Month: October 2005

Your Web Based Future

Chris Shaul

With Google and Sun collaborating to bring a web based version of Open Office to consumers, Microsoft has now jumped into the web applications game, but with bigger plans than just an office suite. How about a web based ERP system from Microsoft?

Okay, now that is nothing new. There are plenty of html based ERP systems. Some such as Oracle, are purely a virtual application, being written in Java and launched from a browser. But with Microsoft planning this, the entire desktop and user applications may change. We may have only virtual applications in the future with you only licensing what you use and need. This includes running your company on a virtual, remotely hosted system. This, as mentioned, is not new. But the difference is that you would only need a computer with light processing power and an internet connection to literally run your financials and operations.

With a powerhouse like Microsoft pushing web applications, the future of computing will dramatically change. No more will you go down to the computer store and buy boxed software. You will log into your browser, find the application you want on the Internet, and then subscribe to do your wordprocessing, spreadsheets, companies financials, enter the latest customer orders, etc.

The independence you now have of choosing what is on your computer will diminish as a few market leading applications vendors host your software. The web and software in general are becoming more and more of a utility. Just as the electicity you buy, the cable tv you watch, and the gas that heats your food are all utilities, the web and all of its applications will soon be similar. The question is, who will control this utility? The DSL providers, the Software providers, the web hosting companies? We will probably see a shift in the landscape of Internet companies. Microsoft or some similar entity will begin buying the access control points to the internet. Time Warner is an example of an early adopter. Trying to own the content and the access. But when folks are using the ERP systems and the office suites of the web, then the megacorps will want to charge for the access to and the use of the content.

For now, the one thing that is working against these plans are the fact that most companies do not want someone else having control over their data. But as the costs are reduced to a utility point of view, it will only make sense to outsource. This unfortunately will put a lot of data into the hands of the “utility” companies. Think of the marketing info they could gain and what if your company’s data is not so secure? It is a brave new world that we are embarking upon. And to have an ERP system that is hosted, maintained, and monitored by an outside entity that is not in the business of hosting, but rather in the business of providing content and access is a rather scary nightmare. But for now it is okay. We have years before this becomes a reality…maybe.

Chris Shaul is a Sr. IT Consultant specializes about ERP selections and implementations.

ERP Tiers: What Tier are you in?

ERP vendors and consultants are always trying to classify you as a company into distinct ERP tiers. What is your vertical industry? What is your revenue? How many employees? These are all questions of where you fit within their offering. Others talk about ERP Tiers. What are tiers? ERP Tiers are classifications of software by the size of the company the fit. Let’s break it down:

ERP Tiers: Tier 1 ERP

Tier 1 ERP software is software for the large enterprise. This includes multi-site, multi-national corporations. Typically the Tier 1 customer is a company with revenues in excess of $200 million dollars and has several sites, probably geographically dispersed and in multiple companies. There used to be what was known as JBOPS. JD Edwards, Baan, Oracle, People Soft, and SAP. Now that Oracle purchased People Soft, who had just prior purchased JD Edwards, the map has left the three primary ERP vendors: SAP, Oracle and Baan. These are your Tier 1 ERP players. Although not yet quite a Tier 1 ERP player, Microsoft with their Axapta (now called Dynamics AX) is pushing to be a Tier 1 software system.

ERP Tiers: Tier 2 ERP

The Tier 2 market is the largest of all the tiers in terms of the number of potential customers. This is the mid-sized tier. The customers of Tier 2 software usually are in the $20 million to $200 million dollars. They are usually just a few localized sites. For example a company that has a main office in California, with a manufacturing facility in Ohio and a distribution outlet in Texas would be a typical Tier 2 client. Often though, Tier 2 customers are single site. The main indication is the size of the company by revenue. This is important in that you probably will not find more than a couple hundred users all said and done. More likely though it is less than 100 users. Some references to the Tier classifcation refer to the number of employees. This is really not a good indicator as sometimes smaller companies with labor intensive processes may only have a few computer users.

Software in this class includes QAD, Infor’s Syteline, Microsoft Navision (Dynamics NV), ABAS, Glovia, Best’s MAS500, Epicor Vantage, and a host of others.

The problem that the Tier 2 vendors are facing is that the Tier 1 players are pushing down into this space. The market in the Tier 1 arena is small and to continue to expand their businesses, the Tier 1 players are reducing cost, simplifying transaction sets, and offering outsourced hosting and other incentives to allow a medium sized company to have the broad features of the Tier 1 package.

ERP Tiers: Tier 3 ERP

Tier 3 software is designed for single site customers of under $40 million dollars. These are companies with 5 to 30 users and have less demanding needs. Often these companies have just grown out of the Tier 4 packages and are looking to expand their capabilities. These companies tend to be the family run or small corporations.

Software in this market space includes Lily’s Visual Manufacturing, Intuitive Manufacturing, Microsoft Great Plains (Dynamics GP), DBA Software and Best’s MAS200.

ERP Tiers: Tier 4

Tier 4 software is your basic accounting systems. These include Peach Tree, Accpac and Quickbooks. This is the startup to $2 Million dollar software.

The next time you hear a vendor referring to a Tier 2 client, you will understand now that they are referring to a midsized company with just a couple plants. It is amazing how in the IT industry acronyms and categories spring up and every assumes they know what the other is referring to.

An interesting article is the segmentation of ERP into two tiers. You can read more in this publication: The rise of two-tier ERP: what it is and what it means.(TECHNOLOGY)(enterprise resource planning ): An article from: Strategic FinanceERP Tiers

ERP Tiers

ERP and Lean

Chris Shaul

Today, many ERP vendors are offering Lean Manufacturing modules in their solutions. These modules propose to assist companies in their lean effort. The real question is to what degree will these modules be used. Can a traditional manufacturer going to a lean model utilize a lean software tool immediately? When implementing an ERP system, process redesign is a must. The change that must occur in order to support an ERP system can be tremendous. But can a company bite off and digest all of the changes? Which should be done first, lean or ERP? These are all some of the questions that a typical manufacturing manager who is about to embark on an ERP implementation might ask.

First, lets define a few things. Lean is the removal of waste within a process and the concept of pulling items to a demand. It is also known as the Toyota Production system as it was developed and refined by Toyota in Japan. ERP is a business process enabled by software tools. It is not a software project! ERP streamlines your information flow such that it parallels your process flow. ERP works to build product to a forecast and then execute a production plan and inventory purchases synchronized to meet the predicted and actual demand. Lean, on the other hand, uses a pull system to meet an actual customer requirement. Lean uses the philosophy of smaller batches and reduction in non-value-added activities to create a much shorter lead time, thus delivering faster to a customer. ERP does not by its’ nature drive efficiencies in the production process. It only provides planners with information on what is going on and allows them to plan faster. If the process is broken, then automating it with the use of ERP will only highlight the problems.

What is the answer? The answer for many is to implement lean as part of an ERP intiative. Some would say that it should be a predecessor to an ERP initiative. Lean purists will argue that you do not need MRP and MPS to drive the production. ERP folks will argue that MRP and MPS are essential to having parts in-house and suppliers coordinated with the production. The answer for most companies is a hybrid solution, where lean is driving waste from the production and supply chain process (although also in the above-the-shop-floor activities too), while ERP is being implemented, such that you are automating value added processes and not trying to replicated waste processes in your new system. MRP can be used to plan longer lead time items, or items with higher value, whereas a Kanban can be setup for the faster turning and less expensive items.

Working from the perspective of a hybrid model, lean principles and practices can be implemented just prior to the ERP initiative. Then during the ERP implementation, the lean concepts must be considered and utilized in the setup of the new system. Tools such as Value Stream Mapping can define areas for quick improvements. Then once those improvements are made, a process flow based on the future state model can be applied to the ERP system. For example, a production cell might be setup for a particular product line with kanban inventory control. This would change how you would define your production process in the ERP system. Better ERP systems can run in this hybrid mode of traditional MRP and modern Lean concepts. Some product lines might be more suited to the MRP/MPS method because of supply chain issues or because of the long lead times that are associated with the products. Other product lines might be easy to immediately switch to flow manufacturing. Because of this, you want a system that can handle both methods.

Using a hybrid model, you select and position the ERP system to work alongside your lean initiatives. By leaning out processes (above and below the shop floor), you are avoiding “automating the mess.” Doing so will shorten lead times, reduce inventory, reduce production costs, improve employee moral and streamline your ERP implementation. Be sure to choose an implementation partner that is familiar with lean and is able to work in a hybrid manner. What order should these two tranforming intiatives occur? It might be best to have the lean initiative lead the ERP intiative by a few months. Then begin to implement the system. But do not stop the lean transformation. That should now be an ongoing philosophy of continual improvement. Use it to your advantage during the ERP implementation. Doing so will only help you on go-live day.

References:

http://www.advancedmanufacturing.com/September00/informationtech.htm

http://www.lean-manufacturing-info.com

http://www.qad.com/company/newsroom/lean_value.html

http://www.mapics.com/software/EE/SyteLine/sl7-aps.asp

http://www.cmtc.com/

http://www.inventoryinc.com/complimentary.html

Chris Shaul is a Sr. IT Consultant and specializes about ERP selections and implementations.

A developers view of ERP

A fascinating article on the design and functionality of an ERP system from a different perspective:

“… The task of IT is to begin building systems on a new foundation, using a new kind of blueprint. First, adopt the following rule: Business processes define database table relationships; database table configurations drive application components; applications drive interface development.

This hierarchy is powerful and effective, as long as you stick to it. Break away, and start redefining database tables to serve apps, or basing apps on interfaces (two long-standing standards from the old days), and your ERP framework will not bear the weight of it long. …

If your company is going ERP, then there are probably several driving forces behind the decision, possibly including: the need to increase supply chain efficiency; the need to increase customer access to products or services; the need to reduce operating costs; the need to respond more rapidly and flexibly to a changing marketplace; and the need to extract business intelligence from data over time.

All of this is fine for the decision-makers, but what does it mean to you as a developer? To achieve senior management’s objectives above, IT needs to make the following things happen:…:

Read more about ERP from a Develops point of view here.

ERP for the little guy

Chris Shaul

Most of the news and information you hear on the web or read in print about ERP relates to SAP, Oracle and other large systems. There is a derth of information on ERP for the small shop or for the under 10 million dollar manufacturer. What then do people do when they have graduated from Peachtree or Quickbooks? Is it possible to get a complete integrated system that manages their entire operations and finance areas?

Well fortunately, there are a few solutions that will not break the bank and will provide end-to-end functionality for a small manufacturer or distributor. These softwares are surprisingly complete. In fact, there are often features and functionality that beat the main-stream big systems.

One such system is called IntegrateIT This system provides a well rounded set of features that allow the small manufacturer the ability to run the company with a complete understanding of what is in inventory, what am I making today, what should I buy today, where is my cash position and am I profitable? Surprisingly, this software has modules that many larger ERP systems do not have, such as Field Service. It is amazing the amount of power that these smaller systems have. This link is one such example of how this system saved a company thousands of dollars.

Another solution is DBA Software. Having gone through a major rewrite of their core solution, they are both complete in functionality and have a very current underpinning of technology. This solution provides a very easy to use system for the smaller firm.

What makes these systems perfect for the smaller enterprise? The fact that they get more done with fewer screens. On a mid-tier solution, there maybe 2 to 5 screens needed to process a transaction such as entering a voucher or creating a work order. These smaller solutions tend to do it in one to two screens with all the information you need at your fingertips. The idea is that in larger companies, there is a delegation of work. In the smaller company, you may have one person wearing many hats and they need efficiency in transaction processing.

So the when you are thinking of integrated software solutions, remember that big isn’t necessarily an answer. Amazing things often come in small packages.

Chris Shaul is a Sr. IT Consultant and specializes about ERP selections and implementations.

The Shrinking Landscape of ERP

Chris Shaul

Now that Oracle has gobbled up its competitors, Peoplesoft and JD Edwards, and has aquired Seibel CRM, there is a shrinking landscape of Tier 1 vendors available in the marketplace. It used to be the old JBOPS (JD Edwards, Baan, Oracle, Peoplesoft, and SAP) that people relied on as the playing field for their selections. Now, you have Oracle and SAP battling it out at the top end. SSA Software is working at bringing Baan back to the game under the name SSA ERP LN, but the market has not yet recognized the “new Baan”. So essentially there are now three players in the Tier 1 space.

SAP and Oracle are continuing to compete on the extensiblity of their solutions. SSA is making some buzz in the market too.

So the question is, will there be more variety or options, or will it be more of the same. If it is more of the same from each of these three players, then who will companies turn to? One possible answer in the future will be Microsoft and their Axapta (Now called Dynamics AX) product. But that product is still a few years from being a true Tier 1 competitor. The advantage with the Microsoft solution is very flexible technology that allows solutions and modifications to be built around the product core easily, without breaking the upgrade path. This flexibility outshines the other players. The depth of the product will be their in a few years, but it is not there yet.

What about the Tier 2 players? Can QAD, Epicor, or Infor produce a competing product? As of right now, no. It seems that is not the niche they want to play in. So for now, in the upper tier space, there will be only a few players and few options. But with everything in the IT world, a short time can reveal many new changes.

Chris Shaul is a Sr. IT Consultant and specializes about ERP selections and implementations.

The ERP comeback

Chris Shaul

ERP seems to be on the move again this year. Vendors are ramping up, customers are calling again, selection projects are beginning. Why now? With all of the things going on in the world, what is it that is driving the return of ERP and technology initiatives?

This can be attributed to several factors. First is the rush to implement prior to the year 2000. In the late 1990’s, every company was working to shore up their systems to prevent the dreaded millennium bug. Companies that couldn’t patch or were not even sure about it, moved in droves to the ERP market. It was a frantic time. Now, six and seven years later, the lifecycle of those original ERP systems is coming due. Companies that implemented back then are now reconsidering their systems and are either performing major upgrades or migrating to new solutions.

Second was the freeze on IT spending in the post 9/11 era. After 9/11, companies invested in very little infrastructure and spent more of their budgets on IT security related issues. It is only of late that companies are loosening the purse strings again to invest in infrastructure and strategic systems.

Lastly, because of the IT downturn in the early part of the 2000’s, there has been a tremendous consolidation of software providers. Sage and Infor have quickly aquired a multitude of smaller software providers and are rebranding and in some cases consolidating their offerings for the small and medium enterprises. Microsoft and Oracle have recently gobbled up competing ERP offerings. Microsoft with the acquisition of Navision/Axapta, Great Plains, and Solomon. Oracle with the acquisition of JD Edwards and Peoplesoft. The result of this consolidation is a more focused message and a clearer landscape of providers. In the mid to larger enterprises, t is almost a choice of platform rather than options. You have the SQL Server camp and the Oracle camp. That is for a different article. But clearly, companies interested in choosing new software now have a smaller field of vendors to look at. Instead of a selection, it is now a choice of perhaps two ways to go.

This comeback is not without problems. Continue reading The ERP comeback

What makes a successful ERP implementation?

What makes a successful ERP implementation?

ERP implementations are the most difficult thing you will probably have to do. They are painful and they usually tear a team apart (and then bring them back together) before going live. Some say that a major ERP implementation will go live under its third project manager! While this is extreme, it can be seen in large corporate environments. Add to the fact that ERP is not really one system; there are document management systems, bar code systems, report writers, warehouse management and other sorts of bolt-on’s. The greatest challenge is Continue reading What makes a successful ERP implementation?