of Business Focus
2
3
4
Total IndustrialMachinery &Equipment
High Tech Aerospace Automotive
Q. What is your most critical area of business focus today?
Sustain growth Control cost
© IDC Manufacturing Insights Page 5
1.4%
49.3%
40.6%
8.7%
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
Q. How do you expect the level of complexity in operations to be in 3 years
from now?
Significantlymorecomplex
Morecomplex
About thesame
Lesscomplex
Source: IDC Manufacturing Insights, 2012, n = 69
Complexity Keeps on Going
14.5%
20.3%
33.3%
44.9%
46.4%
60.9%
79.7%
0% 20% 40% 60% 80%
Business processcomplexity
Organizational complexity
Product complexity
Supply chain complexity
IT complexity
Operational complexity
Market complexity
Q. What area of your business do you feel will grow in complexity?
© IDC Manufacturing Insights Page 6
5.8%
5.8%
13.0%
13.0%
36.2%
40.6%
43.5%
43.5%
49.3%
49.3%
0% 10% 20% 30% 40% 50%
Improve bid and project profitability
Increase the ability to comply with newC
Streamline new product design andC
Reduce company environmental footprint
Improve manufacturing productivity
Implement lean/six sigma or other continuousC
Improve demand planning and forecasting
Improve customer fullfillment
Increase sourcing from lower cost countries
Better align IT with the business
Q. What are the business initiatives your company will undertake over the next three years?
Leading Business Initiatives
Source: IDC Manufacturing Insights, 2012, n = 69
© IDC Manufacturing Insights Page 7
� Manufacturers can beat complexity only if they are able to:
– Streamline business processes and rapidly adapt them to business changes
– Break organizational silos, fostering more collaboration
– Speed up their decision-making capability
52.2%
55.1%
58.0%
63.8%
63.8%
0% 20% 40% 60% 80%
No data visibility andintelligence tools available in
the market
No or inadequate integrationto partners
Our current ERP and BI are transactional systems that
don’t allow real time visibility and intelligence
Information is stored in too many different IT systems
that aren’t properly integrated
Organizational andinformation silos exists that
hamper data sharing
Lack or inaccurate data
Q. What are the main barriers to creating an effective real-time decision-making environment?
Speed Up Decision Making
Source: IDC Manufacturing Insights, 2012, n = 69
© IDC Manufacturing Insights Page 8
9.4%
21.9%
32.8%
32.8%
46.9%
46.9%
48.4%
60.9%
0% 10% 20% 30% 40% 50% 60% 70%
Does not include industryspecific capabilities availableC
Too complicated and expensiveto upgrade
The system is transactional and doesn’t offer event-driven, C
It's primarily a financial ERP andits operational capabilities areC
Too complex to customize to fitour specific needs
Too complex to integrateseamlessly with other existingC
Doesn't offer collaborative orsocial networking-styleC
Doesn't support fast decisionmaking capabilities
Q. What do you think are the major limitations or weaknesses of your current ERP system?
Traditional ERP Limitations
Source: IDC Manufacturing Insights, 2012, n = 64
© IDC Manufacturing Insights Page 9
The ERP System of the Future Defined
17.2%
42.2%
43.8%
46.9%
71.9%
78.1%
0% 20% 40% 60% 80%
Get new products to market faster
Improve collaboration
Keep costs under control
Provide more detailed insightsinto my business
Streamline process and achieveoperational excellence
React faster to the changes thebusiness needs
Q. Over the next three years, what do you need your ERP system to enable you to achieve?
Source: IDC Manufacturing Insights, 2012, n = 64
© IDC Manufacturing Insights Page 10
Business
Alignment
IT Efficiency
Legacy Systems
Best-of-Breed Applications
Financial ERP
Operational ERP
Operational ERP
© IDC Manufacturing Insights Page 11
Companies are moving to single ERPs
21.9% 20.6%
9.4% 7.0%
57.8% 63.0%
10.9% 9.4%
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
Today 3 years from now
Q. What is your current and future approach to ERP?
Two-tier ERPapproach
Best-of-breedfederation
Single ERP
Multiple-tier ERP
Bespoke system
Source: IDC Manufacturing Insights, 2012, n = 64
© IDC Manufacturing Insights Page 12
Technology: Defining the WayWe Work in the Future
5.8%
52.2%
42.0%
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
Q. Do you think modern technology —e.g. mobility, social networking or cloud
computing — is going to change the way you work in the near future?
Will completelychange the waybusiness ismanaged
Will partiallychange the waywe work
Not at all
Source: IDC Manufacturing Insights, 2012, n = 69
© IDC Manufacturing Insights Page 13
Essential Guidance
� Modernize traditional IT and take advantage of the "four IT forces"
� Create an integrated decision-making environment
� Combine the rigor of current ERP with the flexibility offered by social technologies and mobility
� Undertake an operational ERP strategy
© IDC Manufacturing Insights Page 14
Pierfrancesco ManentiHead of IDC Manufacturing Insights,
EMEA
Thank You! Questions?