Pelion Systems Champions Manufacturing Process Optimization

Globalization and outsourcing are proliferating within the manufacturing industry, and most successful companies are implementing demand-driven business models as they seek ways to capture, shape, and respond to the demands of the dynamic global marketplace. This is because as demand visibility improves, manufacturers are called upon to respond to that demand more quickly and with more predictable results. Thus, increasingly, organizational visibility into the capacity and performance of production assets, whether wholly owned or outsourced, is needed to support decisions about where and how to meet production demands in a profitable and predictable fashion. In sum, manufacturing operations today are characterized by a significant need for factory transformation management.

Evolution of Tiered Manufacturing Operations

A top-down approach to manufacturing coordination and visibility is clearly in order. Consequently, manufacturers are looking beyond the realm of local execution capabilities to architectures and systems that support interdependent supply networks (ISN), synchronizing the execution of compliant manufacturing and logistics processes across a dynamic supply network (see Supply Chain Management is Evolving toward Interdependent Supply Networks).

In addition, the lines between familiar production applications have blurred. Modern production execution management applications combining traditional manufacturing execution systems (MES), quality, asset, and performance management functionality are beginning to emerge. These will offer manufacturers a more cost effective and integrated approach to contemporary manufacturing challenges, while providing an integrated view of site-level performance.
ISNs require the orchestration of manufacturing operations on a global scale. Progressive enterprises view manufacturing as a strategic node in their ISNs. Brand owners are embracing the growing role of contract manufacturing and logistics to supply product in increasingly volatile supply networks. This is fueling the rapid evolution of a market for applications that provide brand owners with visibility into the performance of distributed arrays of manufacturing assets. ISN involves leveraging current investments, as well as making long overdue investments in the dynamic closed-loop scheduling of distributed assets, such as plants and distribution centers.

Local Manufacturing Operations Require Manufacturing Performance Optimization

First and foremost, production operations must focus on local execution excellence. Manufacturing capabilities vary dramatically across industries, geographies, individual manufacturing sites, and even production lines within those sites. Mergers and acquisitions have compounded the problem of highly heterogeneous plant software, instrumentation, and control landscapes, resulting in poor replication of manufacturing best practices. Moreover, for the past five to ten years, upgrading plant systems has taken a back seat to preferential investments in enterprise transactional systems, including enterprise resource planning (ERP), supply chain management (SCM), customer relationship management (CRM), and supplier relationship management (SRM).

Global manufacturers are now finding that in-house and contract manufacturing requires local investments in plant automation and control to ensure agile, compliant, first-time responses, as well as the associated visibility into the status and performance of all manufacturing assets. Enterprises are changing how they source, manufacture, and distribute products. They are gaining a greater appreciation for speed, timeliness, reach, execution, and integration with manufacturing operations strategies, including demand management, supplier management, product, and transportation and logistics strategies.

What Are Manufacturing Execution Systems?

Plant execution software systems have many different scopes, forms, and formats, and they mean different things to different folks. Although plant execution software is used widely in a number of industries, it is rarely described similarly, and its functions are hardly ever identical.

An execution system used at an electronics discrete manufacturing facility is similar only in concept to one used at a food processing plant, and these differ substantially from that used by a pharmaceutical or chemical manufacturer. Time and experience have led the most successful vendors to pursue a “narrow-and-deep” strategy, and to devote their software development to the industries they know best. Even still, the names given to the various components of the execution systems vary greatly among industries and even among companies within an industry—if not between plants within a company.

To add further confusion, official definitions of a manufacturing execution system (MES) differ as well. APICS Dictionary (11th edition) defines it as

[p]rograms and systems that participate in shop floor control, including programmed logic controllers and process control computers for direct and supervisory control of manufacturing equipment; process information systems that gather historical performance information, then generate reports; graphical displays; and alarms that inform operations personnel what is going on in the plant currently and a very short history into the past. Quality control information is also gathered and a laboratory information management system [LIMS—applications used to manage the collection of samples, collection and formatting of test results, and the reporting of results by sample or product category, whereas these applications may be environmental-, medical- or research-focused] may be part of this configuration to tie process conditions to the quality data that are generated. Thereby, cause-and-effect relationships can be determined. The quality data at times affect the control parameters that are used to meet product specifications either dynamically or off line. [italics added]

Gartner’s IT Glossary defines MES as a

computerized system that formalizes production methods and procedures within the manufacturing environment, providing online tools to execute work orders. The term is generally used to encompass any manufacturing system not already classified in the enterprise resource planning (ERP) or open control system [OCS—a manufacturing system that is based on a set of commercially available, standards-based technologies, and that permits the open exchange of process data with plant systems and business systems throughout a manufacturing enterprise, whereas "control" refers to process control for discrete, batch, and continuous-process manufacturing, as well as computer numerical control and other motion controls] categories. In the broadest definition, MESs include computerized maintenance management systems (CMMSs), LIMSs, shop floor controls (SFC—a system of computers and controllers used to schedule, dispatch and track the progress of work orders through manufacturing based on defined routings), statistical process control [SPC] systems, quality control systems, and specialized applications such as batch reporting and control. [italics added]

What these lengthy definitions illustrate is that it can be difficult to easily identify or define the full range of applications used on the plant floor, let alone determine what falls exclusively under MES. Moreover, vendors never hesitate to add to the confusion by using creative labeling to suggest difference.

To put MES into perspective, it can be defined both broadly and specifically. Broadly speaking, MES can be regarded as a collection of business processes that provide event-by-event, real-time execution of planned production requirements. For example, it can calculate what and how much to produce, based on information from the enterprise planning level. From electronic production management systems to shop floor data capture, MES functions manage operations from point of order release to manufacturing, to point of product delivery to finished goods.

A narrow definition of MES is that it serves as a work order–driven, work-in-process (WIP) tracking system that manages and monitors production events and reporting activities. It captures “live” information about setups, run times, throughput, yields, etc., allowing managers to better measure constraints, identify bottlenecks, and get a better understanding of capacity. It closes the loop for production management and helps ensure production is followed as planned.

MES Today

Seen as a bridge from the plant floor to the rest of the enterprise, MES has become the principal means of delivering real-time order status to the supply chain, for available-to-promise (ATP) processing, and for “closing the loop” with sophisticated enterprise and supply chain planning systems.

PPM Software Vendors

With many PPM vendors focusing their attention on IT governance, here are some vendors to consider when searching for a solution to model an organization's governance framework (a future article will provide more in-depth coverage of these vendors).

Computer Associate's (formerly Niku) Clarity product incorporates strong resource planning and financial management functionality with top-down portfolio analysis capabilities. Sophisticated real time capture and control of financials make Niku a strong candidate for regulatory compliance (e.g., SOX). Also, its robust resource planning module provides extensive resource management capabilities to support sophisticated IT governance policies. As one of the originators of PPM, Niku is a serious contender for organizations looking for extensive functionality to support their IT governance framework.

ProSight's portfolio management software's real strength lies in PPM and compliance for the government sector. ProSight's focus on government agencies help IT departments comply with a number of government-specific compliance regulations, such as Section 508 of the US Rehabilitation Act, the Federal Information Security Management Act (FISMA), privacy compliance, the Clinger-Cohen Act (CCA), and the Government Performance and Results Act (GPRA), to name a few. A good number of their clients are US federal government agencies.

Pacific Edge offers a different approach to IT governance by providing its maturity-based Accelerators solution, which allows organizations to incorporate their governance framework in a staged manner. Pacific Edge offers three stages of accelerators with the initiation and visibility of IT governance, the maturity of the execution of a governance framework, and the investment focus of project portfolios. These IT governance stages are priced and packaged to grow with an organization.

Augeo Software offers a PPM solution that is strong in tracking a high number of short term projects that need to comply with an organization's IT governance framework. Augeo 5 is strong in supporting many projects in multiple locations by using project templates and accurately tracking financials and resource utilization. Known for its strong resource planning capabilities, Augeo has attracted large multinational organizations in pharmaceutical, automotive, media, government, high technology, and financial services, especially in Europe.

PlanView's IT governance solution, PRISMS, offers its own best practices process maturity model based on PlanView's functionality. PRISMS provides the ability to measure performance and actuals, analyze and document decisions, execute changes efficiently, and monitor service deliveries with key performance indicators. In addition, PRISMS offers continuous improvement processes, allowing an organization to adapt to new best practices for IT governance. Supporting many of the top companies in the financial and insurance industries has made PlanView a strong vendor to consider for IT governance in those sectors.

Mercury Interactive provides IT Governance Center, where dashboard technology integrates all major components of demands, portfolios, programs, projects, resources, financials, and application changes for real time visibility of project portfolios. Mercury's IT Governance Center tracks all demands made from IT and allows an organization to adapt to the major processes and project control frameworks, such as Six Sigma, CobiT, and ITIL. Known for its testing toolls, service level management (SLM), and focus on application management, Mercury is an important vendor to consider for IT governance frameworks covering SLM and application development (e.g., Six Sigma and CMMI), as well as regulatory compliance (e.g., Health Insurance Portability and Accountability Act [HIPAA] and SOX).

Defining IT Governance

The differences between success and failure in today's high technology environment, for many organizations, are based on the IT governance framework they adopt. IT governance recognizes that information technology is what drives today's businesses. Implementing a framework of best practices to support and to efficiently run an organization's IT infrastructure facilitates an IT department's efforts to effectively carry out its objectives, while closely monitoring any bottlenecks along the way.

There are numerous vendor neutral governance frameworks that have been widely adopted by large IT departments. The most widely recognized and adopted for IT governance are Control Objectives for Information and Related Technology (CobiT) and ITIL:

CobiT is a best practices framework developed by the IT Governance Institute (ITGI). CobiT's best practices focus on the control and measurability of IT. Tools are provided to assess and measure all aspects of IT within the thirty-four identified CobiT processes. Increasingly, CobiT standards are adopted as best practices in the governance of information, IT, and risk. For CobiT, the purpose of IT governance is to ensure that IT's performance meets the following objectives.

* For IT to be aligned with the enterprise and to realize the promised benefits
* For IT to enable the enterprise by exploiting opportunities and maximizing benefits
* For IT resources to be used responsibly
* For IT-related risks to be managed appropriately



ITIL is a set of best practices documents and standards originally developed by the UK Government of Commerce, and directed at IT service management. ITIL is organized into a series of best practices referring to service support, service delivery, planning to implement service management, information and communications technology (ICT) infrastructure

PPM's Role in IT Governance

By nature, internal IT departments are project-centric. Consequently, the tools implemented to manage projects and their operational realities play a central role in the governance of all IT activities. PPM vendors have seized the opportunity to address this growing area of IT governance. PPM tools provide IT organizations with the ability to implement governance strategies while ensuring that the processes in place are adhered to by all relevant parties. PPM tools contribute to IT governance by providing the following core components.

1. Portfolio planning and selection allows vendors to align their IT processes with strict controls on the planning of projects within the context of the portfolio. Risk, cost, and benefit analysis, as well as what�if scenario reports, contribute to the IT governance adage of maximizing return on investment (ROI).

2. Executing best practices provides flexible resource utilization, project planning, time tracking, collaboration, and business intelligence functionality in line with best practice methodologies outlined by an IT department's governance framework.

3. Assessment of performance and cost allows IT organizations to evaluate the true cost and benefit that a portfolio of projects contributes to the future incorporation of best practices and standard processes put in place. Portfolio analysis, project accounting, and real time system tracking of works, projects, and cost facilitate IT organizations' ability to measure compliance with internal policies, as well as external compliance regulation (such as SOX).

These components ensure that from inception to planning, execution, and post-assessment of projects, an IT organization's governance framework is in line with its business objectives from a cost and benefit perspective.

IT Governance: Maximizing the Business Investment

Information technology (IT) management and chief information officers (CIO) share a common goal to maximize the value of their IT investments. Achieving this requires a strong foothold on the multiple projects taking place at any given time. Identifying risk, resource utilization, and earned value with a portfolio of IT projects necessitates the implementation and adoption of standards processes to track and respond to any "red flags" that may appear. This is accomplished by establishing IT governance, where a structure of relationships and processes will direct and control an organization in order to achieve its goals to add value and to balance risk. Moreover, the standards and processes put in place can assist organizations with compliance issues surrounding the Sarbanes-Oxley Act (SOX) and other governance standards (Organizational Project Management Maturity Model [OPM3], Capability Maturity Model Integration [CMMI], Information Technology Infrastructure Library [ITIL], etc.).

In light of the increasing interest in IT governance, numerous project portfolio management (PPM) vendors have directed their focus on addressing the pain points expressed by internal IT departments. With the inherent functionalities of portfolio analysis, budget/cost controls, risk analysis, and audit trails found in PPM software, many PPM vendors have recognized the value they provide to the challenge of putting in place an IT governance framework.

PPM's Place within IT Governance

A number of today's PPM vendors originally were established in response to the lack of available tools addressing the needs of internal IT departments. With the onset of professional services automation (PSA), these tools eventually extended their functionality to address professional services organizations. As the PSA industry matured, major enterprise resource planning (ERP) players entered the billable services space. In turn, a number of best-of-breed vendors, weaker in the area of financials, repositioned their offering by focusing their efforts on functionality for internal IT departments in resource planning and portfolio management. Thus, a number of vendors have adopted the IT governance mantra to differentiate their best-of breed functionality from the integrated PPM solutions offered by the ERP industry.

Vendors such as Computer Associate's Niku, ProSight, Pacific Edge, Augeo Software, PlanView, and Mercury Interactive, among others, recognize the value of positioning themselves as niche vendors in IT governance. In response to the strong billing and project accounting functionality offered by ERP and accounting vendors, these best-of-breed PPM vendors have focused their marketing efforts on IT governance to strengthen their offering.

PPM Vendors for NPD

As PPM becomes increasingly important in NPD projects, numerous PPM vendors have extended their offerings in this area. Organizations looking for a PPM solution for their NPD projects should consider the PPM vendors below.

Niku's Clarity solution provides the tools that are necessary from the decision stage to the development and delivery stages of NPD. Niku provides reporting tools (bubble diagrams and histograms), as well as collaboration and decision support applications to support PPM for NPD and R&D projects. Key to Niku's offering is its People Powered Innovation concept, which provides companies with tools to facilitate collaboration and to gain increased visibility into people-related processes such as idea development, resource capacity planning, and project staffing.

Planisware's OPX2 NPD solution targets NPD projects based on Stage-Gate� best practices. OPX2 NPD offers a single system with four strategic tools for product development. These include project management, NPD process management, collaboration, and project information management tools. Planisware plans to include its Project Intelligence application, which improves predictability, collaboration, and visibility of NPD projects, as a part of OPX2 NPD in the future.

Pacific Edge's NPD solution seeks to align NPD projects with corporate strategies. At the core of its solution lies the Pacific Edge Mariner product. Pacific Edge Mariner provides users with a Web-enabled solution built on portfolio management functionality. For NPD projects, Pacific Edge adopts a stage-gate approach, providing tools to monitor lifecycle, resource, financial, and project data in an integrated decision support framework where trade-offs are examined, impacts are analyzed, and performance is tracked and optimized.

Artemis Software's NPD solution focuses on the manufacturing, high technology, life sciences, and consumer goods markets. Artemis for NPD delivers PPM, lifecycle management, financial management, idea management, project management, and resource management components. Artemis also incorporates stage-gate processes, and has recently introduced an idea management module to capture, manage, and route multiple ideas for NPD projects.

Augeo Software handles the production side of R&D projects with Augeo 5, its NPD solution for the pharmaceutical, automotive, and high technology sectors. For NPD, Augeo's PPM solution focuses on resource allocation and project lifecycle functionality. However, Augeo lacks functionality in the areas of idea generation and product launching.

Sopheon is a best-of-breed vendor that offers a PPM solution uniquely for the NPD market. Sopheon Accolade integrates the stage-gate process (as well as other phase-based processes) into its offering to allow tracking of NPD projects from both a day-to-day activity and a business strategy point of view. Sopheon delivers dashboard technology, customizable portals, centralization of project phase data, and alignment monitoring functionality.

Realization offers a PPM solution that is specifically designed for NPD in the IT, defense, and manufacturing sectors. Realization's product, Concerto Engine>, adopts the "critical chain" concept, factoring in the uncertain elements that are prevalent when managing multiple projects. Concerto Engine facilitates management by level loading resources based on the pipeline of projects and providing buffer management to calculate unscheduled time and resources when uncertainties arise during project execution. This is all achieved in a single relational database.

PPM Phases for NPD

Traditionally, organizations have focused on capturing and organizing documents, content, bill of materials (BOM), and specifications for new products. In contrast, PPM emphasizes the human resources (HR) component of NPD, which can drive the success or failure of projects. PPM software uses the following phases to address NPD projects.

1. Planning. Planning enables an organization to share and prioritize ideas, ensure projects are aligned with business and financial goals, and determine resource capacity. PPM solutions facilitate planning by offering Web-based bubble diagrams, "what-if" scenario reports, and collaboration or repository applications to help rank and share ideas.

2. Development. This phase allows managers to build resource teams based on templates; provides quick access to information and collaboration capabilities for team members; and allows access to forecasting, scheduling, and costs reports. PPM solutions contribute to development by providing resource planning tools, dashboard capabilities for visibility and collaboration, and real time executive reporting.

3. Delivery. The delivery phase helps organizations to successfully launch a product by improving collaboration between production and marketing, optimizing marketing by providing a single repository for consistent information, and managing product engagements and installations. In aid of this, PPM solutions provide collaboration tools, workflows, and dashboard technology to view and control all aspects of the product delivery process.

Supporting Stage-Gate with PPM

Though tools that gauge the aforementioned NPD and R&D project phases are important, implementing a best practices framework is also a critical factor in the success of a project. According to Robert G. Cooper's 2001 book, Winning at New Products: Accelerating the Process from Idea to Launch, Stage-Gate is one of the more popular NPD methodologies adopted by organizations seeking to closely monitor the progress of their projects.


(Source: http://www.prod-dev.com/stage-gate.shtml)

Stage-Gate is a best practices road map that divides NPD projects into distinct stages in order to formalize the careful evaluation of projects by management. As the above diagram shows, each stage is divided by decision gates where key decision makers can impose a go or kill command or determine the prioritization of the project at hand.

From the inception of an idea to the launching of a product, a gate acts as a decision point for key decision makers in an organization. Acting as a funnel to determine where resources are best allocated, the gate allows management to confirm if project deliverables are met based on predetermined qualitative and financial criteria. The output of the gate review will determine whether NPD or R&D projects will continue, be cancelled, be placed on hold, or be reprioritized (these outcomes are also known as go, kill, hold, and recycle, respectively). Furthermore, the gate review sets the plan for the next stage in the process.

During these various stages, tasks are executed by project managers and staff. Each stage costs more than the preceding stage, and project commitments are incremental. The following list catalogs the five stages of the Stage-Gate process.

* Stage one involves scoping. This is an assessment of the market adoption and technological merits of the projects.

* Stage two involves building the business case. Stage two is a critical decision point for moving forward with a project based on the product definition, justification, and plan.

* Stage three is development. Plans are translated into actual deliverables, where manufacturing or operations map out marketing, operating plans, and testing.

* Stage four involves testing and validation. This step requires total validation of the product, production process, customer acceptance, and financial viability.

* Stage five is the launch—the complete commercial launch and production of the product.

Stage-Gate imposes discipline on the rather chaotic processes typically found in NPD projects. Stage-Gate also clarifies requirements and manages business risk by breaking resource commitments into stages, thus greatly improving the success rate of NPD projects.

Project Portfolio Management for New Product Development: Tracking the Project Cycle from Idea to Launch

Besides being relevant to professional services organizations (PSO) and internal information technology (IT) departments, project portfolio management (PPM) software is applied in multiple vertical markets in the area of new product development (NPD). In industries ranging from manufacturing and high technology to consumer goods and biotechnology, PPM solutions help manage the corporate objectives associated with NPD projects.

PPM for NPD and research and development (R&D) projects addresses the needs of organizations seeking to maximize resource utilization for a portfolio of projects. PPM software empowers decision makers to select, evaluate, and prioritize their NPD and R&D projects. Furthermore, existing projects can be accelerated, terminated, or de-prioritized by the allocation or re-allocation of the resources that deliver project tasks. In the area of NPD, the primary objective of a PPM solution is to facilitate strategic and financial control throughout the project or product lifecycle.

The following article will examine the features and benefits of PPM in the NPD arena, as well as some of the vendors that provide specific functionality for this growing market segment.

Challenges in NPD

PPM is a key component of an organization's NPD strategy. The main challenge faced by managers and executives tracking NPD projects is the identification of bottlenecks within the NPD process that are relevant to their unique function within an organization. For instance, at any given time, project managers need to identify the short term availability of resources in relation to the requirements of a portfolio of projects. Vice presidents (VP) and "C" level executives, on the other hand, need to identify mid-term and long-term viability, return on investment (ROI), and strategic business decisions regarding their resource investments.

According to the Product Development Institute (http://www.prod-dev.com), organizations apply PPM methodology to address the following three critical issues in NPD and R&D projects.

1. Maximizing the value of portfolios by effectively managing and allocating resources to optimize profitability, maximize ROI, and reduce risk. This is achieved through the financial controls and scoring models offered by PPM solutions.

2. Achieving balance between business goals, risks, vertical markets, business strategies, and technologies. PPM solutions offer bubble diagrams, histograms, and other graphical reports to assist organizations in benchmarking their balance.

3. Aligning portfolio spending with the organization's business strategy. This can be achieved by implementing a PPM solution that provides strategic cross-referencing between projects, as well as a "gating" process, which enforces checkpoints to evaluate the viability of projects.

It is important to note that PPM solutions help provide the streamlined system that is necessary to address these critical issues by centralizing the information needed to track and evaluate NPD and R&D projects from idea to launch.

Geac Trying Its Luck in Partnering:Market Impact

After a slew of acquisitions in the past, which have resulted in varied outcomes, Geac seems to be trying another tack to expand its product offering and to convince the market about its commitment to further develop certain attractive product lines.

We maintain our position that Geac will not establish itself as an enterprise applications leader as long as it remains perceived as a company that acquires, botches up, and possibly divests other under performing software vendors and/or products. The company will have to become a true software-developing vendor, not simply a software collector and/or dealer within some esoteric market segments. It will need to add much more value to its products and services to attract and retain customers instead of simply increasing the investment in the existing, possibly outdated, core products and support services. For these reasons, we endorse Geac's recent partnering initiatives in case as well as its alliance with IBM from the beginning of this year, which features Geac's System 21 on IBM hardware, with IBM consulting services and e-Business solutions.

Its applications must be able to support future business requirements, which are nowadays directly related to customers' e-business strategies. While the company is currently not in a position to offer a comprehensive e-business and CRM solution on its own, it should, nevertheless, be able to at least provide a back-office hub and bridges to e-business components in the fashion similar to J.D. Edwards' EAI strategy. To that end, Geac must develop standard, common components that will be readily available within its product portfolio.

Geac acquired System 21 through its acquisition of JBA International. In spite of the fact that Geac, which is a large software company with a track record for profitability and growth, has significantly enhanced System 21 by embedding acquired CRM and SCE products for the apparel industry, Geac has been unable to be successful in marketing its System 21 business. The revenue from the product in the last year was embarrassingly low ($67 million) compared to the level attained in 1998, when JBA reported $487 million in sales. Therefore, its recent partnering initiatives are only an initial necessary step in creating its market recognition as a strong global business applications vendor to be reckoned with.

Geac Trying Its Luck in Partnering

According to a press release from August 21, Applix, Inc., a global e-business solutions company, and Geac Enterprise Solutions, a division of Geac Computer Corporation Limited, a Canadian supplier of enterprise management software, have partnered to deliver a global, Web-based iCRM solution to customers. Geac will distribute Applix's iCRM solution on a worldwide basis as both a component of its own solution offering and as a standalone application in select markets. As proof of its commitment, Geac will implement Applix's iEnterprise iCRM solution for its own internal use.

Geac will use Applix iEnterprise software to interface the customer-facing front office business processes to its back office applications. Subsequently, it will use Applix's iTM1 business intelligence solution to analyze customer data to help users improve business efficiency and provide customers with the information and services they need. By accessing enterprise-wide data, businesses will be able to accurately measure levels and patterns of customer demand in real time. Also, when the highly flexible iEnterprise is configured to Geac's solutions (SmartStream, System21, E Series, M Series, SQL Financials, TotalHR), the browser access will enable customer data to be viewed and analyzed remotely, regardless of where the transactions are made. The extensive information available relating to customer sales, previous orders, service levels and prior performance will give organizations the necessary data to fully understand the cost of transactions and streamline the entire process of customer interaction, such as matching the most suitable process with the right customer.

"In the New Economy, maintaining both new and established customer relationships is not an option - it is a necessity," explains Harry Debes, President, Geac Enterprise Solutions. "By partnering with Applix, Geac Enterprise Solutions can now show businesses how to use the data that our applications maintain to improve and streamline the way their e-business interacts with the customer. It is yet another example of Geac Enterprise Solutions' commitment to supply mid-market companies with unrivalled and specialized end-to-end solutions to help them prosper in the new digital age. This represents a significant step in Geac's strategy of enhancing its customers' existing investments to participate wholeheartedly in the New Economy."

Earlier, on August 7, FRx Software Corporation, a Denver-based company specializing in the development of advanced financial reporting and analytical application software, announced a strategic partnership with Geac Enterprise Solutions. As part of the agreement, Geac will make FRx available to its SmartStream customer base and will extend its pre-existing interface with FRx for SQL Financials customers. Geac will also include FRx with all new license agreements into its SmartStream, SQL Financials and E Series and M Series product suites. In addition to bundling FRx into future solution packages, Geac will market and sell the product to its existing customer base, which includes businesses in the hospitality, property, banking and publishing industries. This combination will allow Geac customers rapid access to critical financial information and reports needed to make more informed business decisions.

"We chose to partner with FRx Software based on its reputation, quality of product and commitment to its customers," said Peter Quinn, vice president of Product Marketing, Geac Enterprise Solutions. "Through this partnership we can offer our clients the ability to provide their customers with industry-leading financial reporting capabilities that maximize Geac's ERP solutions."

IFS Has A Magic Growth Formula:Market Impact

We have only praise for IFS' fast growth and international expansion. Its formula for success seems simple, although apparently not easily emulated by competitors:

* a flexible and technologically superior componentized product

* a comprehensive e-commerce strategy

* deep feature-rich vertical functionality

* a number of standard APIs or XML-based interfaces

* reputable customer service & support

* prudent acquisitions and/or partnering moves in the past

Particularly at the lower end of the market segment and in regions where IFS has a strong presence (e.g., Nordic Region), it represents a generally low-cost, but viable option.

While the North American business unit, with headquarters in Tucson, AZ achieved very impressive results - a 234% revenue increase over the same period of last year - IFS' track record of successful regional implementations is still being made. Currently it is at the level of a couple of hundred customers. These results are crucial for the following two reasons: 1) to build the company's mind share in the world's most prospective business applications market, and 2) to show that the heavy investments IFS has made in North America over the past several years have begun to pay dividends. Although a newcomer in the North American market, IFS shows promise with a component-based product that enables it to more feasibly integrate traditional ERP with e-business, CRM and other extended-ERP applications. The company will also likely pursue the opportunity of preying on the customer base of currently struggling or all but vanished vendors.

IFS announced the availability of its new release, IFS Applications 2001, in August 2000. This release included 500 major product enhancements and the addition of 10 new modules. IFS Applications 2001 includes web-based components, Internet storefronts, customer relationship management (CRM) applications, connectivity to other business applications, and collaboration with process control systems with a variety of e-commerce engines. IFS Applications offers over 50 functional business components for improving business processes in medium-to-large size companies. Some major enhancements were:

* Completely integrated CRM Solution with Sales & Marketing, Call Management, Sales Configurator and WEB Store.

* Portals implemented for the whole IFS Application product suite.

* Flow manufacturing with support for Kanban.

* Integrated Business Performance solution with Data Warehouse and Cube configurator capabilities.

Despite IFS' presence in 42 countries, the challenge of further international expansion and brand awareness remains. The perception of poor scalability and less-than-global presence within the higher-end of the market are the hurdles yet to be overcome. There is also room for improvement in its currently undeveloped indirect channel, which has been a major success factor for other companies in the mid-market. Moreover, one should closely watch IFS' future profitability track. The company has posted five losing quarters out of the last six (See Figure 1), and its shareholders' confidence may deteriorate until they see a more consistent profitable performance. The mitigating factor in this regard is IFS' solid current stockholders equity.

IFS Has A Magic Growth Formula; But What About Profitability

Bengt Nilsson, president and CEO of IFS, commented, "We are pleased with the significant increase in license sales in the third quarter. Results for the third quarter are always considerably affected by vacation periods throughout Europe. However, the market is recovering strongly, particularly in the US. The positive consulting margins in September are evidence of better utilization of our consultants. With our consulting organization intact, we are well equipped to meet growing demand for IFS products and services. While we still aim to report a positive net earnings result for 2000, the late recovery of the market will make it difficult to achieve this goal. Our continued investment in product development has enabled us to remain in the forefront in terms of technology. An increase in sales of over 106% in the third quarter speaks for itself. IFS Applications 2001, our new product release that includes a wide array of e-business components, has met with an enthusiastic reception."

IFS was particularly pleased to announce strong momentum in the North American market with the last quarter producing the best performance to date in number and value of contracts in the United States. From July through September, the company closed deals valued at more than $20 million in products and services with 20 customers, predominately in the mid-sized manufacturing market segment.

IFS North America President and Chief Executive Officer Terje Vangbo commented, "This strong performance is further evidence that our component-based solution is gaining ever increasing acceptance among enterprises that need to evolve their operations one step at a time into e-business. With the North American market rebounding from the industry-wide slowdown of 1999, IFS is seeing not only an increase in the number of deals, but in the size of the deals as well. I believe IFS will continue to emerge as a business solutions leader in North America, particularly with the recent release of IFS Applications 2001 software. With its proven component technology, we expect IFS Applications 2001 to set the pace in the U.S. for e-business/supply chain integration. It will be difficult to match our solution with its integration capabilities, unlimited scalability, and new off-the-shelf e-business components."

IFS' newest U.S. customers represent a diverse range of industries, including plastics, automotive, fiber optics, civil aviation, electronic components, steel, and wood products.

Defining ERP for Services

The main difference in functionality between best-of breed service applications and ERP for services is the back-office component. ERP for services applications provide complete functionality for both the transactional (or operational) components, and the project-oriented components of service organizations. However, best-of breed service applications typically refer only to industry-specific functionality. Some vendors may include a back-office piece, and others may only deliver vertical functionality that communicates with other ERP systems or financial packages. As a result, there are two categories of vendors for service organizations:

1. Best-of-breed service vendors: Vendor solutions such as Compuware's Changepoint and OpenAir PSA focus primarily on professional services organizations, and are typically marketed to the small to medium business (SMB) market. These offerings vary in breadth and depth, and the vendors tend to target a few key vertical markets. Depending on the vendor, their business models are diverse and can deliver software as a service (SaaS) and license models to their clients.

2.
ERP for services: These vendors are typically traditional ERP vendors that provide a fully integrated solution with complete back-office functionality. Since they provide their clients with complete operational and transactional functionality, their offerings tend to be broader in application. In addition to project-oriented functionality that vendors such as Epicor and Deltek deliver for professional services organizations, ERP for services vendors provide fully integrated, operational functionality for non-project organizations, such as Lawson in the health care sector, and Unit 4 Agresso for the public sector.

ERP for Services
Back Office	Service Industries
Human resources	Health care components
Procurement	Distribution components
Financials	Government components
Customer relationship management	Higher education components
Business intelligence	Financial services components
Knowledge management	Hospitality component
	Nonprofit components
	Professional services components

The Evolution of Enterprise Resource Planning Includes Service Industries

Since the late nineties, the enterprise resource planning (ERP) vendors that originally targeted the needs of manufacturing organizations have slowly extended their functionality to service the needs of non-manufacturing industries as well. By 2000, when many of the major ERP implementations for the manufacturing industry had tapered off, tier one ERP vendors such as SAP and Oracle had refocused efforts to market their integrated solutions in the greener pastures of service-oriented vertical markets, including health care, government, higher education, banking, insurance, and other service-based businesses.

Today, ERP vendors are aggressively marketing industry-specific and project-oriented functionality to service industries. Unlike best-of breed solutions, these systems provide a fully integrated, mature back-office system originally developed for manufacturing industries. Consequently, this raises the question: Is ERP for services a new category? Or is it "ERP less manufacturing?"

From a vendor's point of view, the answers to these questions vary according to which side of the ERP fence you stand on. On one hand, ERP vendors claim that ERP for services is a well-developed software category customized for the service industries they serve. On the other hand, best-of-breed vendors for service verticals (such as professional services, health care, government, and financial services) push their industry expertise and vertical solutions built from the ground up for those respective service industries. Consequently, organizations in service industries are faced with the challenge of determining which vendors best fit their functional requirements.

SCT and G-Log Form Alliance For Collaborative Logistics in the Process Industries

SCT (www.sct.com/manufacturing) and G-Log (www.g-log.com), both leaders in their respective fields have announced a partnership that brings together SCT's process industry manufacturing execution, planning, and optimization with G-Log's global logistics platform. The partnership is aimed at process manufacturers and distributors in the food, beverage, chemical, CPG, pharmaceutical, biotechnology, and related process industries worldwide. Both companies currently have impressive lists of customers in these industries using their solutions. G-Log's customers include Eastman Chemical, Dupont, and Kimball International. SCT's customers include Coca Cola, Kroger, Cargill, and Basic American Foods.

Typically, the process industries have robust logistics needs due to the nature of the materials transported. These materials tend to be bulky, heavy and often have special requirements like environmental demands, shelf life or regulatory issues. Many process companies are global in nature and ship using a variety of modes (truck, barge, ocean freight, etc.) further complicating their logistics management needs. This partnership addresses those needs by the expansion of SCT's iProcess.sct solution by improving distribution service and efficiency, while considering real-world transportation constraints.

The G-Log logistics platform supports the mission-critical process of managing all freight, all over the world, in a multi-client environment, by incorporating traditional domestic and international transportation components into a single system. It provides planning, optimization, visibility, control, and settlement of shipments and orders. SCT's iProcess.sct, is a process industry-specific solution that provides supply chain planning, Internet commerce, relationship network management, and supply chain execution/ERP capabilities. The SCT products provide collaborative supply chain distribution and network optimization capabilities. Together, these products will help process enterprises optimize manufacturing, distribution and transportation decisions based on accurate real-time information from their logistics networks.

Darcy MacClaren, senior vice president, business development, of G-Log states, "We believe the combined solution will enable companies to collaborate more effectively with their suppliers, improve customer service, and respond more quickly to market opportunities."

"With the addition of the G-Log solutions, SCT is able to bring a full suite of supply chain planning and execution solutions to the process industries, ranging from network planning and design and enterprise planning all the way down to plant scheduling and transportation execution" states Jim Brown, VP Solutions Strategy and Marketing.

An Analyst's View of Process Industry SMB Challenges

The process industry provides many of the products we use in our daily lives for food, shelter, and health. Such products are created as materials and transformed through the use of energy resources and chemical products. In addition, the process industry manufactures products that are essential to advanced industries such as computing, biotechnology, telecommunications, automotive, scientific, and space exploration.

These industries are facing major pressures not only to meet the present needs of our global economy, but also to do so without compromising future generations by ensuring that processes

* meet environmental guidelines
* optimize energy resources efficiently
* result in products that are safer, more reliable, and more functional
* provide features that meet both industry and consumers needs

This article focuses on how enterprise resource planning (ERP) vendors are helping the process industry meet both the needs of today and deliver on anticipated functional requirements that will help meet the needs of tomorrow.

Process Industry Manufacturing Challenges

Manufacturers in the process industry are at a difficult crossroads. Although the industry is not facing any imminent substantial decrease in its overall profit margins, there is concern in the industry according to a recent study by the Canadian Manufacturers and Exporters Association, which cites the following issues:

* increased global competition
* foreign currency fluctuation
* changing patterns of customer demand
* escalating business costs
* problems in implementing new technologies
* competitive business pressures
* shortage of skilled workers

To address these issues, process industry manufacturers and distributors must manage the following key activities, and ensure they use an enterprise system that supports these activities:

* Planning production for both materials and capacity—to develop a production plan, manufacturers must ensure that there are sufficient available resources and materials, production capacity, and labor.
* Inventory tracking and controlling work-in-process (WIP)—monitoring material consumption and tracking work order progress is the basis of manufacturers' being able to meet sales order, demand, and delivery dates.
* Replenishment and demand planning—the ability to review variances between forecasted and actual sales is the basis of managing vendor lead times and raw material replenishment.
* Managing the supply chain for order fulfillment—reviewing the global supply chain provides manufacturers with the ability to coordinate logistics and operational activity to meet customer order fulfillment expectations.

Specific Requirements of an ERP System for the Process Industry

Here's an overview of how some of the functionalities of an ERP system for process industries help manufacturers better perform the activities listed above.

1. Conversion process capability
In the process industry, the bill of materials (BOM) used in discrete manufacturing is replaced by the master product formula, or simply the formula. The formula requires a conversion table for measures, such as weights from grams to pounds, and must have the ability to record liquid units of measure, in both metric and US-standard. The formula must also record specific information related to product characteristics that can affect manufacturing processes. For example, in the blending process, the system can record product information such as percentage calculations of raw materials, and the effective specific gravity, potency, density, and number of reactives of those raw materials.

2. Interface to other modules
The master formula can also be linked to submodules like quality assurance (QA), procurement, inventory, and accounts payable (A/P) for government compliance and safety issues. Also, the manufacturer must be able to trace products in order to manage dating of inventory lot control and the amount of inventory available at the distribution level. Furthermore, there are government and regulatory concerns that deal with the nature of the materials, as there may be a controlled substance with specific shipping, handling, and storage regulations. Or, the manufacturing process may emit hazardous by-products. Or, there may be logistical concerns within the manufacturing process itself.

Key Benefits of a Mixed-mode ERP System

Following are some of the major benefits a mixed-mode ERP system can offer:

• elimination of duplicate data entry

• a Web portal or executive dashboard that displays accurate, real-time data on key costs and trends, in a concise, graphical format

• a common user interface and a single set of processing goals to reduce training costs and to smooth IT operations

• a phased implementation rather than a single implementation, which means that not all legacy systems require implementation, thus resulting in a smoother transition

• the ability to support both discrete and process manufacturing modes

Vendor Solutions for a Mixed-mode Environment

An organization's decision-makers must be educated about the software applications and their key features in order to make the right choice. Each of the five major ERP vendors mentioned below can address the needs of both large-scale and small to medium size businesses with its software packages. Listed are the types of packages these vendors offer, including key features and functionality.

1. Lawson Process Manufacturing
Based in Saint Paul, Minnesota (US), Lawson Software has 40 offices worldwide. The vendor's software system has received broad industry acceptance, and features standard product functionality, along with a few interesting features. Lawson Process Manufacturing

• supports mixed-mode, discrete, and process manufacturing environments

• supports service-oriented architecture (SOA)

• offers a fully integrated suite of modules that can be integrated either individually or separately

2. Infor ERP XA
Infor one of the world's largest providers of business software, is based in Atlanta, Georgia (US). The vendor has acquired and developed ERP systems to serve both discrete and process manufacturing. Infor ERP XA

• supports mixed-mode, discrete, and process manufacturing environments

• integrates with shop floor services and the supply chain to aid material supply, distribution, warehousing, and freight management

• supports SOA

• links to radio frequency identification (RFID) and transportation management systems (TMSs)

• supports lean manufacturing

3. SAP
SAP,headquartered in Walldorf (Germany), has applied a great deal of its research on process industries into its product offerings. SAP's software packages

• support mixed-mode manufacturing environments

• offer easier integration through merged companies

• receive maintenance and support directly from SAP

4. Epicor Vantage
An Irvine, California (US)-based firm established in 1984, Epicor serves the mid-market, with over 20,000 installations globally. An integrated, out-of-the-box solution, Epicor Vantage

• offers integrated workflow processes that work collaboratively across modules

• supports paperless transactions as well as SOA

• provides a built-in project management feature as part of its planning and scheduling module

• features vendor portals (from its eBusiness Suite), which enable vendors to manage issues

5. JD Edwards by oracal
JD Edwards Enterprise One (formerly PeopleSoft) is a suite of modular, pre-integrated, industry-specific business applications designed on a pure Internet architecture. It is suited for organizations that manufacture, construct, distribute, service, or manage products or physical assets. JD Edwards Enterprise One

• offers an integrated modular approach

• provides manufacturing management dashboards with real-time metrics on key performance indicators (KPIs)

• features rapid deployment

• supports global installation based on localized versions of software available

Getting It Right: ERP Solutions for Mixed-mode Manufacturers

Mixed-mode manufacturers operate in both discrete and process environments. In the past, these organizations have not been well served by traditional discrete or process enterprise resource planning (ERP) solutions. But a recent trend in the ERP market has been the offering of software solutions by major discrete ERP vendors to the mixed-mode manufacturing sector. However, in terms of criteria and the overall weight assigned to them in a request for proposal (RFP), these vendors must consider the industry sector the mixed-mode manufacturer's operations serve, the manufacturing processes, government regulations, and the quality standards of the particular industry.

Key Differences between Discrete and Process Manufacturing

Discrete manufacturing uses bills of materials (BOMs); process manufacturing uses formulations, also known as recipes. A discrete manufacturer assembles products along a production sequence routing, whereas a process manufacturer blends in a batch.

In discrete manufacturing, a multi-level BOM is used to produce a finished good, indicating the base unit of measure with all the lower level assemblies and subassemblies featured below. In process manufacturing, all sequential steps are held within the product formula, including all relative secondary products. Batch sizes are based on specific units of measure and vary according to the formula and product yields. Process manufacturing systems must be able to track the equipment and materials used, equipment settings, and labor.

Table 1 lists examples of discrete and process manufacturing sectors.

Discrete Industry	Process Industry
aerospace manufacturing	lubricant manufacturing
automotive manufacturing	water treatment manufacturing
furniture manufacturing	mining companies
machines precision parts	organic and inorganic chemicals
electronics	pigments
	coatings and paints
	inks and dyes
	adhesive manufacturers
	oil and gas fields
	pool chemicals
	cleaning products and solvents
	pharmaceutical
	food and beverage
	biotechnology

Table 1. Discrete and process manufacturing sectors.

The Trouble with Traditional Discrete and Process ERP Systems

Because mixed-mode manufacturers fall somewhere in between discrete and process manufacturing, ERP systems geared solely toward one type or the other often fail to support key mixed-mode manufacturing processes, resulting in decreased productivity and customer satisfaction, not to mention a lower return on investment (ROI) for the manufacturer.

For example, the challenge faced by a mixed-mode manufacturer when attempting to use an ERP package designed for the discrete manufacturer is the system's limitations in being able to account for the following process manufacturing requirements:

• yield estimation of products per job

• calculation of the available to promise (ATP) inventory allocation of finished goods

• increase or decrease in production yields based on ingredient levels or on lot or batch size limitations

• governmental and regulatory compliance related to lot control and traceability, as well as product quality—issues that the pharmaceutical and the food and beverage industries in particular must consider

• maintenance and tracking of quantities and costs of raw material process variances within the manufacturing process

Furthermore, a mixed-mode manufacturer may encounter the problems of longer implementation time and additional expense with an ERP system designed for discrete manufacturers, as modifications to the core functionality of the system may be required.

System Flexibility

Mixed-mode manufacturers need an ERP system that can handle formulations, batching, and other practices specific to process manufacturing in addition to the specific requirements of discrete manufacturing. What compounds mixed-mode manufacturers' malaise with ERP systems designed specifically for either discrete or process manufacturing is that these systems lock the mixed-mode manufacturer into a single line of business. They force companies to work around the software used for their other product lines by constructing spreadsheets or databases to compile data from various sources. When an organization's business model changes, the organization is usually forced to choose a whole new ERP system. For a mixed-mode manufacturer, the way around this scenario is to implement mixed-mode enterprise software instead. Mixed-mode software enables companies to switch manufacturing styles, and provides the flexibility needed to meet market demands.

Since implementing an ERP system is a time-consuming and costly undertaking, collaborative effort and research by all departments involved is required before a system is selected. A review of the current business processes and a documented view of the processes each department seeks to improve are essential to making the right choice. This review must be aligned with management's long-term objectives for the organization.

One way to shorten this cycle within the scoping phase is to obtain vital, up-to-date market and software solution information. Organizations can purchase relevant information on software systems from reputable software evaluation companies to save time and gain firsthand knowledge on the ERP market, as well as the proper tools to evaluate the product offerings that match their criteria. The goal of this exercise is to avoid making a costly investment in a system that is not flexible and that was not written with the mixed-mode manufacturer in mind.

Five Steps to Business Intelligence Project Success

Successful business intelligence (BI) projects encompass more than implementation of a solution on time and within budget. True success should be measured by how the BI solution improves the organization's overall performance through increased efficiency in reporting, planning, financial functions, and performance measurements. This will help ensure organizations' BI projects fall into the estimated 30 percent success rate.

Much has been written about measuring return on investment (ROI) for BI, and the general conclusion is that gaining tangible insight into the initial benefits is not easy. Identifying long-term benefits becomes more practical as planning and analysis, compliancy, and forward-looking approaches become more mainstream within organizations. To gain insight into how to implement a BI solution successfully, organizations should benchmark the success of other organizations—including their implementations and use of BI—against their own current initiatives. It is equally important that organizations learn from other organizations' failures—and avoid repeating them.

This article identifies and explores five steps organizations should take to avoid the common pitfalls encountered by many businesses when implementing a BI solution. These steps also provide an overview of items that need to be considered before implementing BI within an organization or business unit.

Step 1. Identifying the Business Problem

Identifying the BI business problem is the first step to ensuring a successful project. Once an organization knows what is broken, not only can it start to find ways to fix the problem, but it can also identify the proper resources, create user buy-in, and prioritize how to tackle the project. To produce an ROI, a BI solution needs to address specific business problems. Otherwise, implementing an ad hoc query tool, an online analytical process (OLAP) cube, or a dashboard will not result in lasting benefits.

Unfortunately, it is common for BI solutions to be pushed onto a business unit in order to meet an IT objective rather than an organizational need. Sometimes organizations get caught up with general initiatives and lose sight of the actual benefits BI provides in terms of performance management, collaboration, workflow, process improvement, etc.

To attain buy-in, the user community should be a part of the problem identification process. An implementation decision that comes from management still requires input from users as to what their requirements are, and this information can make the difference between the implementation of a tool that works as a value proposition and an implementation that may be seen as useless.

Step 2. Determining Expectations of Use

Once BI is implemented within an organization, its usage usually grows beyond initial expectations. For example, an organization may assume that its BI solution will be used by 10 to 20 users, when in reality over 400 users query data on a monthly basis. Because the initial design of the platform will have been based on a low number of potential users, the system may not be able to sustain such a high number of queries, and will most likely "crash" (fail), causing users to lose faith in the new system and potentially revert to their pre-BI environment for stability. In addition to lacking confidence in the new system, the organization may see the challenge of getting an unstable system up and running as not worth the effort, delays, and time required.

With unrealistic expectations, frustration may cause the organization to rethink its use of BI. Generally, once BI adoption occurs within one part of the organization and other departments or business units see its benefits, adoption begins to spread throughout the entire organization. For a BI solution to meet these increasing needs, organizations should anticipate the use of BI before implementation of a solution.

Another consideration is the type of BI tool use. For example, if a sales manager needs to increase sales and therefore wants to analyze trends, product distribution, and sales performance, creating a set of static reports will not be helpful. A data visualization tool to manage these items and to develop a plan based on trend analysis will more likely produce the appropriate results.
The BI solution's ability to collect the right information for reporting and analysis is essential if it is to deliver value to organizations. Although identifying the data required is time-consuming, it is the backbone of BI. Additionally, determining how data will be delivered, what the appropriate data cleansing activities should be, and whether the data is to be delivered in batch or in real time, should all be defined in advance. If data is not cleansed or delivered when needed, then the front-end BI tools will not provide the proper value to the organization. BI solutions impart value through the analysis of data, so it is essential that data arrives when required, in the proper format, and at the right time.

In addition to extract, transform, and load (ETL) tools, data quality and data cleansing need to be inherent aspects of the delivery of BI within the organization. In reality, short of an organization-wide master data management (MDM) initiative, the responsibility of providing accurate data will fall on the shoulders of the business units implementing BI.

Some organizations are misguided and think that their BI solution will provide the tools to fix their data problems. BI solutions can provide ongoing data quality processes, but these are not innate to software offerings. Some vendors' BI tools include enhanced data quality and integration features, and other vendors assume this responsibility should fall to the organization. Organizations should implement data management structures to minimize frustrations that result from data issues.

Step 4. Rolling Out Training Initiatives

Deciding when to roll out training contributes to project success. Training initiatives should begin right before or during the implementation phase. However, in many organizations, training is rolled out months before actual implementation, creating hype among the employees about the new system and what they will be able to do with it. By the time implementation actually occurs—sometimes months later—the initial excitement and buy-in has subsided, and more importantly, users have forgotten their newfound skills. To build momentum again, training needs to be repeated—wasting time and money.

Buy-in related to change is never easily achieved within organizations. Users become attached to their current processes, whether or not those processes are productive. Buy-in does not occur immediately upon showing users the inherent value of BI because it means the entire way they do business will change. Creating a training program—and delivering that training in a timely fashion—helps users apply their newfound skills immediately, thus helping to increase user buy-in.

Step 5. Choosing a Vertical- or Horizontal-based Solution

Organizations should identify whether more value will be provided by a vertical solution that is built specifically for the organization's industry or department, or by a horizontal solution that can grow with the organization. For example, does the organization need a generic reporting, querying, and analysis tool that will extend across the organization, or does the organization need to develop a process and compliancy that will adhere to the US Sarbanes-Oxley Act (SOX) or Health Insurance Portability and Accountability Act (HIPAA) standards? The answer to this question will help the organization define which type of solution will best meet its needs.

In addition, anticipated use of BI in the future may help determine whether a horizontal or a vertical solution will best meet the organization's needs. Organizations that must adhere to compliance standards should take advantage of vertical-based solutions, because vendors have developed solutions that meet specific compliance requirements. Horizontal solutions need a large degree of customization to bring them up to par, leading to extra time and money spent on developing the solutions.

Organizations in key vertical industries should strongly consider vertical-based solutions that will meet their needs, out of the box. Vertical-based solutions are likely to meet the general requirements of a specific industry or department, but since horizontal BI solutions do not base themselves on specified data models, they may be more versatile to the changing demands of the organization. Therefore, if an organization anticipates rapid BI growth across the organization, having the ability to develop solutions based on individual needs may be more beneficial. This relates to identifying the business problem and anticipating the future needs of the organization.

Conclusion

All too often, BI projects fail to meet an organization's expectations. But with research, planning, and a solid methodology, failure can be avoided. To help ensure BI project success, organizations should work through these five essential steps: identifying the business problems, determining how a BI solution will be used, knowing how and when data is delivered, rolling out user training initiatives at appropriate times, and developing a framework for selecting the type of solution that will best fit their organizations' needs.

The Blurry Line between ERP and PLM

The purpose of integrating ERP and PLM is to ensure that product definition information (which is mainly generated by the product design and development department) is accessible instantly by the following processes (e.g., production and services). Also, data from non-design phases can be a valuable input for the decision-making process during the design and development stages. ERP and PLM vendors and implementers have developed technologies to integrate the two systems and to integrate CAD design information with enterprise software applications as well.

In the past, the boundary between the ERP camp and the PLM camp was quite clear. However, after seeing the market potential of PLM solutions, almost all major ERP players have entered into the PLM market. This doesn't necessarily mean that PLM solutions provided by ERP vendors integrate with ERP systems better than those provided by pure PLM vendors (sometimes it may take very long for an acquired PLM solution to be well integrated with its new owner's ERP system), but it should be somewhat easier to coordinate the efforts of integrating two systems together.

Both ERP and PLM vendors are trying to extend their respective solutions' capabilities to the other side. This effort makes the line between ERP and PLM blurrier—ERP solutions are now more capable of managing product data and PLM vendors are adding more transactional functionality in their offerings.

On one side, ERP solutions are increasing their inward capability of managing product data. This phenomenon can be found more significantly in ERP solutions specifically for the ETO industry. To explain how ETO ERP is advancing in providing PLM functionality, I selected two common sub-modules: product data management and product/item configurator. Both submodules are available in ETO ERP and Discrete ERP (which has more generic coverage on manufacturing industries) categories within the Technology Evaluation Centers' (TEC's) knowledge bases (KBs). The comparison of average rating scores (based on TEC's software selection methodology) of the two types of ERP on the selected submodules clearly shows that ETO ERP provides better PLM capability than Discrete ERP (see figure 1). These average scores are quite representative since they are based on 111 Discrete ERP and 35 ETO ERP solutions recorded in TEC's knowledge base. Although PLM-like functionality within an ETO ERP solution can't match what PLM can do, this extension may reflect that ETO manufacturers are eager to enhance the connectivity between product data and operation data.

Figure 1. Rating scores of two submodules within ETO ERP and Discrete ERP

On the other side, PLM vendors are now working on expanding to the ERP-like functionality. A good example is the increasing availability of sourcing solutions from non-ERP PLM vendors. No matter how a PLM vendor positions its products (i.e., sourcing as a part of the PLM package or as a parallel offering alongside PLM), it makes perfect sense to increase the proximity between product definition information and sourcing. For ETO manufacturers, delivering high-quality products on time requires efficient sourcing, decision-making, and operations which rely on instant access to accurate product definition information and streamlined collaboration around it.

The Blurry Line between ERP and PLM in Engineer-to-order (ETO) Manufacturing

The Need for ERP–PLM Integration in ETO Manufacturing

It is important for all manufacturers that have implemented ERP and PLM systems to build connections between the two software applications. For engineer-to-order (ETO) manufacturers (who design and manufacture products to the specific needs of the customer), the connection between ERP and PLM is even more important due to the specificity of the ETO sector.

Facilitating Engineering Changes

For ETO manufacturers, the probability of product and process changes is high. During the time between receiving customer requirements and delivering final products, changes happen (whether the customer modifies their requirements; design modifications are requested by the shop floor; or issues on the supplier's side result in using alternative parts). Quite often, a change initiated in one system (either ERP or PLM) will have a consequence in the other. For ETO manufacturers, the capability of efficiently capturing change requests and implementing change actions throughout the entire value chain (customer, manufacturer, and supplier) in a synchronized manner is one of the key success factors.

Reducing Rework and Scrap

Every manufacturer wants to reduce rework and scrap but ETO manufacturers dislike these costly activities more than the average manufacturer. In the ETO sector, the quantity of each product is usually small—unlike mass production manufacturing. This manufacturing process allows for a certain percentage of rework and scrap and costs are allocated to finished products without significant increase on unit price. For ETO companies to avoid catastrophic wastes in manufacturing processes, they have to make sure that the design department knows what can be made on the shop floor and that the production side always works on the up-to-date design specifications that reflect correct customer requirements.

Meeting Delivery Time
One of the major responsibilities that product/project managers at ETO manufacturers have is to ensure that the product can be delivered on time. Although one delivery delay may result in only one unhappy customer, for some ETO manufacturers, this customer may mean their entire business. The need to oversee both the development and production processes for every product poses a challenge for managers in the ETO sector. . The collaboration between product development and production is even more challenging since the two processes are mainly handled by two different information systems—PLM and ERP, respectively. Unless the two systems can talk to each other consistently, the collaboration won't be effective and efficient.

Providing High-quality After-sales Services

For many ETO manufacturers, after-sales services are not only obligations attached to the product but also an important revenue source. High-quality after-sales services rely on accurate product definition information (usually maintained in PLM systems), traceable service activities (which more likely reside in transactional systems such as ERP), and a convenient reference between the two sides. The entire perception of after-sales services is based on the experience dealing with the product provider as a single entity regardless if customers have access to ETO manufacturers' systems or have to interact using traditional communication means. That being said, ERP and PLM systems have to work as if they are a single system. For more discussion on the integration between PLM and ERP-like systems for service purposes, please read the blog post What Keeps EAM/CMMS Away From PLM?
Alongside other business objectives, the four factors mentioned above make the connectivity between ERP and PLM a necessity for ETO companies. Ideally, it would be great if there was a single system handling everything that an ETO manufacturer needs. However, during the early days of development, the product development application camp (e.g., computer aided design [CAD] and product data management [PDM] vendors) and the transactional enterprise system camp (e.g., ERP and supply chain management [SCM] vendors) were developing solutions in significant ignorance of each other. Also, ERP and PLM systems were not implemented at the same time for many organizations (often ERP was implemented earlier that PLM) and integration between the two systems seemed to be the only realistic option.

Tip Two: Extend Systems to Suppliers

Once the basic problem of aligning manufacturing schedules with demand is taken care of, the greatest bottleneck to improved supply chain efficiency is often the disconnect between internal scheduling processes and those of external suppliers. Companies that are vendors to major original equipment manufacturers (OEMs) know that large manufacturers are working to eliminate this bottleneck, and are often working with suppliers on a proactive basis to help them become more responsive.

Technology can play a vital role in eliminating this constraint. In the case of our paint and coatings manufacturer, one of their main bottlenecks was packaging. They outsourced printing on the cans their product was shipped in, which meant that the supplier cannot finalize their own can production schedule until they know the exact product numbers that will be filled. Their packaging actually took longer to produce than the manufacture of the product itself. Even though the cost of the packaging is low in comparison to the actual product to be filled, the scheduling of the packaging supply is one of the most critical and difficult parts of production planning.

The solution was to set up a supplier portal, so that the packaging vendor and other suppliers could look into the production plan and prepare their own schedule accordingly. This eliminated a lot of the manual and administrative work involved with interfacing with a supply chain partner in real time, removing all manual intervention and administrative delays. Portals of this nature can also provide a longer view of anticipated production so that vendors can manage their own inventories and plan their own capacity according to anticipated demand.

Figure 1. A supplier portal eliminates administrative waste and integrates the supply chain in real time.

Tip Three: Run Parallel MRP Processes

To clarify, this tip does not have as much to do with running parallel systems for manufacturing resources planning (MRP) as much as it is about delaying the commitment to manufacture to a point where demand is visible, known or certain.

Even as companies try to focus on the disciplines normally associated with the idea of a lean supply chain, this another fundamental paradigm shift that must take place within their organization, and it is often overlooked.

For instance, many companies operate with one single MRP process. Consider that company that manufactures in a make-to-stock (MTS) mode, whose executives feel that this single MTS enterprise system is adequate for their needs. This attitude is fine—if a manufacturer has a stable, predictable demand for all of its products. But in reality, few manufacturers have the luxury of flat demand. More often the rule of Pareto is applicable. This rule suggests that 20 percent of products have a stable demand, and you can manufacture them efficiently in large quantities. But the other 80 percent of a manufacturers' part numbers are ordered less frequently, and therefore need to be treated differently in the company's processes, systems, and scheduling. This is why virtually any MTS manufacturer should run in multiple manufacturing modes. Most MTS manufacturers would gain from a parallel make-to-order (MTO) system. This will avoid the stockpiling of a large number of items that are more effectively handled in MTO mode, freeing up both capital and production capacity for other products, all without sacrificing responsiveness or customer service. By continually analyzing demand patterns and inventory turns, the point of postponement can be changed over time to achieve the optimal balance between efficiency and responsiveness.

A modern, agile enterprise application will include all of the necessary tools to handle these multiple modes. Apart from ensuring that they have the proper enabling technology, manufacturers will need to carefully analyze the demand patterns for their finished goods and divide them into MTS and MTO.

Figure 2. Demand Planning—Minimize the forecast error and improve customer service without sacrificing inventory turns.