Making Your ERP System Work for You

May 16, 2012
I.B.I.S. CEO lays out some best practices for successful ERP software deployment.

CEO, Andy Vabulas is in the business of connecting people with technology.

His company -- I.B.I.S., a Norcross, Ga.-based enterprise business solutions provider -- is specifically designed to do just that by heping companies leverage their high tech tools to optimize performance and maximize efficiency.

In other words, it is his job to help usher businesses into the digital world.

Over the years, this position has provided him with a unique perspective on advances to the technology and the impact they have had in the business world.

Today, he sees manufacturers struggling to take advantage of new advances to their Enterprise Resource Planning (ERP) software, many of them struggling just to find a place for its expanded functionality in their organization.

Vabulas is familiar with this struggle. Throughout his career, he has watched many companies fight this constant battle to stay atop of every new development, trend and tool, from the rise of the internet to the move to the cloud.

IndustryWeek met up with Vabulas recently to discuss some of the challenges these companies are facing in terms of their ERP system and to put together some of the best practices for ERP software deployment in today's manufacturing companies.

Andy Vabulas: The Interview

IW: Paint the picture for us. What is going on in the ERP world?

AV: People are looking for and need a modern system today to gain a competitive advantage.

The last time a lot of people refreshed their system was the year 2000. They had that Y2K bug and everybody that made everyone rush to change out their ERP systems.

The world has completely changed technology-wise in that timeframe.

Over the last ten years, ERP systems have really become industry relevant. When people go out to buy, they're not just going to buy discrete or process manufacturing anymore, they're looking for somebody who has expertise in industrial equipment manufacturing. Not only industrial equipment manufacturing, but are you a specialist in tractors.

The market is really changing toward expertise and business because the systems have gotten so easy, it's less technical to implement these systems and more business sense to do that. So that's really the big change going on. It's more business functionality and industry functionality.

IW: What does this new functionality mean to companies today? What do high-level executives need to know about their new systems to stay competitive?

AV: CEOs, CFOs, CIOs, COOs, all the C-level guys, they need to know what their ERP strategy is. It's no longer acceptable to say, "I have to have an ERP because that's how I do my billing, that's how I manage my inventory."

Good C-level people should have strategic business goals and make sure that they have the ERP system that will support their strategic business goals.

They need to decide what's going to be included and what's not going to be included, if they're going to buy into that stack concept so that the cost of ownership is lower or if they're going to go with best of breed concept thing, which costs a lot of money.

There's things like, 'Am I going to be doing a lot of mergers and acquisitions?' 'What kind of governance do I have if I'm a public company?' 'Do I have enough there to make sure that I could go through my audit without a great deal of pain?' Does my ERP support that?

It is important that CEOs, COOs understand that ERP is a tool and they can program their program for success. They can program their business model and be sure that they are getting the right profit margins.

They can set up service levels so they understand if they're failing their customer, it's on their dashboard, it's on their radar. They know when things they need to worry about are coming. They don't need to worry that they've got a million parts that are in stock and they're okay. They need to know that there are three parts that out of stock and they're holding up a 15 million dollar order.

Understanding what they expect and making sure that they get what they expect is the most important thing.

Selecting and ERP System

IW: How should they go about selecting an appropriate ERP system?

AV: There are a lot of different factors on how to select an ERP system. What the goals are and what you have to look for. You need to make sure that you can manage growth, you can reduce costs, that you're easier to do business with. That you can interoperate with your trading partners today. Those are the kinds of things that they should be worried about. They shouldn't be worried about cutting a purchase order or the basic functionality. They need to have loftier goals and look at this like a vehicle that is going to drive their company forward.

They need to be able to look at their dashboard in the morning and see all green and know that they don't need to worry about something, they can go have that customer meeting and not worry that they're going to get blindsided by a customer complaint that was buried down at the sales person level who didn't want to tell anybody because he didn't want to get in trouble.

The system should serve them now. We have the technology to do that. Ten years ago, people were just using the ERP systems as typewriting machines. Today you have predictive analytics and you can make decisions that can help you navigate going forward instead of always worrying about what happened in the past. A good system should tell you what you should be doing and where to go.

IW: What is the next step in the evolution of ERP?

AV: I think you're going to continue to see systems that are more defined for specific vertical markets that will come with, and that are already coming with best-in-breed and best-practices built in, but if everybody implements the bests in practice or best in class, then we'd all be the same.

It used to be when you bought an ERP system, you'd buy it and it would be 65% or 75% of what you needed and then you would pay your computer supplier to tune the rest or to modify the code. Today, you're looking at buying systems that are 90% to 95% there and the 5%-10% is your magic sauce, your magic business model that differentiates you from your competitors. You always need to be able to put your secret recipe into your ERP system as part of that programming your business model for success.

I believe that in the end, taking this technology, you can program your business model for success and you can set the way you want the business to run, stop the cowboy outliers and you set your system up the way you know you want to be the most profitable.

That's what's coming.

IW: Any closing thoughts?

AV: People need to know they can't sit there and run on a 1998 ERP system and expect to grow their business anymore.

Just think about your car. That might be a good analogy.

Think about what your car was like back before the turn of the century. Now you get in your car, you have satellite radio, you have GPS, you can see the traffic, the things are green or red on the lanes if you buy that XM add-on.

ERP systems are no different: You should have a NAV system for your business.

About the Author

Travis M. Hessman | Editor-in-Chief

Travis Hessman is the editor-in-chief and senior content director for IndustryWeek and New Equipment Digest. He began his career as an intern at IndustryWeek in 2001 and later served as IW's technology and innovation editor. Today, he combines his experience as an educator, a writer, and a journalist to help address some of the most significant challenges in the manufacturing industry, with a particular focus on leadership, training, and the technologies of smart manufacturing.

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