May 1996 € Volume 6 € Number 5
Enterprisewide Software --
Pro's and Con's
By Tom Wallace
One of the most insightful observers of the manufacturing software scene
is Doug Burns, a principal with the Operational Excellence Forum in Winston-Salem,
N.C. Doug, formerly employed by several major software vendors, has been
an independent consultant for many years. His recent activities include
an assignment with SAP in Germany, helping them to develop a functionally
sound set of manufacturing application software for its R3 product. Doug
and I talked recently about the advent of "enterprisewide software."
Tom Wallace: Doug, can you give us a brief, workable description
of enterprisewide software? Just what is it?
Doug Burns: These are software packages that integrate the data and
decision-making across all departments -- marketing, sales, manufacturing,
purchasing, distribution, finance, product development. They have a broader
scope than the earlier packages, which tended to focus primarily on the
manufacturing function.
So why are these products so popular?
Several reasons. One is a desire to integrate not only software but functions.
One complete set of software servicing all of the user groups within a total
enterprise is very appealing. Another is the fact that many companies are
coming off their mainframe hardware platforms and moving to UNIX/PC-based
client-server arrangements. Thus, they need to make a software change as
well as a hardware change. Last and certainly not least, business has become
much more global so there's a need for software that readily handles different
languages and currencies, which these kinds of packages do.
A good example of an excellent tool that's underutilized is available-to-promise-matching
incoming orders with product availability as expressed by the master production
schedule. One of the reasons it's been underutilized is that most companies
have their order entry system on one piece of software and the master schedule
on another. They can't talk to each other.
A solid enterprisewide system will handle that readily because the incoming
customer orders, the inventory balances and the master schedule are all
on the same set of software and hardware. I think we'll see much broader
use of available-to-promise in the future, and that will certainly help
companies do a better job of shipping to their customers on time and complete.
O.K., that's some of the good news. But I've been hearing some rumblings
about these enterprisewide packages: very high cost, long installation time,
high complexity, etc. Any truth to this, or is it just sour grapes?
I have to say there's some validity in these comments. Yes, they are expensive;
yes, they can take a long time to bring up; and yes, these packages attempt
to "cover the waterfront" of applications and hence do tend towards
complexity. Therefore, I feel that these products are not for everybody.
They make their biggest contribution in an organization that already has
high competence, that's doing many things well. Enterprisewide software
can then make it possible for that organization to do things that it just
couldn't do before.
Doug, what do you say to a company that has purchased one of these packages
and is at the front end of an implementation? What advice would you give
them?
Get back to the fundamentals. Manufacturing companies should stay focused
on the ABCs of implementation. The C item is the computer hardware and software.
It's essential, but less significant than the others. The B item is the
data -- the inventory records, the bills of material, the routings, etc.
The A item is the people, and successful implementations of systems in manufacturing
companies hinge almost totally on how well the company deals with this issue.
The last thing you want to happen is for the computer to become the A item;
that means the project is in big trouble.
Well, what should a company do regarding the A item, the people?
What are the three most important things in real estate?
I don't know what real estate has to do with software for manufacturing
companies, but I believe the answer is location, location, location.
Right. And in implementing these kinds of systems, the three most important
things are education, education, education. Notice I'm not saying training,
but rather education. Training is software focused; it teaches people how
to run the software. Education is business focused; it teaches people how
to run the business using this powerful set of tools -- call it manufacturing
resource planning or business resource planning or enterprise resource planning.
Successful reengineering of business processes comes about only with a focus
on running the business better.
Who are these people who need education?
Just about everybody. The folks in marketing, sales, manufacturing, purchasing,
distribution, product development, finance and all of the other departments.
Some of them may have very little direct involvement with the software system.
Such as?
Top management, for example. They don't need to know what keys to hit to
enter a customer order or to update an inventory record. That's training.
They need education to know the capabilities of this new set of tools, to
appreciate the overriding need for data integrity and what it takes to maintain
it, and to understand their role in the sales and operations planning process
and why it's essential that they be directly involved with it.
When I hear you talk about data, the old phrase "garbage in, garbage
out" comes to mind.
Certainly. The greatest software in the world won't help a company at all
if the data's lousy. In fact, it might make things worse. In an enterprisewide
system, the need for data integrity is, if anything, even greater than before,
because of the interdependencies.
The key is for the users, in all departments, to be educated to understand
the intent of these business processes -- the master schedule, the order
promising routines, the plant and supplier schedules. When they do that,
they'll take care of getting and keeping the data accurate. It all starts
with people; they, not the software, should be at the center of the implementation.
About three lifetimes ago, I had a brief tour of duty as a programming
supervisor. I put a sign on the wall in the programmers' office: DON'T MAKE
IT WORSE. I was only half kidding. I was saying that, in our enthusiasm
to install better systems, let's be careful not to take away from a user
group a superior tool and replace it with an inferior one.
Right. And this can be a problem when enterprisewide systems are installed
as a software project, rather than as a business initiative to help people
run the business better.
This can be devastating. One example is a company that replaced an excellent
plant scheduling system with the one that came with their enterprisewide
software package. It was totally inadequate. The results: on-time shipments
to the customers dropped sharply, plant efficiency decreased, and morale
suffered a lot. Why was this allowed to happen? Well, the project team wanted
to avoid "bolt-ons" -- that's when a piece of software from outside
the enterprisewide system is added.
Seems to me that bolt-ons aren't inherently bad, and in many cases would
be the best choice. After all, what are the chances that any one enterprisewide
package has the "best in breed" of all the software functionality
a company needs?
Right. Bolt-ons would be a problem if you have a lot of them. On the other
hand, having one or several applications -- forecasting and plant scheduling
are two good examples -- from outside the main "suite" of software
should not present any real difficulties.
Is enterprisewide software here to stay?
Absolutely! It's valid; it's the logical next step. Ten years from now,
we'll be wondering what all the excitement was about.
Tom Wallace is an independent consultant based in Cincinnati. He is the
author of Customer Driven Strategy: Winning Through Operational Excellence
(1992) and editor/author of The Instant Access Guide to World Class Manufacturing
(1994). Tom is co-director and a Distinguished Fellow of the Ohio State
University's Center for Excellence in Manufacturing Management.
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