Page 33 - MetalForming September 2012

Why Companies Seek ERP-System Replacement
Seeking more functionality Outdated technology
Cost advantage–seeking to lower TCO 38% M&A–consolidation strategy 25%
Our business is changing 24% Integration issues 21%
51% 44%
New standard defined– consolidation strategy
Extensive customization prevents us from keeping pace
Current system cannot scale with our growth
20% 17%
16%
0% 20% 40%
60%
Fig. 1
doesn’t perform well or produce world- class business results. But do not let your current ERP system, or lack there- of, become an excuse for poor per- formance or stagnation.
Why Do Companies Replace ERP?
We asked this question of the 38 percent that had replaced their ERP solution. Their top three reasons for replacing their ERP software:
• Lack of functionality
• Outdated technology; and
• The inability to scale with growth
of the business.
Yet, when we asked a similar ques-
tion of all respondents, asking what might prompt a replacement in the future, the responses were more even- ly spread across a variety of factors (Fig. 1).
Functionality (51 percent) and out- dated technology (44 percent) still claimed the top two spots, but the inability to support growth plunged to the bottom (16 percent). Taking its place in third place (38 percent) was
the perception that there was a cost advantage in replacing ERP software. Some of the cost savings are obvious, some more subtle. Clearly the imple- mentation of newer technology and more functionality should result in
productivity gains. Replacement of outdated technology also can save in terms of maintenance—preventive and remedial.
Customization
Heavily customized solutions may prevent companies from moving for- ward. But if you truly require heavy customization, then it may be time to reevaluate whether you have the right solution for the job at hand. Perhaps you made the best decision at the time of the purchase, but newer technology and rapid application-development models have allowed ERP-solution providers to add features and func- tions at a far more rapid pace than in days gone by.
Perhaps you now are able to pur- chase that same functionality off-the- shelf, thereby eliminating the recurring costs of maintaining customizations, while allowing you to take better advantage of innovation you already are paying for with your maintenance dollars. In fact, your current solution provider may already have incorporat- ed features into its standard software that you developed as custom.
If customizations have you stuck in older releases, perhaps re-implement- ing the same software at the most cur-
Purchasing a New ERP System within the Next 3 Years?
NO
NO
Enterprise
??
YES
1st Time New Site Replacements
One in four companies are already planning the purchase of a new ERP solution within the next 3 years.
Three out of five will be replacements of existing
ERP solutions, while the remaining two out of five
are first-time purchases
either for the entire enterprise or for a new site, previously not supported by ERP.
www.metalformingmagazine.com
MetalForming/September 2012 31
Fig. 2