ERP Software Paces Cloud Adoption
By Patrick Waurzyniak
Enterprise resource planning (ERP) software still leads the pack in the race to the cloud.
To stay competitive, manufacturers need to move quickly to the latest cloud-based SaaS (Software-as-a-Service) ERP technology to get the best advantage of moving to the new technology, said Patrick Fetterman, vice president of marketing, Plex Systems Inc. (Troy, MI), developer of the manufacturing-centric SaaS ERP system Plex Online.
“Now is the moment for SaaS ERP,” said Fetterman at Plex Systems’ ERP Roadshow event held yesterday for customers in Dearborn, MI. “ERP especially in manufacturing has become kind of a catch-all term—people slice it and dice it in different ways.”
ERP is now the fastest-growing application in moving to the cloud, he said, citing data from the market research firm Gartner Group (Stamford, CT), publisher of the Gartner Magic Quadrant research study. “Cloud-based applications are coming faster than you think,” Fetterman said. Today, customers are moving both to private cloud and public cloud-based systems, and while roughly 72% of companies to date have moved to some level of cloud adoption, that number is expected to grow to about 90% cloud adoption in just three years.
Companies deploying ERP today need to have a 20-year deployment plan, but the technology cycles are averaging only about 10 years, Fetterman said. It’s important for manufacturers to buy ERP at the right time, not in the middle of the cycle, he added. Some customers are still transitioning to cloud-based ERP off much older computing platforms, including the IBM AS/400 midrange computer systems, and even from dated platforms like vintage Digital Equipment Corp. (DEC) VAX computers. “I think Digital Equipment disappeared in about 1991,” Fetterman said. “Clearly, those products are at the end of life.
“We’re right at the brink of a new generation,” Fetterman said. “One of the central challenges manufacturers face today is that if they buy ERP software too late in the cycle, they end up losing all the advantages of the new technology.”
Plex Online, which launched in 2001, is a fully cloud-based SaaS ERP system that focuses on manufacturing operations. Founded in 1995, Plex Systems evolved from a manufacturing execution system (MES) production project started at an automotive supplier company that later became part of American Axle (Detroit). Cloud-based SaaS ERP can potentially save manufacturers millions in both up-front licensing costs and annual maintenance and consulting fees, versus traditional on-premises ERP installations, Fetterman said.
Plex customer Newman Technology Inc. (Mansfield, OH), a manufacturer of automotive and ATV parts for Honda and Subaru, outlined the case for moving to Plex Online’ s ERP system, with Mark Williams, Newman Technology’s director of IT, stating that installing the Plex system saved the company more money than the figures cited by Fetterman. A key benefit of moving to Plex Online, Williams said, was the ability to much more accurately predict inventory and also greatly improve the builder’s production scheduling.
“We either had too much inventory, or not enough,” said Williams. “Purchasing decisions were guesswork.” With Plex Online, the company transitioned off its legacy AS/400 computer systems and older Mapics ERP software. In less than two years, Newman improved its inventory prediction accuracy from 40% to 98%, Williams said, bolstering cash flow and freeing up about 100,000 sq.ft. of manufacturing space. The new system also has helped Newman’s production control immensely, by lowering downtime per month from about 300 hours to just 10 hours a month.