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ERP Case Study: How ERP Software Can Affect Your Business

ERP software is an old dog that’s doing a pretty good job of learning new tricks. ERP systems were first introduced in the 1990s as an offshoot of MRP software. These systems have since become a widely used tool for businesses to assist in the automation of workflows and the centralization of data and functions. As a program that has been around for about 30 years, ERP is constantly working to adapt to changes in consumer habits. An ERP case study is an effective way to learn more about how modern advancements have impacted real businesses. In this research article, we will take a look at actual ERP implementation examples to see how recent innovation has boosted business.

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ERP Case Study

 

Some popular and emerging tools that we will discuss include automation, artificial intelligence and IoT capabilities. These three components often work together to assist in the streamlining of business functions. With all of these new technologies and systems being introduced to the ERP market, it begs the question of “How will these new tools actually affect ERP systems?” and “How could they affect my business?” We’ve been pondering the real-life answers to these questions too, which is why we decided to contact some industry experts and aggregate some ERP case studies to learn more.

Key Takeaways

  • Lack of technological knowledge and goal planning when implementing ERP can lose companies millions of dollars – a 2019 study found that 45% of ERP projects go over budget
  • About 85% of companies are predicted to either implement or develop a plan to implement IoT in 2019
  • Making sure that employees are on-board with a new ERP system and that you have a “project champion” is vital to success
  • AI technology is booming and could contribute more than $15 trillion to the global economy by 2030

Table of Contents

What Are Some of the New Technologies and Trends Being Used in ERP Software?

New technology is being introduced to ERP software rapidly. Some prominent examples of new functionality include integration with IoT, process automation and AI. Eric Kimberling, the CEO and Founder of Third Stage Consulting Group, had this to say about the state of the industry: “Automation saves time and money on manual processes and instead allows employees to focus on more strategic activities and exceptions in the business process. Technology such as AI and machine learning can provide better information so organizations can better forecast, plan and align their operations.”

The main benefit of ERP is data centralization because it allows data to be seamlessly accessed and integrated across departments. Shelly Gore, the CEO and co-founder of A Bigger View, said “Because ERP is a central repository of data, the more automation can feed our ERP systems, the more value of information we can harvest.  ERP vendors should consistently look for ways to integrate more data sources, preferable automated ones such as IOT data, so that ERP can become the source for intelligent artificial intelligence (AI) and machine learning opportunities.” Artificial intelligence is a tool where machines can perform tasks that a human would typically perform. This allows the software to perform calculations and develop insights based on prior information automatically. It may also be able to schedule shipments based on warehouse activity.

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IoT is another helpful new technology because it can use devices attached to machines to glean information such as which tools are currently in use and which products they are in the process of making.

Ultimately, the technological landscape of ERP is at an exciting stage, and its natural benefits are well-aligned to current innovations. Data centralization allows for many automation opportunities that can be connected to AI and IoT functionality.

What Are Some ERP Case Studies Where New Technology Benefited a Business?

Because ERP software is such a popular solution, there are thousands of businesses that could provide an example of a positive ERP implementation. According to data from a 2019 Panorama Consulting Solutions report, 88% of companies considered their ERP implementations a success, while 12% considered theirs a failure.

Rate of ERP Implementation Success

An ERP case study goes in depth on what exactly a company did to encourage implementation success while also measuring how particular aspects of the system affected ROI. Luckily, because ERP is so prevalent, there are dozens of case studies containing positive results available for consumption. And, even luckier for you, we’ve compiled some of that information here so that you don’t have to go digging through vendor pages to discover actual results.

PCI

Plastic Components, Inc. (PCI) is a manufacturing company known for its revolutionary automated production facilities. However, even with this incredible production automation, PCI still had issues with processes such as scheduling, inventory, and measuring manufacturing costs. The company was using Excel spreadsheets and even doing calculations by hand to keep these essential workflows up and running.

This method of business was a bottleneck in the manufacturing and distribution process, so PCI decided to implement an ERP. In this ERP case study, we see that PCI opted to go with IQMS. One of the driving factors of this selection was that IQMS was able to support the advanced automation technology that PCI was already using for its production system. When a sales order is submitted, the ERP can automatically calculate demand, measure how much raw material is needed and then schedule events on the manufacturing floor to coincide with these measurements.

Additionally, PCI benefitted from internet of things (IoT) technology. With IoT capabilities, PCI and other companies can connect to devices on the manufacturing floor to perform tasks such as the monitoring of production and the exchange of data.

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East Coast Olive Oil

Sometimes you need to reevaluate the software solutions that you have in place to see if they are still effectively meeting your business needs. That was the case with East Coast Olive Oil. The changing needs of a business as it shifts and grows is the focus of this ERP case study. For ECOO, one of the main goals of adopting a new ERP software was to gain some assistance in the streamlining of its distribution network. The company initially had short sales lead times and long purchasing lead times, so a primary consideration was the evening out of these processes.

ECOO looked at different vendors and decided that Sage Enterprise Management was the best choice for its specific needs. The result of the software implementation was the complete automation of the manufacturing process from raw materials to production orders. Automation is a useful tool that can boost productivity and increase revenue by completing automatic calculations based on accumulated data. It can also reduce the amount of time employees spend on certain tasks.

TiLite

TiLite is a Washington-based company that designs customized wheelchairs. Historically, this company produced many products but then moved to a single product model. With this significant change came the need to implement a new software system. TiLite opted to go with SYSPRO ERP software.

TiLite uses SYSPRO ERP to connect to its customized web configuration called EZ-Ti, which is a system that allows customers to easily enter their personalized wheelchair specifications. Through this integration, orders are automatically inputted to the bill of materials (BOM), sales orders are built and stock codes are attached. Since deploying SYSPRO in 1998, production has increased 12-fold.

This is a prime example of an ERP case study that shows how automation can actively improve business. Productivity is a critical component to account for when looking at solutions. It’s crucial to consider your company’s current projected growth and measure that against the predicted ROI associated with ERP deployment.

Ganong Brothers LTD

Ganong Brothers LTD is the oldest candy company in Canada, but it’s only through continuous innovation and keeping up with technology trends that a company like this can remain successful. That’s why Ganong Brothers decided to implement a new ERP system in 2002 to obtain real-time financial data, improve order processing and support a mixed-mode manufacturing workflow.

By implementing ERP software, Ganong Brothers obtained the ability to estimate demand several months in advance to help determine material requirements. The company is also able to readily access information about product and customer profitability. Estimation tools are often associated with AI tools, which are a new feature that is becoming more and more common in ERP solutions.

Why Was Implementation Successful in These Examples?

One thing that all of the successful ERP case studies have in common is clear implementation goals. Developing clear goals is one of the first steps that companies should take when considering ERP implementation. Without knowing what you wish to achieve by purchasing ERP software, it’s impossible to measure ROI and to determine the functionality that your company specifically needs.

A positive ERP case study also usually indicates an overall willingness to adapt to new forms of technology. Companies whose employees aren’t open-minded about changing their workflows or dealing with new tools in day-to-day processes will have more difficulty using their ERP than companies that are entirely onboard.

A whitepaper from Acumatica examined how a project “champion” is an essential component of an ERP project because this person will provide visibility and encouragement throughout the company. Francisco Callegari, CIO at Guardian Sealtech, said in the paper that IT should not be the owner of the project and that users should be heavily involved every step of the way.

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When Does New ERP Technology Not Benefit a Business?

Many factors can lead to an unsuccessful ERP integration. They can include a lack of support, failure to test before launch and ineffective use of technology. Let’s go over some examples of ERP case studies where companies tried to go with the latest and greatest ERP technology but unfortunately were met with a complete failure or inability to gain a return on investment.

Nike

Nike’s 2000 ERP implementation led to $100 million in lost sales and a decrease in its stock price by 20%. The issue with the system was that its demand planning module overpredicted the amount of Air Garnett sneakers needed and underestimated the amount of Air Jordans that customers would want. This is a prime example of a time when new technology in the form of an ERP forecasting tool failed.

To put this failure into more context, you need to know more about how Nike has historically measured inventory. Nike’s business model revolves around a tight control of the supply chain. Retailers commit to product orders far in advance, which doesn’t leave much wiggle room for a forecasting tool. This made the ERP system ineffective for its short- and medium-range planning.

Nike stopped using the new demand planning tool shortly after it realized the pitfalls of the system. It instead moved to integrate the demand planning functions into its other ERP system — SAP ERP. By using a different system that was more focused on actual demand than on forecasting, Nike was able to boost its revenue and eliminate the issues associated with the failed implementation.

United States Navy

The United States Navy has a long history of implementation failures. The Navy has spent more than $1 billion on failed ERP since 1998. This includes at least five different attempts.

So, what’s the problem? To be clear, ERP failures usually occur because of multiple factors — not just one issue. However, one significant issue with the ERP system that the Navy was attempting to implement was that it was quite complicated. The attempted solution needed the Navy to create 44 different interfaces to connect various systems. Additionally, historical data needed to be converted for proper use.

Integration is a great feature, but it can also get complicated. Depending on the integration method that the Navy was attempting, it would have been pretty easy for wires to get crossed and workflows to be impeded. This is an example of how a positive technological benefit such as integration can become cumbersome.

ERP Operational Disruption Stats

Hewlett-Packard

HP is no stranger to software implementations. However, the company hit a snag in 2004 when it tried to implement a new system that would connect operations not just in their corporate offices but also across the supply chain. One of the significant issues with the project was the level of disruption that HP had planned for. A 2018 report found that 66% of respondents experienced operational disruption during implementation, and among those companies, 46% had a disruption duration of 1-2 months. HP planned for three weeks of disruption but ended up experiencing six weeks.

The company also dealt with data integrity issues because the process of moving data from the front-end program to the implemented back-end system was ineffective and orders kept falling through the cracks. In this case, HP employees took responsibility for the failure and deemed it an “execution issue.” This is a prime example of the importance of understanding your current workflows and checking under the hood of your company processes before making a software transition.

HP’s then-CEO Carly Fiorina mentioned the failed implementation as a prime factor in a $400 million revenue shortfall. Integration is the responsibility of both the vendor and the client. In this ERP case study, you can see the importance of understanding current technological and workflow processes before implementing a new system.

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Why Was New Technology Unsuccessful in These ERP Case Studies?

One of the factors that all of the ERP case study failures have in common is that all of them had some level of complexity or incompatibility with the system that they were introducing. This is a prime example of how doing a deep dive of workflows and any snags in current processes is critical when considering ERP software. Here is what Eric Kimberling had to say about some of the pitfalls of new technology and ERP: “The potential pitfalls are that the technology is not as mature and as tested as other ERP functionality and organizations don’t know how to integrate automation into their operations.”

Having a strong IT team and dedicated support from the vendor or a consultant during the implementation process is incredibly beneficial. Because there are so many moving pieces involved in integration and in learning completely new technologies, you should take all the help you can get. A clear understanding of a new technological system is vital in ensuring success.

How Can I Improve My Chances of a Successful ERP Implementation?

An ERP failure can be classified either as a complete failure of the system or an inability to meet projected implementation goals. For example, if a company wants to increase on-time shipments by 20% through the introduction of ERP software and is unable to achieve this goal, its implementation would be deemed unsuccessful. The most critical component of successfully deploying new software is the development of an ERP strategy. Here are some of the steps you should take as you go about doing that.

Budget

Creating an accurate budget or budget estimate is key in making sure that the solution you go with is affordable for your business while still retaining all of the functionality that you need. According to a 2019 study, 45% of ERP projects go over budget, so developing a goal ahead of time and clearly communicating that to vendors can help reduce the likelihood of exceeding financial capacity.

Goals

Implementation goals are incredibly helpful when searching for ERP software. As you read about in the positive ERP case study example section, having a clear idea of the ROI that you wish to get out of your ERP can improve the likelihood of success. If you don’t know what you’re trying to get out of your ERP system, you won’t know what functionality to ask for, therefore increasing the probability of getting a solution that doesn’t perform how you need it to.

List of Business Processes

It’s essential that you know the ins and outs of the business processes that you are going to affect by implementing ERP. All of the workarounds and tricks of the trade need to be recorded and communicated to your selected vendor to ensure complete compatibility. David Dozer, the CTO of Blaze IT LLC, said “If your business processes aren’t well defined, understood at both high and detailed levels and reliant upon good master data, then features such as automation are a recipe for disaster. If you have poorly defined or poorly executed processes, then all implementing automation steps does is give you bad data even faster than before, and now it’s invalidated too.”

Employee Input

Employee input goes hand-in-hand with creating a list of business processes. It’s unlikely that you know all of the details associated with every workflow in your company, so it’s essential to speak with employees who will be affected by the change. It would be helpful to ask them about workarounds that they are currently using and any pain points associated with their day-to-day workflows.

IT Resource Allocation

Your IT team will likely be the point-of-contact for employees who have questions about your new ERP system. Therefore, it’s vital that you keep the team looped in on the implementation process and that they have resources available to assist staff in the migration to the new system. IT resources can be allocated months ahead of time, so it’s essential to work with these employees to develop an efficient implementation schedule.

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What Is the Future of the ERP Industry?

The ERP industry has a bright future ahead of it. There are multiple functions and aspects available on the market now that indicate where the ERP industry is headed and how its role in your business could grow and change. Eric Kimberling said, “The industry is pretty solid in basic workflow automation, but not nearly as mature in more emerging technology such as AI, IoT, machine learning, etc. The industry is heading toward these emerging trends — with plenty of R&D money being spent — but there is still a ways to go.” Here are some things to look out for:

Cloud-based Deployment

Legacy ERP systems were typically installed on-premise. However, with the proliferation of cloud-based software, many ERP systems have made a move to the cloud as well. Even some solutions that have been around since enterprise resource planning software became popular are jumping on board by giving users the option to choose between on-premise and cloud-based ERP.

Postmodern ERP Strategy

ERP strategy has changed in recent years with the introduction of postmodern ERP. With postmodern ERP, you essentially build your own ERP by piecing together different standalone software systems. For example, you would select the accounting software that you like best and integrate it with a best-of-breed distribution solution. With this strategy, ERP implementation can be done through ESBs, which make it easier to prevent wires from getting crossed among different systems. The benefit of this strategy is that you can completely customize your ERP solution by selecting the disparate systems that most closely meet your company needs.

Artificial Intelligence (AI)

Artificial intelligence is a quickly growing technological innovation. A study from PwC estimates that the global economy could receive $15.7 trillion from AI by the year 2030. This technology can perform processes that were previously done by humans. This is no cause for concern though — AI can free up human labor so that employees can work on other important tasks and therefore improve productivity.

Automation

Automation is a benefit of new technology solutions. When software becomes smarter, processes become more streamlined and fewer errors occur across the supply chain and other business processes. Shelly Gore said, “ERP automation not only reduces time spent on processes, but also automates data collection that becomes the basis of departmental integration, smart decision-making, AI and machine learning.”

Internet of Things

IoT is the smart, digital connectivity between objects. For example, if you have lights that you can turn off by asking your connected smart speaker to do so automatically, you have experienced IoT firsthand. In a manufacturing center, this might look like a smart machine that can tell you in real-time how many packages it has processed in a day. This technology coupled with real-time data could be an incredibly valuable asset to a company. Many organizations are starting to take notice. A 2018 Forrester study predicts that 85% of companies will implement or plan to implement IoT solutions in 2019.

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In Conclusion

ERP software is continuously changing, so there are new factors to consider all the time. However, the steps to success remain the same — develop clear goals, set a suitable budget and get help. Getting help is especially crucial when you’re looking for ERP with sparkling-new abilities such as IoT and AI.

Integration is also a significant factor to consider when trying to insert the latest and greatest technology into your system. A positive integration can boost ROI by leaps and bounds, especially in accordance with automation tools that increase productivity. As more and more companies request new ERP technology in their systems, the more competitive the marketplace will become and the more pressure there will be to implement these solutions. Overall, the effect that new technology has on business is a positive one if you take the steps to implement it correctly.

Contributing Thought Leaders

Eric KimberlingEric Kimberling

Eric Kimberling has dedicated himself to giving keynote speeches at industry conferences and universities worldwide, and has been quoted in thousands of articles in newspapers, magazines, and books, including the Wall Street Journal, CIO Magazine, and Fortune. He has served as the expert witness in the industry’s highest-profile legal cases, representing both government and private companies across the globe. He is also the author of the acclaimed book, “An Expert’s Guide to ERP Success.”

shelly goreShelly Gore

Shelly Gore is CEO and co-founder of A Bigger View. For over 25 years, she successfully designed and implemented complex IT and Cloud-Based ERP systems for corporations in North America and Europe. At Oracle’s OpenWorld and SuiteWorld conferences, Shelly presents on global supply chain, advanced manufacturing, continuous improvement, mobile apps for operational efficiency, warehousing and quality best practices. She is a Thought Leader for the National Science Foundation’s Center of Excellence in IT and serves on the Council of Business Advisors for the Santa Fe Business Incubator.

david dozerDavid Dozer

David Dozer is a business consulting and IT specialist with more than 15 years of experience in the enterprise software realm. He has dedicated his career to helping clients find and implement software solutions that meet real-world business needs. In his current role as CTO of Blaze IT LLC, he focuses on helping small companies with their digital operations. David is also a member of the SelectHub Thought Leader program.

Lindsey JenkinsERP Case Study: How ERP Software Can Affect Your Business

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