Aberdeen Group’s Benchmarking Study Reports Small Manufacturers Need Same ERP Functionality as Global 2000 Organizations
Data reveals Made2Manage and Intuitive customers utilize more ERP functionality than most.
Indianapolis, IN, January 25, 2007 --(PR.com)-- Made2Manage Systems and Intuitive Manufacturing Systems, leading providers of enterprise resource planning (ERP) software and services for small and midsize discrete manufacturers, today announced key findings from a research paper entitled, “Benchmarking ERP in SMBs” (small and medium-sized businesses), written by Aberdeen Group's Cindy Jutras, vice president and service director for manufacturing research. The study aims to help small manufacturers (with revenues less than $50 million), that are either searching for or currently using ERP software, benchmark their progress against companies of a similar size.
According to Jutras, “The search for core ERP functionality not needed by [small] companies … produces a relatively short list. While small companies desire less complexity, they also require most of the same basic functions needed by larger companies.” Not surprisingly, Jutras’ research showed that functionality is by far the top selection criteria (64 percent) for small manufacturing companies searching for a new ERP solution. An even greater percentage of current Made2Manage and Intuitive users cited functionality as a key requirement during their ERP selection process (83 percent).
Despite the importance of comprehensive functionality, Jutras found that small manufacturers, upon implementation, are only using 62 percent of the core ERP functionality available to them. While Made2Manage and Intuitive respondents were using slightly more functionality at 65 percent, Jutras’ research found that the percentage of ERP functionality deployed within a company is directly correlated to total cost of ownership. Indeed, the study found a steady decline in the cost per percentage of functionality used as more and more functionality was deployed. According to Jutras, “Once a threshold is reached and dues are paid, payback multiplies as ERP penetrates more broadly and deeply into an organization.”
Although small and large companies alike can realize increased returns by more fully implementing their ERP systems, the study did find that small manufacturers were doing a better job than their larger counterparts at reaching initial system payback. All small-company respondents reported that they completed their implementation within two years, and 86 percent within one year. Only 47 percent of large manufacturers (companies with more than $1 billion in revenue) are achieving a system go-live within the first year.
Jutras’ research also points out that small manufacturers develop long and productive relationships with their ERP providers. Compared to 63 percent of Made2Manage and Intuitive users, 51 percent of respondents had been using their current ERP solution for more than five years. Made2Manage and Intuitive users again outpaced the average small manufacturer when 63 percent stated they planned to upgrade to the most current version of their existing system (compared to the study’s 47 percent average). The study also showed that small manufacturers tend to purchase additional functionality, such as supply chain planning and execution or customer relationship management modules, from their existing ERP vendor, versus another “best of breed” provider.
According to Jutras, most small manufacturers have a long way to go in order to achieve maximum value from their ERP implementations. Keys to success include taking the time to establish measurable performance indicators for an ERP implementation and, upon implementation, fully deploying the functionality in order to obtain the visibility necessary to measure business performance objectives over time.
As Jutras recommended, “Don’t fall into the trap of believing an ERP implementation is ever completely done. There will always be innovative technology advances to consider, and a healthy business is constantly evolving.”
Access a full copy of the ERP Benchmarking Study for Small Manufacturers, compliments of Made2Manage and Intuitive, at:
http://www.aberdeen.com/link/sponsor.asp?spid=30410275&cid=3818
About Made2Manage Systems and Intuitive Manufacturing Systems
Made2Manage Systems and Intuitive Manufacturing Systems compose the enterprise resource planning (ERP) division of M2M Holdings Inc. and serve more than 2,500 customers worldwide and across a variety of discrete manufacturing industries, including industrial and commercial machinery, fabricated metals, rubber and plastics, electronics, analytical and measuring equipment, furniture and fixtures, and durable goods. For further information, visit www.made2manage.com, e-mail info@made2manage.com, or call (800) 626-0220.
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According to Jutras, “The search for core ERP functionality not needed by [small] companies … produces a relatively short list. While small companies desire less complexity, they also require most of the same basic functions needed by larger companies.” Not surprisingly, Jutras’ research showed that functionality is by far the top selection criteria (64 percent) for small manufacturing companies searching for a new ERP solution. An even greater percentage of current Made2Manage and Intuitive users cited functionality as a key requirement during their ERP selection process (83 percent).
Despite the importance of comprehensive functionality, Jutras found that small manufacturers, upon implementation, are only using 62 percent of the core ERP functionality available to them. While Made2Manage and Intuitive respondents were using slightly more functionality at 65 percent, Jutras’ research found that the percentage of ERP functionality deployed within a company is directly correlated to total cost of ownership. Indeed, the study found a steady decline in the cost per percentage of functionality used as more and more functionality was deployed. According to Jutras, “Once a threshold is reached and dues are paid, payback multiplies as ERP penetrates more broadly and deeply into an organization.”
Although small and large companies alike can realize increased returns by more fully implementing their ERP systems, the study did find that small manufacturers were doing a better job than their larger counterparts at reaching initial system payback. All small-company respondents reported that they completed their implementation within two years, and 86 percent within one year. Only 47 percent of large manufacturers (companies with more than $1 billion in revenue) are achieving a system go-live within the first year.
Jutras’ research also points out that small manufacturers develop long and productive relationships with their ERP providers. Compared to 63 percent of Made2Manage and Intuitive users, 51 percent of respondents had been using their current ERP solution for more than five years. Made2Manage and Intuitive users again outpaced the average small manufacturer when 63 percent stated they planned to upgrade to the most current version of their existing system (compared to the study’s 47 percent average). The study also showed that small manufacturers tend to purchase additional functionality, such as supply chain planning and execution or customer relationship management modules, from their existing ERP vendor, versus another “best of breed” provider.
According to Jutras, most small manufacturers have a long way to go in order to achieve maximum value from their ERP implementations. Keys to success include taking the time to establish measurable performance indicators for an ERP implementation and, upon implementation, fully deploying the functionality in order to obtain the visibility necessary to measure business performance objectives over time.
As Jutras recommended, “Don’t fall into the trap of believing an ERP implementation is ever completely done. There will always be innovative technology advances to consider, and a healthy business is constantly evolving.”
Access a full copy of the ERP Benchmarking Study for Small Manufacturers, compliments of Made2Manage and Intuitive, at:
http://www.aberdeen.com/link/sponsor.asp?spid=30410275&cid=3818
About Made2Manage Systems and Intuitive Manufacturing Systems
Made2Manage Systems and Intuitive Manufacturing Systems compose the enterprise resource planning (ERP) division of M2M Holdings Inc. and serve more than 2,500 customers worldwide and across a variety of discrete manufacturing industries, including industrial and commercial machinery, fabricated metals, rubber and plastics, electronics, analytical and measuring equipment, furniture and fixtures, and durable goods. For further information, visit www.made2manage.com, e-mail info@made2manage.com, or call (800) 626-0220.
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M2M Holdings Inc.
Melissa Stahley
317-249-1270
www.made2manage.com
Melissa Stahley
317-249-1270
www.made2manage.com
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