Enterprise Resource Planning – Future Systems and Factors Driving Implementation
Kathy Reiss, OESA

Given the pressure suppliers are under  to “do more with the same,” the OESA Chief Financial Officers Council initiated a survey of members to understand companies’ current enterprise resource planning (ERP) systems installations and future investment considerations.  This survey captured the demographic details of ERP system integration, system requirements, operational life and system security.

Of the 15 survey responses, seven represent a global ERP perspective while eight answered from a regional, North American perspective.  The number of manufacturing facilities utilizing these company-integrated ERP systems ranged from 1 to 11 with the median of 54 percent of the facilities being integrated into a single common platform.  The majority (76 percent) of the current ERP systems have been in place six or more years.  On a 1 to 7 scale, where 7 equals exceptional, companies rated their current ERP systems on several dimensions including ease of data entry (receiving a weighted score of 3.87), shipping/receiving report generation (3.80) and planning/control decision support (3.80).

Given the generally low performance rating, it is no surprise that 60 percent of responding companies are considering an upgrade or a new ERP system.  Of these nine companies, only two are able to make ERP improvements without incurring charges to their existing systems.

When considering upgrades or new ERP enhancements, some of the functions identified as important in the selection process are inventory control, maintenance management, financial reporting, production/capacity planning, quoting and system integration.  Cloud computing is being considered by approximately half of respondent companies.  The criteria used in evaluating ERP ROI is shown in the chart above with initial ERP investment considered a priority by 11 of the 15 responding companies.  The investment payback metric ranged from six months to four years with 54 percent of companies targeting a one- to two-year payback period.

Additional profile information may be gleaned from the survey including that hardware and software are owned by 73 percent and 80 percent of respondent companies, respectively, with the remaining companies stating that Software as a Service (SaaS) is being outsourced or paid on a maintenance contract.  Eighty-seven percent of companies have ERP systems integrated into their supplier EDI systems.

The survey provides benchmark data to evaluate ERP systems.  The CFO Council will continue this discussion at its Nov. 30, 2011 meeting with a plant material manager.  The CFO Council is open to executives responsible for the finance function from OESA regular member companies.  Executives not currently members may contact Keiyania Mann at 248.952.6401 ext. 236 or kmann@oesa.org to audit this meeting.

Kathy Reiss can be reached at 248.952.6401 ext. 247 or kreiss@oesa.org.