David Karlin, managing director, mid-market division, Sage UK, says the findings from the Sage Business Heartbeat Survey-a new, continuing study into the ups and downs of business life-offer hope for the majority of manufacturers who are dissatisfied with their IT.
The clearest message from our research into the IT experiences of manufacturing companies is that nearly half of manufacturers feel they have wasted at least some of their investment in IT.
"Companies blame themselves as well as their vendors for veering down IT blind alleys."
But buyers can avoid this nightmare. All they need to do is take more care not just over what they buy but over who they buy it from. And the lesson for vendors is that they should be more approachable before buyers make their choices and more helpfulat more reasonable costafterwards.
When I ran a manufacturing company I found that IT vendors came in three flavours. With care, I could find myself among friendssuppliers who accepted that a manufacturers survival in todays competitive maelstrom might have more to do with its keeping costs, inventory and working capital low, quality high and deliveries on time than on being a technology showcase.
"More than two in five manufacturers say they bought the wrong products because they misunderstood their own IT needs."
That meant I could ignore the other two groups. One believes your businesss first competitive duty is to keep up with (their) technology at all costs. The other is convinced that your business can only survive if it uses the same technology (theirs) that your competitors are using.
Many businesses already realise this need for care. Companies blame themselves as well as their vendors for veering down IT blind alleys. More than two in five manufacturers say they bought the wrong products because they misunderstood their own IT needs. They realise that, if you have clear business goals, understand your business processes, know how youd like them to look and then deploy the right technology, you will succeed.
What is the right technology? Every business is different but there are rules for making the right choices. Rule one is to put good business practices in place then find the technology that models and supports them.
This is easily stated but less easy to achieve. Companies are all too aware of their problems, and they know that the problems may be caused by the processes, the IT, or a mismatch between the two. But, lacking the time or experience for deeper analysis, they blame the IT system.
"nearly half of manufacturing companies, a higher proportion than the national average, expect to invest more in marketing applications like CRM."
Tracking down root causes may reveal that the computer system is not at fault. But this can only apply to systems which model the real world, not an operations management textbook. IT buyers have to achieve a balance between getting the result they want from improved business processes, and the amount of effort, training and care needed to feed the computer system with accurate data about what it is to model. Accurate data, and not too much of it.
Rule two is not to be bamboozled by ancient arguments between integrated and best-of-breed systems. Some applicationssales order processing, accounting and factory control applications, for exampleneed to work together intimately and should be integrated. Othersoften applications that, given the right conditions, can offer a real edge over competitorsneed real-time access to the accurate, current information in the main ERP applications set but can operate at arms length from it. These applications, which lend themselves to the best-of-breed approach, include forecasting, sales force automation and customer relationship management (CRM). The survey shows that nearly half of manufacturing companies, a higher proportion than the national average, expect to invest more in marketing applications like CRM.
The next rule is not to fear packaged solutions. Thanks to active user groups, over a couple of generations, packages have developed to the point where they offer great-value solutions for a broad variety of companies. They are flexible enough to meet most needs without too much configuration or an open-ended commitment to consultancy. And if consultancy is necessary, it wont break the bank.
The technology-focussed, massive-system vendors are all too likely to sell a system, walk away and leave you to get on with it. This might work if you already know what you are doing, but few manufacturers have the resources to put themselves in that position. They usually need to call the vendors consultants inand then the meter starts running, big time.
Rule four is to look for external advice. It takes experience, for example, to discover those best practice processes and apply them sensibly. If theres no-one in your company whos done it before, then youd better either recruit someone or start asking vendors for reference sites.
As to vendor choice, its important to marry into a network of people who are good at going into businesses, understanding whats going on, and showing them how to do the right things. And if youve found the right vendor, at the end of such a series of meetings theyll tell you what software you need to help you do all these things.
So, rule five is to buy from someone who has the implementation infrastructure to do this at a cost that you can afford. The implementers have to be local, and they must have dealt with your size and type of business.
Follow these rules and youll find your IT makes you a winner, not a disaster-story case study.
David Karlin was appointed managing director, Sage Mid Market division in April 2004. Prior to this, David was chief technology officer for Sage UK with responsibility for the companys technical product strategy. He has a breadth of commercial experience in both the UK and overseas markets. Prior to joining Sage in 2001, Karlin was managing director of Soundcraft, part of NYSE-quoted Harman International Industries Inc., one of the world leaders in professional audio equipment. David has a first-class honours degree from Cambridge in Electrical Sciences and is fluent in three languages. He wrote his first software over twenty years ago for the Royal Signals and Radar Establishment, and also worked for Sinclair Research as chief design engineer.
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