infor s manufacturingerp_io#132723_eguide_110116_li#1441539

E-Guide

CLOUD ERP CASE STUDIES AND TRENDS FOR MANUFACTURING EXECUTIVES

▲

SearchManufacturingERP

PA G E 2 O F 2 2 S P O N S O R E D B Y

Home

Manufacturers begin to embrace cloud ERP software

Four developing ERP trends the C-suite must know

How manufacturing companies can join the digital revolution


ecurity and control issues have plagued the cloud ERP business case for manufac-turers, but the relief for IT is increasingly tuning out these common culprits. Learn

how four manufacturers leveraged their cloud ERP investments, emerging ERP trends to watch out for, and tips for manufacturers with digital aspirations.

S


Home





MANUFACTURERS BEGIN TO EMBRACE CLOUD ERP SOFTWAREJim O’Donnell, News Editor

Manufacturing has been one of the slowest enterprise segments to move their ERP systems to the cloud, but more options and more familiarity with the advantages of the cloud may be changing this.

The reasons manufacturers have been reluctant to run cloud ERP software are as varied as the companies themselves, but they generally boil down to two main issues: security and control. Now, however, it appears that manufacturers are going to the cloud for the reason that most other segments do: It’s simply less hassle to have someone else run ERP. This is particularly attractive to smaller manufacturers who often lack the IT resources to run ERP systems on-premises.

Options abound now for any company that wants to run cloud ERP software systems. Large vendors like SAP, Oracle, Microsoft and Epicor have come out with cloud versions of flagship ERP systems or ramped up new cloud-first products. Smaller players in the ERP market also offer cloud versions, some


Home





that have been born and raised as cloud-only systems. Some of these smaller vendors may be more attractive to manufacturers because they offer targeted functions for manufacturing or specific industry segments.

LUXURY VAN BUILDER FINDS CLOUD WORTH INVESTMENT

Waldoch, based in Forest Lake, Minn., a company that builds luxury vans and customized trucks, moved to the cloud with Epicor ERP two years ago. The results have been somewhat mixed, but satisfying for the most part, according to Billy Waldoch, the company’s general manager. Not worrying about managing the system is a plus, but Waldoch is concerned with diminished control over the system.

“Any ERP has struggles with upload time, but the nice thing about having it in the cloud is that we don’t have to worry about it going out -- they do -- so when it does go out we’re calling them wondering why we’re down or vice versa,” he said. “The bad part about that is that it’s not as fast, and we can’t always do what we want to do with it because it is in the cloud. When it’s on-site we can mess with it and do what we want, and it’s a lot faster because when you’re going over the Internet, you’re dealing with how fast your Internet speed is.”


Home





Although cost effectiveness is often touted as a major reason to move to the cloud, Waldoch cautioned that this may not always be the case. Implementing Epicor ERP on the cloud cost much less upfront than any of the on-premises systems that Waldoch considered, but there have been significant ongoing costs. Nevertheless, on balance, the system is worth the investment, Waldoch said, and it allows the company to run ERP with far fewer management issues.

“If everything works right, you will save money with a cloud-based system, but it’s the initial getting it up and going is what a lot of people don’t realize,” he said. “I would say to anybody else that’s looking for one, get the salesperson, get the IT person, get the person that you’re going to be communicating with [from the vendor], and if there’s a problem, you get all those people involved before you make the decision.”

CLOUD-BASED ERP FREES UP IT DEPARTMENT

Freeing up the IT department has been a major benefit of running ERP in the cloud for AMVAC Chemical Corporation. The company, based in Newport Beach, Calif., develops, manufactures and markets crop protection and other agricultural products, with three manufacturing facilities in the U.S. and three in other countries. AMVAC has been running QAD’s ERP system since 1996


Home





and moved everything to the cloud in 2012, which has helped them improve business processes, according to Ranier Laxamana, AMVAC’s IT director.

AMVAC, a relatively small company that competes against giants like Dow, DuPont and Monsanto, does not have the resources to employ a large IT department, Laxamana said. When the company ran QAD on-premises his two-person IT staff spent most of their time on database and system administration issues. Now that AMVAC is in the cloud, all that administration is done at the QAD data center, and the IT staff focuses on more important tasks.

“Why were we spending so much of our time keeping QAD up and running, when somebody that does that for a living can do that for us?” Laxamana said. “Freeing up their time allowed them to help the business grow because now we spend most of our time sitting with our business unit managers and asking them what their pain points are, what we can automate for them. We ended up implementing a lot of projects within QAD, some modules that we’d never used before.”

THE CLOUD FREES UP ERP FOR SMALLER MANUFACTURERS

The cloud may be an option worth considering for large organizations with fully staffed IT departments, but it might be the best option for small companies.


Home





This was the situation for National Circuit Assembly (NCA), a small electronic manufacturing services (EMS) firm that builds electronic products, primarily for the military and automotive companies. The company, based in Garland, Texas, recently implemented a cloud ERP system from IQMS to tie together its headquarters and two manufacturing facilities.

“One of the reasons we implemented IQMS is because of our multiple plants and being able to run from a central location, where we have the individuality for each plant to have their own PLM [product lifecycle management], but at the same time someone here in corporate can look at the combined for both,” Raul Cantero, NCA’s vice president of operations, said. “You can do that with an in-house server, but a company like ours doesn’t really have an IT department.”

Cantero explained that NCA needed to replace an aging and inadequate ERP system, and after considering several on-premises and cloud systems, decided that IQMS’ cloud system made the most sense given its available resources.

“My IT group here is two -- and one of them is me -- so running the ERP system in house is something we can’t afford right now,” Cantero said. “We are obviously paying for it to have it on the cloud, but it puts it with somebody else. I don’t have to worry about it. The updates are automated, and the backups are


Home





automated, so if we ever have a hiccup I don’t have to panic, so that peace of mind is worth the price.”

CHANGING REGULATIONS SPUR A MOVE TO THE CLOUD

The major ERP vendors are revamping their cloud strategies with a variety of products and deployment options. SAP offers the SAP HANA Cloud Platform and the cloud-first SAP Business ByDesign, an ERP product aimed specifically at the SMB market. Microsoft earlier this year released a cloud-first upgrade of its Dynamics AX ERP, which is deployed from the Microsoft Azure cloud platform.

This means that Dynamics customers are going to the cloud eventually, whether they want to or not. Umbra Group, an Italian aerospace manufacturing company, has run Dynamics AX on-premises since 2006 and has been an early adopter of the new cloud-first version. The company has no choice in the move, according to Giacomo Bonora, Dynamics AX application consultant and developer at Umbra, but this is only possible now because of industry regulation changes that allow cloud deployments.

“In our business, you have strict laws and market requirements about document segregation, security and access, and because of these regulations,


Home





we couldn’t do cloud before,” Bonora said. “But now the Dynamics AX solution is certified by the major authorities like the FAA in the U.S., so it’s compliant with their requirements.”

Bonora said that when the regulations changed, Umbra began to evaluate an upgrade to the cloud-first Dynamics AX. “We did an analysis about cost, maintenance and everything, and it appeared to be better in terms of cost control, in terms of investment and so on,” he said. “I can’t say yet that if, in the end, we will decide to keep everything on cloud or not or take advantage of the hybrid solution they’re offering up next year; it depends.”

These moves to the cloud by manufacturers are not that surprising as they grow more comfortable with the technology, explained Adam Boyce, manager of IT strategy for Panorama Consulting, a Denver-based firm that provides ERP-related services.

“Traditionally, a lot of manufacturing companies have a lot of positive control over their systems and information, especially veteran companies that have an established IT. For them, a lot of it is being able to become comfortable and transition,” Boyce said. “One of the bigger advantages that you hear about the cloud structure is that because there’s minimal hardware and infrastructure and you’re using thin client, there’s a cost benefit. So for a company to have that

PA G E 1 0 O F 2 2 S P O N S O R E D B Y

Home





established IT, [they] might have a concern on how they adopt this new model because they’re familiar with what they have.”


Home





FOUR DEVELOPING ERP TRENDS THE C-SUITE MUST KNOWChristopher Wilder, Practice Lead and Senior Analyst, Moor Insights & Strategy

Nimble technology startups, widespread mobility and social collaboration have exerted major changes on society at large, and enterprise application vendors are finally following suit. Where enterprises were once tied to extremely expensive systems that required lengthy implementation cycles -- and to the vendors that sold them -- today, radical changes are occurring in the ERP and enterprise systems market.

ERP and business applications vendors are in danger of being caught and passed by born-in-the-cloud competitors that are just quicker to recognize developing ERP trends and other disruptive forces. Software vendors that want to play catch-up face a number of obstacles, but with proper planning, positioning and focus, they can identify a niche and capitalize on today’s market needs.

However, business leaders, who must also adapt to this change, have much to gain as the ERP market evolves into one focused on users and sophisticated,


Home





forward-looking technology. Here are four trends happening today that CEOs and other business leaders should watch.

ENTERPRISE UX AND UI ARE QUICKLY BECOMING A BUSINESS PRIORITY

One of the most important ERP trends is the step away from clunky, difficult-to-use systems. Indeed, user experience is driving the development of new systems. In the high-velocity, data-driven world we live in, many CEOs want an integrated supply chain where they have real-time intelligence and visibility across the entire network to ensure they can make effective decisions and actions. New tools are becoming available that give companies real-time insight into not just business activities, but also customer personalization, including what their customers need and what products and services they can offer. Consolidating contextually relevant information into a single, customizable dashboard has become vital for ensuring businesses can quickly respond to customer and market demands. Further, users are demanding interfaces that are clean, easy to use and customized to fit the way they interact with the system. Executives and employees no longer want to search through files, tables and systems to find the information relevant to their role.


Home





INTEGRATION IS OFFERING NEW OPPORTUNITIES

One of the most critical aspects and, oftentimes, the most challenging issue for companies is getting their systems properly integrated. Historically, integration has been accomplished by paying systems integrators enormous amounts of money to write large amounts of code that link APIs, processes and legacy or disparate systems onto a common infrastructure. In recent years, more companies are emerging that develop products to integrate things like information and data, and advances in data management tools are making it easier for companies to coalesce multiple data formats and sources into a common information model or data standards.

On the other hand, there is more complex business process integration -- the flow of information across a business process or workflow that touches a constituent -- whether those are customers, suppliers, partners or employees. To be successful, process integration must merge information in a way that appropriately solves business problems. As such, it is both more expensive and difficult to integrate, with fewer companies that can deliver. But that is changing. In addition, as vendors rise to meet this challenge, so too must implementation partners and consultants who must work on updating their skills to meet new demands.


Home





COLLABORATION IS BECOMING MORE SOPHISTICATED

Mobility, social networks, cloud and collaboration are no longer new, disruptive factors -- they are the norm. Mobile and social capabilities allow companies to better track customer interactions with the company and respond to customer demands or product issues more quickly -- capabilities that enterprise application vendors are responding to. Indeed, more vendors are incorporating into their products the more sophisticated mobility, collaboration and notification systems to help to facilitate improved communications and process among lines of business, customers and employees. This is critical, since real-time collaboration across functional business areas improves application usage and adherence, faster response times and streamlined workflow by giving employees the tools necessary to make informed data-driven decisions dynamically. Further, more companies are attempting to access and use structured data -- including data on parts, suppliers and components -- and pair it with unstructured data from social networks on pricing trends, quantities and global intelligence to gain revenue-generating insights. With more vendors focusing on such capabilities, a greater number of choices will become available.


Home





MACHINES AND CUSTOMERS WILL INTERACT IN NEW WAYS

New data models, artificial intelligence, machine learning and analytics are becoming the most compelling elements of the future of ERP. These new tech-nologies change how we interact with customers, develop sales pipelines, and bring awareness and consideration to marketing opportunities.

These technologies are being used today to help companies improve cus-tomer satisfaction while reducing overall costs. Take bots: These pieces of soft-ware use artificial intelligence and machine learning, and can be programmed to identify anomalies or degradation in equipment performance over time and automatically make adjustments autonomously. If something breaks, these bots open a trouble ticket through the help desk, schedule the maintenance, order the replacement parts and have them delivered to the technician without any human interaction. Once the technician repairs the unit, the system then closes out the trouble ticket and resumes its monitoring.

In another example, sensors are being applied to train doors to measure pressure when the doors close. How the doors close is an indicator of the over-all health of the train, and taking a train off the tracks for maintenance is costly. As pressure declines over time, these sensors proactively notify maintenance to schedule the train for repair. This gives the operators the ability to ensure


Home





scheduled maintenance and upkeep are coordinated and downtime is reduced. Each of these examples use integrated internal business systems, such as MRO, ERP and field service automation to perform each task.

Developing ERP trends and other changes to the business landscape will demand profound transformation from organizations over the next few years. Companies that wish to thrive will need to make drastic changes -- not only to their enterprise systems, processes and technologies, but a fundamental change in philosophy, metrics and workflows.


Home





HOW MANUFACTURING COMPANIES CAN JOIN THE DIGITAL REVOLUTIONDiann Daniel, Editor

The concepts of digital manufacturing, digital thread and digital supply chain can seem far more straightforward and easy to understand when discussed in general terms. But, in practical terms, when fully realized, these concepts are huge and complex, and it’s understandable that they can seem overwhelming to business leaders who want to bring their manufacturing processes into the “digital revolution.”

Indeed, entire organizations across the globe are devoting themselves to addressing the complexity of digital manufacturing and helping business leaders create roadmaps for the digital manufacturing future. In the United States, the Digital Manufacturing and Design Innovation Institute was created for just this reason. DMDII, a public-private partnership, focuses on helping businesses develop the technologies and processes to solve their most pressing manufacturing challenges.


Home





In part two of our interview with Brench Boden, CTO of DMDII, Boden shares advice on how business leaders can simplify a complex issue and take steps toward joining the digital revolution. And be sure to check out part one, where Boden discussed digital manufacturing benefits.

WHAT FIRST STEPS TO BECOMING DIGITALLY ENABLED DO YOU RECOMMEND

THAT COMPANIES TAKE, PERHAPS BEGINNING WITH THE SUPPLY CHAIN?

Brench Boden: The challenge of the digital supply chain is the maturity of each individual supplier -- their capability for operating in a digital environ-ment. There are some medium-sized suppliers that are incredibly sophisti-cated. They have a couple of engineers. They have access to design tools. They have computer-numerical controlled equipment on the floor. They may have 3D printing capabilities. So, there are those suppliers -- they’re ready for a digi-tal age; they have the skill set to do it -- but at the other end of the spectrum are the so-called mom-and-pop shops, which may have no equipment that actually can be interfaced to a computer. So, the answer to the question is it depends.

If you’re at that low end and you have no digital equipment, there are a lot of different ways to go about [creating some digital manufacturing capa-bilities]. You can engage state or local support organizations -- every state and


Home





municipality has those. You can engage the Department of Commerce Manu-facturing Extension Partnership for help in working on some of those issues. DMDII actually has a project that will be starting soon where we are trying to develop a very low-cost -- like $500 to $1,000 -- kit that can be used on a very old piece of equipment to make it internet accessible and for us to be able to draw data off of that. Now, that doesn’t necessarily make it a fully digital … but it’s a start in that direction.

If you’re an OEM, one of the things you have to wrestle with is: I want to [fully join the digital revolution], but there are just some companies in my sup-ply chain that I’m going to have to hold their hand. I’m going to have to give them access to my tools just to help them do business better. An objective for DMDII is to look at: How do we transform build to print, which is the shorthand way of talking about suppliers who just take the design and they get the contract award and then they go off and figure out, ‘How I am going to build this?’ And they build and test and send it in. So, how do they look at this process and really transform that using digital manufacturing capabilities?

LET’S EXPAND THIS DISCUSSION TO THE MORE OVERARCHING ISSUE OF EN-

ABLING DIGITAL MANUFACTURING. WHAT FIRST STEPS OR AREAS SHOULD


Home





COMPANIES CONCENTRATE ON TO GAIN SOME OF THE BENEFITS OF DIGITAL

MANUFACTURING?

Boden: My recommendation, if I was sitting across from a manufacturing company, would be to say: Pick a couple of your most costly issues or your most difficult problems [to start with]. Maybe you have a quality problem because you’re not tracking the variability of your production processes, maybe your design function takes too long, maybe you are losing market share because you don’t know what your customers’ usages is. But it has to be business-objective driven.

Don’t go out and buy a bunch of monolithic software. First, look at what are your most costly issues or what your greatest opportunities are. Start from there and build outward.

So, that’s sort of a strategic look at how to do digital manufacturing. No business has ever been successful transforming something like this overnight. The implementations of big, huge software programs end up costing a lot more than anybody ever thought.

HOW DOES A DIGITAL THREAD FACTOR INTO YOUR ADVICE?

Boden: My advice would be to pick a key problem and think digital thread in


Home





how you solve that problem. What data would make this decision more effec-tive? What insights do you wish you could get that you don’t have now when you’re making this decision? If you’ve made this decision, is tracking the result of that decision and rationale important for something later in the process?

My other piece of advice would be -- and this is based on a lot of dialogue in the Institute and this is, frankly, the purpose for it -- you should know that you’re not alone. Everybody’s got similar problems. What DMDII provides is an opportunity to collaborate with others who have similar issues. They may be large companies, they may be small, they may be universities who have particular research interests, but the value is that we can create these small, temporary ecosystems to work on digital manufacturing challenges like, ‘How do I create a digital thread for reliability studies?’ or, ‘How do I get better visibil-ity in my supply chain?’ or, ‘How do I do digital work instructions and present them through some augmented reality?’ Or the members define the problems and then they join together in odd teaming arrangements -- companies you would never expect to work together -- because they have a common interest in whatever that particular [problem] is.


Home





FREE RESOURCES FOR TECHNOLOGY PROFESSIONALSTechTarget publishes targeted technology media that address your need for information and resources for researching products, developing strategy and making cost-effective purchase decisions. Our network of technology-specific Web sites gives you access to industry experts, independent content and analysis and the Web’s largest library of vendor-provided white papers, webcasts, podcasts, videos, virtual trade shows,

research reports and more —drawing on the rich R&D resources of technology providers to address market trends, challenges and solutions. Our live events and virtual seminars give you access to vendor neutral, expert commentary and advice on the issues and challenges you face daily. Our social community IT Knowledge Exchange allows you to share real world information in real time with peers and experts.

WHAT MAKES TECHTARGET UNIQUE?TechTarget is squarely focused on the enterprise IT space. Our team of editors and network of industry experts provide the richest, most relevant content to IT professionals and management. We leverage the immediacy of the Web, the networking and face-to-face opportunities of events and virtual events, and the ability to interact with peers—all to create compelling and actionable information for enterprise IT professionals across all industries and markets.

infor s manufacturingerp_io#132723_eguide_110116_li#1441539

Data & Analytics