Manufacturers have a huge range of attitudes towards manufacturing IT, evidenced by the fact that some still stubbornly refuse to take on board anything more technological than a basic accounts package while others vie to become the live beta site of the latest, greatest version of the acronym of the month. Between these "If it ain't broke, don't fix it" and "Got to have the latest version" extremes, there are a multitude of manufacturers currently facing, currently avoiding or soon to face the crunch question of "do I upgrade or re-implement my ERP system?"

Crunch question

And it really is a crunch question. As Tony Anthony, a Professional Services Manager for Infor Manufacturing Essentials, states: "How a manufacturer deals with this question can often determine whether it is or isn't in business in a year's time." Steve Whitehouse, from SSL WinMan is equally stark: "With the relentless pressure of overseas competition, dealing with this question is critical, especially for smaller manufacturers and distributors. It really is a case of "do or die".

For Anthony, the starting point is being aware of the reason why the question is being asked in the first place. He gives some classic reactionary examples: "Scenarios include responses to a crisis such as terminal system failure; the system's vendor going bust; the system becoming unsupported; the system ceasing to be developed; a key supplier requiring a level of interoperability that the existing system simply cannot deliver, or even, as is increasingly the case in a supply chain context, a key supplier stating that a manufacturer must use a certain system to be part of the chain."

Irrespective of the reason, the manufacturer is inescapably confronted with a problem and often the only solution is to replace the existing system - and usually soon. In other words, it is broke, and it does need fixing.

Changing processes

There are however many other, less obvious reasons why a manufacturer should be asking itself the question 'do I upgrade or re-implement my ERP system', and for Anthony the number one reason is that business processes change: "Most manufacturers are competing in a totally different market place to where they were a decade ago, or even five years ago. They have had to adapt their business processes to survive and remain competitive; they might have even had to completely transform the very nature of their business. The close fit between the ERP system and the company's business processes when it was first implemented may have significantly widened, to the extent that the once enabling ERP system may now itself have become one of the primary constraints."

SSL WinMan's Steve Whitehouse agrees and takes this line of thought one step further: "What about those ERP systems which weren't implemented with such a close business fit in the first place? They may have, and still be, delivering limited benefits but be falling way short of the potential they could be bringing the manufacturer."

For Whitehouse and Anthony, the solution is simple. Manufacturers need to adopt as part of their IT strategy, a regular review methodology to assess the effectiveness of their ERP investments.

This in turn raises the issue of whether manufacturers have the means by which to make such an assessment. Whitehouse again: "It's surprising how many manufacturers lack the means to assess the effectiveness of their ERP system because they have never put in place performance measurement benchmarks.

"There might be a general view or belief within the company that the ERP system is doing a good job, but with no hard and fast means to quantifiably demonstrate this. In this case, re-implementation might prove to a be a very beneficial exercise because it can provide the necessary benchmarks not only to assess current efficiency and performance, but also to evaluate potential future performance capabilities."

Infor's Anthony is adamant: "Once a manufacturer has asked itself the question, should it re-implement its existing system, it has to ask itself the accompanying question, 'should it upgrade to a new system'?"

Whole host of factors

A whole host of factors become pertinent at this stage, some of which may sound obvious but which can be overlooked. Can the current system actually be re-implemented, and if so, what would be the impact of this on the company's ongoing business capabilities? Does the company have internal resources in order to achieve the desired closeness of fit to current business processes or will these need to be obtained externally, typically from consultants? What are the cost implications of this? How future-proof is the existing system and what are the vendor's medium to long term development plans for the system? Does the existing system actually have all the required functionality for the challenges of today's manufacturing environment, and how well equipped is it to integrate with other legacy and/or bespoke systems the company may have? How will any re-implementation fit into the wider IT and business strategy of the company? And ultimately, does any of this compare to upgrading to a new system?

For Whitehouse the key consideration is the system's longevity and how future proof it is: "One of the key technological developments of recent years has been the development of web services, such as Microsoft's .Net which bring previously impossible levels of integration and system interoperability. Any system that is not built on such a framework is ultimately going to find itself obsolete simply because business will demand the levels of interoperability that only web services systems can provide."

This is a situation that both SSL WinMan and Infor have long recognised, with both having invested substantially in developing ERP systems based on .Net.

Another company that is investing in .Net is Preactor International, a leading supplier of Advanced Planning and Scheduling (APS) software, but a company who sees one of its primary purposes as providing solutions that enable and enhance existing ERP investments.

Enabling more

Mike Novels is the company's CEO: "Many manufacturers have invested heavily in ERP yet find themselves needing levels of scheduling accuracy and flexibility that the ERP systems themselves simply can't supply. Rather than go to the expense and trouble caused by ripping out and replacing an existing ERP system, Preactor provides a solution that literally enables the ERP system to achieve its full potential. Which is why we are partners of so many ERP companies, with Sage and McGuffie Brunton now supplying Preactor technology as part of their ERP solutions." In other words, you fix what's broken without replacing the entire system.

Re-implement, upgrade or enable? The choice is ultimately down to each individual manufacturer, and its own set of circumstances, but one thing is sure, every manufacturer should be regularly asking itself the question, and ensuring it has in place the means to answer it accurately.