ERP Solutions Are Becoming More Complex and Specialized
For many manufacturing organizations, life is more complex than ever. The need for speed and high product quality is critically important in this age of IoT, edge computing, smart manufacturing, and Industry 4.0. Not only are manufacturing customers’ expectations high, but so are those of their customers. Consequently, leaner production processes and increased product quality, reliability, and output are core requirements in ERP systems today.
Thanks to innovations made possible by digital transformation and industrial IOT, ERP solutions have been evolving recently, and there has been an acceleration in the need for extended ERP capabilities. Opportunities made possible by industrial IOT have been before us for a number of years, and now there has been an increase in the need for extended ERP capabilities in mid-market manufacturing firms. And for many of these companies, SaaS, or a hybrid on-premise/SaaS model, may be a viable option.
Even ERP systems that were developed within the past few years may not have capabilities desired by small- to mid-size companies, or to larger companies pursuing a two-tier, or in some cases, a multi-tier ERP strategy. In addition, these solutions, often using cloud deployment options, don’t require costly, multi-year implementations. This gives them the ability to be nimble and to quickly introduce industry specific functionality.
As a result, we are at an inflection point in ERP product development, where smaller firms can take advantage of expanded functionality at a reasonable cost and level of effort thanks to advances in digital transformation. New options are now available to manufacturing firms of all sizes.
Interest in Mid-Market ERP Systems is Growing
With increased specialization in some industries, and intense competition present across markets, a “one size fits all” approach to ERP systems is not a viable strategy any longer for many manufacturers, particularly those in mid-tier markets. These companies must be nimble and flexible to more effectively compete in today’s global markets.
An increasing number of industrial firms are interested in deploying mission-specific ERP systems at the plant level for such capabilities as manufacturing and supply chain management, while maintaining a central, corporate-level system for centralized functions, like financials, CRM, HCM, and other functions. These solutions often target mid-tier firms with solutions that tend to be used at plants that require specialized and/or vertical functionality.
This strategy includes the use of a main ERP system that is used at the corporate level for centralized functions, and a second ERP solution is used by divisions, subsidiaries, or other business units. Increasingly, companies are deploying ERP systems that meet plant-specifically needs that can roll-up relevant information to corporate enterprise systems. In many cases, these organizations are seeking ERP systems that offer capabilities that are primarily relevant at the plant level, and less so at other areas across the enterprise. Often, these firms find that adopting a multi-tier strategy gives them enterprise visibility while providing specific features needed at individual plants.
The Evolution of ERP Systems
As can be seen in the graphic, today’s ERP systems have evolved from manual or semi-automated early manufacturing systems to integrated systems within and cross plants. More recently, smart manufacturing has driven advancements in solutions that include improvements and advancements in areas, such as software, AI, ML, and analytics.
With manufacturing companies struggling to keep up with the demands of their customers, who are in turn trying to meet and exceed their customers’ needs, new strategies are needed to differentiate their capabilities. These include deep capabilities at a good value, high quality, and high availability. At the same time, the competitive landscape is particularly challenging for mid-market manufacturers who are trying to take advantage of advances in IoT, edge computing, smart manufacturing, and Industry 4.0 with limited resources.
The new wave of ERP solutions specifically designed for this market are piquing the interest of both prospects and customers seeking improvements in their processes and solutions. Often, these solutions are ideally suited for manufacturers desiring deep functionality deployable on-premise or via the cloud.