Implementation of an ERP platform is not easy for many organizations, especially ETO manufacturers.
This challenge is understandable: After all, ERP is the nexus of virtually all important business applications. This includes accounting systems, CRM tools, productivity suites (e.g., Microsoft Office) and industry-specific solutions, such as 3D CAD software. Setting up all the moving parts and ensuring they work well together can cost ETO manufacturers time and money.
High costs and lengthy timelines are the norm with ERP implementations
Indeed, ERP implementation is like an overdue trip to the dentist for many organizations: painful, potentially expensive but wholly necessary. Let’s look at what typical ERP setups entail:
- A 2016 report from Panorama Consulting found the average cost of an ERP implementation in 2015 was $3.8 million, with 57% of projects seeing budget overruns. Typical duration was 21.1 months.
- 35% of survey takers reported that their ERP setup consumed between 1-3% of their annual revenues. Another 20% stated that implementation costs were in the 3-5% range. The average for all organizations in 2015 was 6.5% of revenue, up slightly from 5.9% the previous year.
- Even with this high level of investment, at least 7% of all ERP projects still fail. While 57% of respondents reported success in their efforts, another 36% “didn’t know” whether they had failed or succeeded. This remark usually indicates that teams did not pay enough attention to software selection or the business case for upgrading/changing the ERP system. That’s a mistake most ETO manufacturers can’t afford to make.
ETO manufacturers are unique
The problems outlined in Panorama’s report cover a broad range of businesses, from the 26% with $25 million or less in yearly revenue to the 6% with $2 billion or more. But small and medium-sized organizations, especially ETO manufacturers face unique head winds in getting ERP properly situated.
“Changes to scope in the middle of implementation, can be extremely costly.”
Like the main character from “Goldilocks and the Three Bears,” they need an ERP solution that is “just right” – i.e., not so disjointed, rigid and slow that it holds them back, but also not so vast, complicated and expensive that it sits well beyond their means. For engineer-to-order manufacturers, this can be a hard needle to thread between functionality and cost.
However, just as Goldilocks eventually discovered the perfect bowl of porridge, ETO manufacturers can find an ERP system that fulfills their specific needs while being eminently economical and reliable. What would such a platform include?
The benefits of an ERP solution by and for ETO manufacturers
When staring down an ERP project, SMBs have to be particularly sensitive to several issues, including but not limited to:
Project scope:
Inaccurate estimates of project scope, as well as changes to scope in the middle of implementation, can be extremely costly. Panorama has called scope creep “the Kudzu vine of ERP implementations.” Smaller organizations must avoid it by finding an ERP package that can be set up quickly and all at once.
Customization:
Tweaking an ERP system to precisely fit an organization’s needs is common practice but comes at a high cost. If the ERP is not well-integrated with your applications or customized, then making the right connections is difficult. It can quickly become tedious and time-consuming. It doesn’t need to be that way, however, for ETO manufacturers.
Inter-department communications:
Poorly structured communications processes across teams can lead to information bottlenecks between engineering and purchasing. As a result, making key decisions about what to buy and when can get slowed to a halt.
A targeted solution such as Total ETO ensures that engineer to order manufacturers have the tools to overcome these challenges and have successful ERP implementations. With Total ETO, setup as well as updating is seamlessly handled by a software agent. Integration with all of your most important apps – from accounting tools to drawing programs – is straightforward. Additionally, the overall cost is very affordable, thanks to highly specialized and configurable software.
Learn more today about how you can get started with an ERP platform made by and for engineer to order job shops.