Key Takeaways
- The budget for many ETO manufacturers is currently stagnant or even shrinking. This is understandable, considering some Custom Machine Builders expect their revenue to shrink over the next couple of years.
- An ERP solution is recommended for any manufacturer looking to scale, especially in the ETO space.
- Trying to force a specialized business into a standard ERP doesn’t work. ETO manufacturers need an ETO solution.
ETO Manufacturers Still Face Many of the Same Challenges They’ve been Battling for Years.
For starters, the IT budgets for Engineer To Order manufacturers are not growing and are, in some cases, actually shrinking: The Gartner forecast for IT spending in 2016 predicted a 4.5 percent drop in IT spending among firms devoted to manufacturing and natural resources.
Similarly, the Spiceworks 2017 State of IT report projected that IT allocations would barely move between 2016 and 2017. Instead, it will rise from an average of $293,000 to $294,000 per company. There were a few other important constraints revealed about ETO manufacturer’s survey:
- 64% of respondents expected to hire no additional technical staff in 2017. Compared to only 30% who were planning on taking on more employees. This trend will put more pressure on ETO manufacturers and others to do more with less.
- Budgets for both software and hardware have been decreasing with some of the funds being redirected to managed services.
- 60% of the companies surveyed expected to see increases in revenue in 2017. A moderate 20% predicted no change and 10% even stated their revenues would likely decline in the new year.
For ETO manufacturers in particular, this current trend of stagnant IT budgets is at odds with the technical investments they’ll need to make. Specifically, advanced analytics, robotics, and augmented reality are just a few of the ongoing developments many manufacturers will have to address.
Finding the right tools
An enterprise resource planning system has to be the focus when modernizing how ETO manufacturers do business. The ideal ERP system is easy to implement, integrate and pay for. This includes small and medium-sized Engineer To Order manufacturers. Unfortunately, many standard ERP solutions fall short on these counts.
Panorama Consulting demonstrated the shortcomings of the average ERP implementation in a recent report on enterprise resource planning. Almost 70% of ERP initiatives in the manufacturing sector went over budget in 2015. The two biggest drivers of these overruns are the expansion of project scope and the need for additional technology. While lower than the average for all industries, the typical manufacturing ERP system costs $2 million to set up, or 7.5 percent of the company’s yearly revenue.
The challenge and costs can be summed up neatly. Trying to shoehorn a specialized business into a general purpose ERP requires incredible effort. There’s also the time and cost to configure, customize, implement, and train. With this in mind, it is crucial that Engineer To Order manufacturers have other options available. They need a system built for them, not a traditional manufacturer or even a make to order manufacturer.
These Custom Machine Builders need something that is not only cost-effective and well-integrated but also built from the ground up for real-time insights and automation. Then, they will be able to avoid the errors and missed opportunities that often accompany old-fashioned methods of organizing, such as Microsoft Excel-based processes or general manufacturing ERP systems.
Total ETO: An ERP Designed for Custom Machine Builders
As many IT budgets reallocate resources to new services and look to trim ongoing maintenance costs, it is important for teams to have access to a modern ERP solution. An ERP that provides an excellent return on investment works well with other applications and replaces error-prone manual processes is necessary. Total ETO fulfills all of these key requirements.
Built by custom design manufacturers, Total ETO is very flexible and affordable for Engineer To Order manufacturers of all sizes. It offers an industry-specific platform that reduces manual liabilities and clerical errors. Moreover, it can be connected to any accounting system, such as QuickBooks or Sage, and CAD systems such as Inventor and SolidWorks.
IT budget growth may not move the needle much these days. however, with Total ETO, manufacturers can ensure they get the most out of their tools, reduce legacy liabilities, and remain competitive.
Learn more about Total ETO by requesting a demo today!
Written by RJ Ahuja
