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Most ERP inadequate for global, complex business, IFS study says

A study released by IFS, a global enterprise applications company, reveals that the overwhelming majority of manufacturers are running multiple manufacturing modes from multiple locations, and that their ERP software is not well equipped to handle it.

Only 34 per cent of respondents said their companies run only one ERP software package. The results went on to identify weaknesses in respondents’ ERP software — preventing them from running their complex businesses on a single instance of ERP software. Specifically, respondents rated their ERP poorly in areas directly affecting multi-location, international organizations and in manufacturing modes and business models associated with heavy industry and service management.

Some of the study highlights include:

• Only 33 per cent of respondents rated their ERP’s handling of equipment maintenance and enterprise asset management better than neutral. This will present a barrier to global ERP for companies with large and expensive assets like offshore oil rigs, process manufacturing plants or power generation and transmission facilities.

• Only 28 per cent of respondents rated better than neutral their ERP’s handling of design, fabricate, install — a common mode of manufacturing in the industrial equipment sector.

• Only 37 per cent of respondents rated their ERP as better than neutral for field service management. This means the ability to manage the customer life cycle is compromised for these companies servicing customers or equipment at remote sites.

• The study documented other weaknesses that will be problematic for companies operating from multiple locations, either domestically or internationally. Only 35 per cent of respondents rated their ERP’s ability to quickly create new companies and entities in the system higher than neutral. Operations in various states or nations often require separate subsidiaries or legal entities be created in an ERP solution. About 45 per cent rated higher than neutral their ERP software’s ability to handle multiple languages, multiple tax and regulatory schema or intra-company transactions.

The study is based on an August, 2013 survey of more than 200 executives at mid to large industrial companies.

“As our study illustrates, most any ERP software product can do a fine job with make-to-stock manufacturing, but might not adequately address the needs of an executive engaged in asset life cycle management or engineer to order manufacturing,” IFS Americas president and CEO Cindy Jaudon said. “We think this study report will be an important educational resource for any complex industrial company considering an enterprise software selection, as it will provide some visibility into the gaps their peers see in software they have implemented.”

The report is available for download at http://download.ifsworld.com/studies.