The Erp in Manufactring Benchmark Report

Enterprise Resource Planning (ERP) systems and their MRP (Material Requirements

Planning) predecessors have been around for almost three decades now. As a result,

many aging implementations, based on outdated technology, are limiting the business

process evolution necessary to any company who wants to thrive and grow amidst the

pressures of globalization and increasingly demanding customers. Conversely manufacturers

demand more value from ERP implementations, not only as their systems age, but

as enterprise applications proliferate, raising questions concerning upgrade, replacement,

consolidation and rationalization.

Key Business Value Findings

The chief ERP implementation challenges cited by respondents were associated with the

alignment of business processes with software capabilities. Customization related challenges

arise where software has been adapted to fit the business. Business process redesign

challenges arise where processes are

adapted to the software. Companies

struggle to balance the two amidst costs

associated with upgrades and latent integration

costs where point solutions or

custom applications have been used to

fill the gaps in functionality.

Implications & Analysis

As a result, enterprises are struggling to

derive more and better business value

from their ERP implementations. That

often means driving the use of ERP

deeper into their organizations or broader

across more of the enterprise. It means extending the footprint beyond the core ERP

functionality and making decisions between ERP vendors and pure play or "best of

breed" solutions. For this to be successful, business processes must be streamlined and

standardized throughout and in many cases outdated technology just doesn't cut it.

Recommendations for Action

Companies should evaluate current ERP implementations to ensure they effectively accomplish

the following:

* Balance aligning business processes to software capabilities against aligning

software capabilities to business processes to maximize benefit and allow your

business to evolve

* Consolidation decisions must weigh carefully the business value brought to the

enterprise.

"In implementing enterprise applications

many organizations neglect to assess the

technology platform, only to discover-after

the fact-that the hardware and networking

infrastructure is insufficient to support the

software."

-Jim Moore, Business System Manager,

R&M Energy Systems

he evolution of ERP (Enterprise Resource Planning) has been an interesting journey.

The consolidation of the enterprise applications market in general and the

ERP vendor landscape in particular, is having a significant impact on the implementation

strategies and execution plans of manufacturers. In addition, continued

pressure on manufacturers to optimize resources, meet tighter delivery schedules, and

improve overall responsiveness is driving change and forcing many companies to reevaluate

their ERP strategies.

ERP systems and their MRP (Material Requirements Planning)

predecessors have been around for a long time. Aberdeen

found a wide range of maturity across ERP implementations.

A full 31% are more than 10 years old (see Figure

1). Ten years ago the breadth of functionality available from

ERP solution providers was far different than it is today and

the technology was worlds apart. Even less than 7 years ago,

at the turn of century, amidst the Y2K (Year 2000) scramble,

the solution landscape was far different than it is today and

probably a healthy portion of those 34% with ERP implementations

that are 5-10 years old were selecting from a

menu of options significantly reduced from today's offerings.

As a result, a wealth of home-grown and custom applications

have been developed and adopted over the years to

fill gaps previously left by MRP and ERP solutions of days

gone by. High levels of customization, combined with aging

technologies presents a significant challenge to ERP strategies

today.

Competitive Framework

Key

The Aberdeen Competitive

Framework defines enterprises

as falling into one of

the three following levels of

practices and performance: