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  • 1. Benchmarking ERP in SMB December 2006
  • 2. Benchmarking ERP in Small Manufacturers Executive Summary From July through September 2006 Aberdeen surveyed a total of 454 small companies (those with revenues under $50 million) and found 14% have yet to invest in an ERP (Enterprise Resource Planning) solution. Small manufacturers and the ERP vendors that serve them have explored the concept of “ERP Light” for many years. However, the search for core ERP functionality not needed by small companies produces a relatively short list. While small companies desire less complexity, they also require most of the same basic functions needed by larger companies. By definition small companies will have limited resources to devote to the implementa- tion and maintenance of ERP. Fortunately, the price performance of ERP and the under- lying infrastructure that supports it, including hardware, databases and technology infra- structure, has improved steadily and significantly over the past two decades. In addition, new delivery models such as Software as a Service (SaaS) provide lower risk alternatives to major capital expenditures associated with acquiring and maintaining hardware. Solu- tions that were once beyond the reach of small companies are now well within their grasp. Key Business Value Findings In spite of the relative “newness” of ERP implementations compared to other segments of the market, a surprising 9% indicated an ERP replacement strategy. While consolidation strategies drive the majority of this activity in other market segments smaller companies are much more likely to be driven to this course of action by the need for more function- ality than is available in their current solution or by integration issues. While small com- panies are far less likely to be running multiple ERP packages as a result of mergers and acquisition or multiple business units making autonomous software selection decisions, running a single enterprise application is a luxury few companies enjoy today. Although a good 43% of companies intend to stay exactly where they are today, there is significant upgrade activity planned as well. A full 72% of small companies are currently running 1 or more releases behind. This is actually a planned strategy for many of these companies. The most often cited reason amongst small companies is uncertainty over the quality of the new release (56%). This statistic is far more prevalent in these smaller companies in spite of the fact that although some are running ERP packages developed and sold by small “aspiring” ERP solution vendors, a lot of these companies are running many of the same ERP packages as their larger cousins. Aberdeen would contend this uncertainty over quality of releases correlates directly with the challenges of training in small companies. Implications & Analysis Small companies achieve first “go live” milestones quickly but benefits gained are decid- edly “average.” Aberdeen compared time to implement across small, medium and large companies. As might be expected, this time span grew with company size. A full 86% of small companies participating achieved this first “go live” milestone within the first year, as compared to 64% of mid-size companies and 47% of large companies. On the other All print and electronic rights are the property of Aberdeen Group © 2006. Aberdeen Group • i
  • 3. Benchmarking ERP in Small Manufacturers end of the spectrum, none of the small company participants spent more than 2 years, but the same could not be said of mid-size (6%) and large (18%) enterprises. While time to implement or dollars spent are both contributing factors, Aberdeen views the value that ERP brings to the business as the most important element of success. Met- rics reported give some indication ERP is generally doing the job it was meant to do in small companies, performance improvements were decidedly average and fell far short of Best in Class. While on average all companies use 27.6% of available ERP functionality, small compa- nies use less - 25.7% and the average small company pays more per user in Total Cost of Ownership (TCO) based on software and services and cost per functionality used Recommendations for Action Aberdeen strongly recommends that small companies aggressively push beyond the lim- its of current implementations for added benefits and lower TCO. Where ERP has yet to be implemented, price performance of hardware and alternate delivery models such as SaaS are removing barriers of entry and making ERP well within the grasp of any com- pany intent on establishing and maintaining a market presence or seeking a competitive edge. • Set goals for your ERP implementation. Many fall short of Best in Class status because performance metrics are not established. • Balance aligning business processes to software capabilities against aligning software capabilities to business processes to maximize benefit and allow your business to evolve • Seek to automate previously manual-intensive and spreadsheet based processes. Expand your implementation to include all fundamental basics of your business. • Don’t fall into the trap of believing an ERP implementation is ever completely done All print and electronic rights are the property of Aberdeen Group © 2006. ii • Aberdeen Group
  • 4. Benchmarking ERP in Small Manufacturers Table of Contents Executive Summary .............................................................................................. i Key Business Value Findings.......................................................................... i Implications & Analysis ................................................................................... i Recommendations for Action..........................................................................ii Chapter One: Issue at Hand.................................................................................3 ERP Maturity ................................................................................................. 3 External Business Drivers.............................................................................. 4 Chapter Two: Key Business Value Findings .........................................................6 Upgrade Versus Replacement Versus Status Quo ........................................ 6 Challenges and Responses........................................................................... 9 Chapter Three: Implications & Analysis............................................................. 11 Performance Results ................................................................................... 12 Software Selection Criteria .......................................................................... 15 Ease of Use and Functionality............................................................... 16 Total Cost of Ownership........................................................................ 18 Costs Scale with Company Size.................................................................. 18 The Cost of Achieving Business Benefits .................................................... 20 Software as a Service – A New Twist to an Old Delivery Model................... 21 Chapter Four: Recommendations for Action ...................................................... 23 Laggard Steps to Success (including those companies yet to invest in ERP)..23 Industry Average Steps to Success ............................................................. 24 Best in Class Next Steps ............................................................................. 24 Appendix A: Research Methodology .................................................................. 26 Appendix B: Related Aberdeen Research & Tools ............................................. 29 All print and electronic rights are the property of Aberdeen Group © 2006. Aberdeen Group
  • 5. Benchmarking ERP in Small Manufacturers Figures Figure 1: ERP Maturity in Small Companies .........................................................................3 Figure 2: Business Drivers Impacting ERP Strategies ...........................................................5 Figure 3: Actions Planned for the Next 12 months ................................................................6 Figure 4: Motivation for replacement.....................................................................................7 Figure 5: Planned Activity at Small Manufacturers ...............................................................7 Figure 6: Reasons to delay upgrading ....................................................................................8 Figure 7: Challenges faced in implementing and maintaining ERP.......................................9 Figure 8: Responses to Challenges.......................................................................................10 Figure 9: How do small companies measure success? .........................................................13 Figure 10: Timeline to first “go-live” milestone ..................................................................14 Figure 11: Small Manufacturers: Better than average but not Best in Class........................14 Figure 12: Software Selection Criteria of SMB Companies ................................................15 Tables Table 1: ERP Competitive Framework.................................................................................11 Table 2: Adoption rates of ERP modules..............................................................................16 Table 3: Average Software and Services $’s by Company Size ...........................................18 Table 4: Costs Per Utilization by Company Size .................................................................19 Table 5: Cost of Performance Improvement by Vendor .......................................................20 Table 6: SaaS Enterprise Application Value Summary ........................................................21 Table 7: Expected and Actual ROI (Return on Investment).................................................23 Table 8: PACE Framework ...................................................................................................27 Table 9: Relationship between PACE and Competitive Framework....................................28 Table 10: Competitive Framework .......................................................................................28 All print and electronic rights are the property of Aberdeen Group © 2006. Aberdeen Group
  • 6. Benchmarking ERP in Small Manufacturers Chapter One: Issue at Hand Key Takeaways • Small manufacturers need most of the functionality required by larger companies but have less to spend • Improved price performance and alternate delivery models provide small companies ex- panded opportunity to gain business benefit from ERP • 34% of small companies either have no ERP or seriously outdated implementations M any small manufacturers are gaining significant business benefits through the implementation of ERP (Enterprise Resource Planning) and a small number are even achieving Best in Class status. Yet most have a long way to go to achieve maximum value from their ERP implementations. While there is sig- nificant activity planned, too many seem content with less than optimal results. Small manufacturers and the ERP vendors that serve them have explored the concept of “ERP Light” for many years. However, the search for core ERP functionality not needed by companies under $50 million in revenue produces a relatively short list. While small companies desire less complexity, they also require most of the same basic functions needed by larger companies. ERP Maturity Aberdeen defines small companies as those with annual revenues ranging under $50 mil- lion. Therefore, by definition these companies will have limited resources to devote to the implementation and maintenance of ERP. Fortunately, the price performance of ERP and the underlying infrastructure that supports it, including hardware, databases and technology infrastructure, has improved steadily and significantly over the past two dec- ades. Figure 1: ERP Maturity in Small Companies What system did it replace? We do not have ERP (or MRP) Home implemented, 14% < 2 years, 14% grown/custom Another ERP developed > 15 years, 10% 33% application > 2 years but < 5 34% years, 21% > 10 years but < 15 years, 10% Manual > 5 years but < 10 processes years, 31% 33% Source: AberdeenGroup, August 2006 All print and electronic rights are the property of Aberdeen Group © 2006. Aberdeen Group • 3
  • 7. Benchmarking ERP in Small Manufacturers In addition, new delivery models such as Software as a Ser- Competitive Framework vice (SaaS) provide lower risk alternatives to major capital Key expenditures associated with acquiring and maintaining hardware. Solutions that were once beyond the reach of The Aberdeen Competitive small companies are now well within their grasp. Framework defines enter- prises as falling into one of However, in this market segment we still found a significant the three following levels of percentage (14%) of companies which have not yet imple- practices and performance: mented ERP or MRP. Over a third (35%) of small compa- nies has implemented their ERP systems within the past 5 Laggards (30%) —practices years. On the other end of the spectrum, we only found 20% that are significantly behind with implementations over 10 years old as compared with the average of the industry 35% of mid-market companies and 56% of large manufac- Industry norm (50%) — turers. Many of the 31% with implementations that are 5-10 practices that represent the years old selected and implemented these systems prior to average or norm the year 2000, at a time when the menu of options from ERP Best in class (20%) — solution providers was far more limited than it is today, practices that are the best however aging implementations are not as prevalent as in currently being employed larger companies. This is partially because many of these and significantly superior to companies simply haven’t been around that long. The small the industry norm start-up today has a significant advantage over start-ups from 10 years ago. ERP systems are far more feature-rich and technology enabled and price performance of both hardware and software has risen dramatically. In addition, Software as a Service (SaaS) is also gaining traction and providing small companies new options in how they license, pay for and implement ERP. From March through July of 2006 Aberdeen surveyed 631 companies to evaluate the current state of SaaS across multiple enterprise applications. ERP was not the first domain to establish a foothold in on-demand or hosted applications. Enterprise applications such as Supply Chain Management and CRM (Customer Relationship Management) jumped on the bandwagon first, but more recently integrated ERP solutions are being offered with this delivery model and providing more options to small companies in particular. A full third of these small companies are still using their first ERP, indicated by the fact that the implementation replaced manual processes. In fact another third replaced home- grown or custom developed applications, which could also indicate this is their very first real ERP, confirming that many companies view ERP implementations like brain sur- gery. You don’t do it unless the patient is dying. While companies 10 – 20 years ago were typically making a 5-8 year decision, even small companies today are thinking longer term. Very small companies may simply be looking to automate their bookkeep- ing functions. This type of decision might have a short life expectancy, but once a com- pany embarks on an ERP decision, few venture into an implementation with the expecta- tion of doing it all over again in the foreseeable future. External Business Drivers By and far operational factors such as the standardization and acceleration of manufactur- ing processes, reduction of costs and streamlining of processes have the greatest impact on the formulation of ERP strategies (Figure 2). In addition 43% of small company par- ticipants view the need to improve customer service as a key driver as well. All print and electronic rights are the property of Aberdeen Group © 2006. 4 • AberdeenGroup
  • 8. Benchmarking ERP in Small Manufacturers Figure 2: Business Drivers Impacting ERP Strategies Standardization and acceleration of mfg processes 66% Pressure to reduce operating costs 53% Streamline order fulfillment processes 53% Requirements to improve customer service 43% Linking of global operations 26% Organic revenue growth 12% Easier connection with external partners 13% 0% 10% 20% 30% 40% 50% 60% 70% Source: AberdeenGroup, August 2006 Small companies today are not immune from PACE Key — For more detailed descrip- the impact of globalization and a growing tion see Appendix A number (26%) are looking towards ERP as Aberdeen applies a methodology to benchmark the vehicle to link global operations, al- research that evaluates the business pressures, though only 13% see the pressure to interop- actions, capabilities, and enablers (PACE) that erate with external partners as a top pressure indicate corporate behavior in specific business processes. These terms are defined as follows: driving ERP decisions. Small companies feel less pressure to connect with external part- Pressures — external forces that impact an ners than their larger counterparts partially organization’s market position, competitiveness, because their size may actually disqualify or business operations them as a viable partner. However, ignoring Actions — the strategic approaches that an this potential business driver today can prove organization takes in response to industry pres- to be a factor that limits growth. sures Surprisingly, organic growth is viewed by Capabilities — the business process competen- cies required to execute corporate strategy fewer companies as a driving factor impact- ing ERP decisions – surprising because one Enablers — the key functionality of technology would assume small companies aspire to be solutions required to support the organization’s mid-size or large companies and we have enabling business practices seen the reluctance to replace ERP systems once implemented. Therefore small companies that do not intend to stay small would be well-advised to factor in growth plans when formulating ERP strategies. All print and electronic rights are the property of Aberdeen Group © 2006. Aberdeen Group • 5
  • 9. Benchmarking ERP in Small Manufacturers Chapter Two: Key Business Value Findings • Desire for added functionality, combined with integration issues, drive replacement Key Takeaways strategies • Many small companies “think small” in determining upgrade strategies • Small companies are more likely to align business processes to software rather than cus- tomize software to existing business processes, yet this remains a delicate balancing act. G iven the need to streamline and accelerate manufacturing processes today, com- panies are faced with many decisions. Do they upgrade to the latest release of their current software, replace it or none of the above? What strategies must they consider for consolidation of ERPs or rationalization of disparate business applications? Upgrade Versus Replacement Versus Status Quo As we look at more specific planned actions, there are really only three general directions any company can take –upgrade, replace or stay where they are. Figure 3: Actions Planned for the Next 12 months Replace ERP at selected Continue installations running current 9% version of selected ERP installations Upgrade to the 43% latest release of selected ERP installations 47% Source: AberdeenGroup, August 2006 In spite of the relative “newness” of ERP implementations compared to other segments of the market, a surprising 9% indicated a replacement strategy of ERP at selected locations (see Figure 3). This is far more replacement activity than we have seen in recent years. In small companies this is far more likely to represent a full scale replacement strategy across the entire enterprise. A full 88% of small companies have a single ERP package implemented (not shown). So while consolidation strategies drive the majority of this activity in other market segments smaller companies are much more likely to be driven to this course of action by the need for more functionality than is available in their current solution (Figure 4). All print and electronic rights are the property of Aberdeen Group © 2006. 6 • AberdeenGroup
  • 10. Benchmarking ERP in Small Manufacturers Figure 4: Motivation for replacement More functionality required than available 52% in vendor’s latest release 52% Integration issues Outdated technology 39% 38% Our business is evolving 30% ERP Consolidation 22% Extensive customization prevents upgrading 22% Unhappy with support from ERP vendor 22% ERP vendor not keeping pace More functionality required than available 13% in vendor’s latest release 0% 10% 20% 30% 40% 50% 60% Source: AberdeenGroup, August 2006 In many cases this is due to the fact their business is evolving, often due to growth. How- ever, in other instances, small companies have chosen a solution which might go by the name of “ERP” but is actually a set of financial modules which has expanded into inven- tory control and other functional areas, but does not have the full set of functionality re- quired to gain visibility and control over their manufacturing operations. It may lack MRP (Material Requirements Planning), engineering change control of bills of materials or work order/shop floor control modules. Integration issues are equally likely to motivate replacement strategies. While small companies are far less likely to be running multiple ERP packages as a result of mergers and acquisition or multiple business units making autonomous software selection deci- sions, running a single enterprise application is a luxury few companies enjoy today. A small companies evaluating ERP today, whether it represents its first implementation or a replacement, generally look for a single vendor solution. However, any ERP likely to be replaced is equally likely to have shared the stage with other applications deployed to fill functionality gaps in legacy MRP or ERP systems. Outdated technology only serves to make the integration of disparate business applications more difficult and can present a barrier to allowing businesses to evolve. All these factors work together to provide incen- tives for replacement. Figure 5: Planned Activity at Small Manufacturers Replace ERP at selected Continue running installations, 9% current version of selected ERP installations, 43% Upgrade to the latest release of selected ERP installations, 47% All print and electronic rights are the property of Aberdeen Group © 2006. Aberdeen Group • 7
  • 11. Benchmarking ERP in Small Manufacturers Source: AberdeenGroup, August 2006 Although a good 43% of companies intend to stay exactly where they are today, there is significant upgrade activity planned as well. A full 72% of small companies are currently running 1 or more releases behind. This is actually a planned strategy for many of these companies. The most often cited reason amongst small companies is uncertainty over the quality of the new release (56%). This statistic is far more prevalent in these smaller companies in spite of the fact that al- though some are running ERP packages developed and sold by small “aspiring” ERP solution vendors, a lot of these companies are running many of the same ERP packages as their larger cousins. Aberdeen would contend this uncertainty over quality of releases correlates directly with the challenges of training in small companies. Although there have been many software upgrades released prematurely over the years, and just one bad experience can have lingering effects for many years, the problem does not necessarily lie with the quality of code. With change comes uncertainty and with uncertainty comes human error that can at times be mistaken for software error. Figure 6: Reasons to delay upgrading Uncertainty over the quality of new releases 56% Current release satisfies our needs 51% Upgrade process is too long and hard 48% we eventually ”catch up” Not enough new features to warrant efforts 48% Customizations make upgrading cost prohibitive 32% Not on maintenance 13% Not interested in new features offered 8% 0% 10% 20% 30% 40% 50% 60% Source: AberdeenGroup, August 2006 The second most often cited reason for not upgrading to the latest release was the conten- tion that the current release satisfied the company’s current business needs. This may indeed be true of small and simple businesses, but Aberdeen would caution these compa- nies to not get too comfortable in their current state lest they miss opportunities for growth and improvement. As globalization reaches further down market and customers become more demanding, no company can afford to be content with status quo for too long. Aberdeen has observed that companies of all sizes often view the upgrade process as too long and hard, prompting them to skip releases with the intent of eventually catching up. This is often combined with the feeling that there are not enough new features in the re- lease to warrant efforts to upgrade, another reason cited for skipping versions. All print and electronic rights are the property of Aberdeen Group © 2006. 8 • AberdeenGroup
  • 12. Benchmarking ERP in Small Manufacturers Challenges and Responses Small companies often face decisions around aligning their business processes and soft- ware capabilities. Top on the list of challenges is dealing with customizations, followed very closely by the challenge of redesigning business processes (Figure 7). These two are very closely related as companies face hard decisions. Should they adapt the business to the software and pay the price in managing change and risking sub-optimal operations? Or should they change the software to fit the business and pay the price in customization? These decisions have a subsequent direct impact on the on-going cost of upgrades and updates. All these factors together influence flexibility in adapting to changing business processes. Newer enabling technologies such as Service Oriented Architectures (SOA) can facilitate more flexibility, yet Aberdeen has observed that these technology factors are often overlooked in software selection. These technologies will be discussed further in Chapter Three. Training was also seen as a barrier to success (39%), much more so than in larger com- panies. While all companies today tend to run lean, smaller companies rely on fewer people to do a broader spectrum of functions and in many cases there is not sufficient attention paid to training during initial implementation phases. Figure 7: Challenges faced in implementing and maintaining ERP Customization related challenges 40% Redesigning business processes 39% Training 39% Cost of upgrades/updates 33% Little flexibility in adapting to business processes 28% High maintenance costs 28% High integration costs 23% Lengthy or incomplete integrations 18% 0% 5% 10% 15% 20% 25% 30% 35% 40% 45% Source: AberdeenGroup, August 2006 So how do small manufacturers respond? “We keep customization to a bare mini- Our findings show these companies are mum. We have added a little subsystem more likely to align business processes to for calculating commissions and done the software capabilities (Figure 8). How- some reporting, but otherwise we’ve ever, our results also prove that these are hardly changed anything.” seldom mutually exclusive choices, re- sulting in a delicate balancing act, al- - Don Miller, IT Manager, parent com- though the goal of eliminating customiza- pany of Jamak Fabrication tions tips the scale in favor of business All print and electronic rights are the property of Aberdeen Group © 2006. Aberdeen Group • 9
  • 13. Benchmarking ERP in Small Manufacturers process adaptation. In spite of the fact that small manufacturers tend to have “newer” ERP implementations than larger companies, a third are responding to challenges by de- ploying newer, more modern applications. We see this activity both in terms of replace- ment strategies, where in fact ERP is older and based on outdated technology and also in terms of extending ERP. Aberdeen has found extensions to ERP such as CRM (Customer Relationship Management), SCP and SCE (Supply Chain Planning and Execution) and others to be much more likely to be built on newer more open technologies which pro- mote interoperability and reduce integration issues. Figure 8: Responses to Challenges 60% Aligning business processes to software capabilities Aligning software capabilities to business processes 49% Eliminating customizations 39% Deploying newer more modern applications 33% Use external consultants 35% Move to standards based integration methodologies 17% Wrapping existing applications with web services 13% Replace legacy apps with SOA enabled apps 12% 0% 10% 20% 30% 40% 50% 60% 70% Source: AberdeenGroup, August 2006 Small companies were more prone to using external consultants in order to provide train- ing or compensate for the lack thereof. This fell within the top three responses of 35% on respondents in this segment, as compared to 25% of mid-market and 15% of large com- panies (not shown). However, in spite of the obvious pain felt by customization and integration, less than one fifth of the small companies participating in our study responded to these challenges with technology innovations such as standards based integration methodologies, wrapping existing applications with web services or replacing legacy applications with SOA (Ser- vice Oriented Architecture) enabled applications. All print and electronic rights are the property of Aberdeen Group © 2006. 10 • AberdeenGroup
  • 14. Benchmarking ERP in Small Manufacturers Chapter Three: Implications & Analysis • Small companies achieve first “go live” milestones quickly but benefits gained are de- Key Takeaways cidedly “average” • While on average all companies use 27.6% of available ERP functionality, small com- panies use 25.7% • The average small company pays more per user in Total Cost of Ownership (TCO) based on software and services and cost per functionality used • The key to benefits and lower TCO is to take fuller advantage of functionality offered A s shown in Table 1, survey respondents fell into one of three categories – Lag- gard, Industry Average, or Best in Class — based on their characteristics in four key categories: (1) process (what business value has been gained from the im- plementation of ERP); (2) organization (corporate focus/philosophy, level of collabora- tion among stakeholders); (3) knowledge (visibility across manufacturing and the order- to-fulfillment process); and (4) technology (scope of ERP implementation and use of technology.) In each of these categories, survey results show that the firms exhibiting best-in-class ERP characteristics also produce a more significant impact to top and bottom line results. Table 1: ERP Competitive Framework Laggards Industry Average Best in Class Process • Business benefits not • Business benefits are • Significant and quanti- measured; success is measured and some fiable business bene- measured on time to quantifiable gains fits achieved from first “go live” mile- have been achieved ERP implementation. stone; commitment but significant addi- Milestones achieved lags after first mile- tional opportunities within reasonable stones are achieved. exist for further pay- timeframes; Upon back. completion of mile- stones, new objec- tives are defined. Organization • IT drives ERP deci- • Both IT and Line of • Both IT and Line of sions with little or no Business involved in Business collaborate involvement or com- ERP initiatives, but IT on ERP initiatives, mitment from Line of owns the projects. with Line of Business Business. owning the success of the project. All print and electronic rights are the property of Aberdeen Group © 2006. Aberdeen Group • 11
  • 15. Benchmarking ERP in Small Manufacturers Laggards Industry Average Best in Class Knowledge • Limited visibility into • Some visibility into • Real-time visibility into manufacturing opera- manufacturing opera- manufacturing opera- tions and the order-to- tions and the order-to- tions and the order-to- fulfillment process. fulfillment process. fulfillment process. Technology • Less than the funda- • Basic fundamental • All fundamental basic mental basics of ERP modules of ERP im- modules of ERP im- modules imple- plemented, using plemented along with mented, using less more than 50% of other specialty func- than 50% of function- functionality in those tions, employing more ality in those modules modules imple- advanced technolo- implemented; ERP mented. Beginning to gies such as event implementation based wrap existing technol- management and on older technology. ogy with web services workflow technologies and first steps taken and using more than towards upgrading 70% of functionality in technology infrastruc- those modules im- ture. plemented. Implemen- tations make use of advanced middleware and integration tech- nologies such as SOA. Source: AberdeenGroup, August 2006 Performance Results So how do small companies perform? What results are being achieved as a result of ERP implementations? Generally speaking our respondents had a hybrid approach to measur- ing success (Figure 9). Most individuals selected a combination of metrics that measured business value but combined these with some measurement of cost and time to gain those benefits. Streamlining business processes and the automation of manual processes were clearly the top measures of success, followed by visibility provided to the business. Only about a quarter of small companies rated ROI (Return on Investment) as a key factor in measuring success. In fact more small companies placed more emphasis on the cost of the software and services than the process cost savings produced, which demonstrates a certain level of short-sightedness more prevalent in small companies than in larger enter- prises. All print and electronic rights are the property of Aberdeen Group © 2006. 12 • AberdeenGroup
  • 16. Benchmarking ERP in Small Manufacturers Figure 9: How do small companies measure success? Streamline business processes 53% Automation of manual processes 47% Visibility it provides to my business 39% Cost of software and services 29% ROI 26% Process cost savings produced 26% Length of time to initial “go live' 24% Length of time for full implementation 22% 0% 10% 20% 30% 40% 50% 60% “Our primary objective was a single instance of ERP and sec- Source: AberdeenGroup, August 2006 ondarily to enter data into the system only once. Through this Given that 24% of small companies chose the length of time approach we have actually im- to the first “go live” milestone as a key measure of ERP proved visibility, reduced inven- success, Aberdeen compared this metric across small, me- tory by 15% and we shaved 5 dium and large companies (Figure 10). As might be ex- days off our month end close” pected, this time span grew with company size. A full 86% of small companies participating achieved this milestone - Small injection molding manu- within the first year, as compared to 64% of mid-size com- panies and 47% of large companies. On the other end of the facturer spectrum, none of the small company participants spent more than 2 years, but the same could not be said of mid- size (6%) and large (18%) enterprises. While length of time to implement or dollars spent are both contributing factors, Aberdeen views the value that ERP brings to the business as the most important element of success. Metrics reported give some indication ERP is doing the job it was meant to do. All print and electronic rights are the property of Aberdeen Group © 2006. Aberdeen Group • 13
  • 17. Benchmarking ERP in Small Manufacturers Figure 10: Timeline to first “go-live” milestone Mid-Size Companies ($50m-$1b) Large Companies (> $1b) >24 months 6% >24 months <6 months 18% 13% 18 to 24 <6 months months 24% 13% 18 to 24 months 6 months to 12 to <18 15% 12 months months 34% 17% 12 to 18 6 months to months <12 months 20% 40% 18 to 24 months 4% >24 months 12 to 18 0% months 10% <6 months 33% 6 months to 12 months Small Companies (<$50m) 53% Source: AberdeenGroup, August 2006 While we find that small companies perform better than average, generally speaking they are what Aberdeen considers Industry Average and definitely not Best in Class. However, Aberdeen did find Best in Class performers across the full spectrum of company size, proving that true value can be achieved from ERP by companies of any size, large, me- dium or small. Figure 11: Small Manufacturers: Better than average but not Best in Class Improved manufacturing schedule 11% 19% compliance 32% Streamline business processes 53% Improved complete and on-time 15% Automation of manual processes 20% 47% shipments 33% Visibility it provides to my business 39% Average 11% Reduction of administrative costs 13% Small Cost of software and services 29%26% Best in Class Reduction in manufacturing ROI 8% 26% 13% operational costs 23% Process cost savings produced 26% 10% Reduction in inventory costs Length of time to initial “go live' 14% 24% 28% Length of time for full implementation 22% 0% 5% 10% 15% 20% 25% 30% 35% 0% 10% 20% 30% 40% 50% 60% Source: AberdeenGroup, August 2006 All print and electronic rights are the property of Aberdeen Group © 2006. 14 • AberdeenGroup
  • 18. Benchmarking ERP in Small Manufacturers Software Selection Criteria Given the critical function ERP plays in managing basic business functions, Aberdeen sought to determine the criteria small companies use in software selection (Figure 12). Functionality was by far the top selection criteria in ERP software decisions, followed by Total Cost of Ownership and Ease of Use. Yet variations on these themes are prevalent in small to mid-size companies. Figure 12: Software Selection Criteria of SMB Companies Functionality 64% Total Cost of 48% ownership Ease of Use 46% 0% 10% 20% 30% 40% 50% 60% 70% Source: AberdeenGroup, August 2006 Standard Hardware, a small company that has established itself as a leading distributor of fas- teners is currently in the process of upgrading “We did all the due diligence, but it wound to the latest version of it ERP application. Its up being a no-brainer. We’re not propo- starting point for decision-making was an old nents of the ‘Best of Breed’ concept. By release of the product, which had been heavily going this route you exasperate the prob- customized. Its decision boiled down to either lem integrated ERP was meant to solve – “upgrade and extend” its current ERP or re- eliminating the islands of automation.” place it entirely. The company chose to up- grade and extend. According to Eric Mackie, - Eric Mackie, CIO, Standard Hardware CIO, “We did all the due diligence, but it wound up being a no-brainer. We’re not pro- ponents of the ‘Best of Breed’ concept. By go- ing this route you exasperate the problem inte- grated ERP was meant to solve – eliminating the islands of automation. We could elimi- nate many of the modifications because of new features in the current release and when you consider the true cost of starting over with a new implementation, the decision was an easy one.” However, the tendency to purchase from a single source does not mean the incumbent ERP vendor has a lock on all further investments. Mountainside Medical is another small All print and electronic rights are the property of Aberdeen Group © 2006. Aberdeen Group • 15
  • 19. Benchmarking ERP in Small Manufacturers company and is actually still operating in start-up mode. So far all the extensions to ERP it has considered and implemented have been modules of its ERP, including SCP and SCE (Supply Chain Planning and Execution) and Quality Assurance. The company is actively considering further extending their implementation with a CRM (Customer Rela- tionship Management) but indicated they were only “somewhat likely” to purchase it from their ERP vendor, even though it ERP vendor recently acquired a pure play a pure play CRM solution. “I used a ‘Best of Breed’ application at my previous employer and the original offering from our ERP vendor was not as powerful,” said Pete Neidecker, Managing Partner, who indicated he would only consider purchasing CRM from his ERP vendor if it were “proven” and integrated. Mountainside Medical understands the acquisition of a point solution by its ERP vendor does not mean the solution is “magically” integrated overnight and there are no guaran- tees that the acquiring vendor will continue to preserve the specific domain expertise and the level of investment in product innovation required to maintain “Best of Breed” status. The company is in “wait and see” mode until such time as its ERP vendor has integrated its recently acquired product. Ease of Use and Functionality Ease of use is the most subjective of these top three criteria and the most difficult to bench- mark. The best measure of how easy a solution “We heavily favor the purchase of modules is to use is perhaps measured by how much use versus extensions. If we do purchase an it gets. And therefore we look at these two cri- extension, it must be fully tested and sup- teria together. Are small companies making the ported.” most of the ERP? While there is a generally accepted view that - John Long, AVP, W.S. Darley ERP is grossly underutilized in most manufac- turers, this view is mostly speculative. As a result, Aberdeen’s ERP in Manufacturing Benchmark Study sought to better quantify this perception by having participants select modules implemented from a set of 24 generic modules (see Table 2). In general small companies track respectably well against our Best in Class respondents in terms of the basics of ERP (those modules bolded in Table 3). However, they lag anywhere from several percentage point to significantly behind Best in Class in terms of more specialized or advanced capabilities. Table 2: Adoption rates of ERP modules ERP Modules Small Best in Class All print and electronic rights are the property of Aberdeen Group © 2006. 16 • AberdeenGroup
  • 20. Benchmarking ERP in Small Manufacturers Companies General Ledger 94% 95% Accounts Payable 95% 96% Accounts Receivable 94% 93% Fixed Asset Management 35% 46% MRP (Material Requirements Planning) 78% 85% CRP (Capacity Requirements Planning) 14% 28% DRP (Distribution Requirements Planning) 10% 19% MPS (Master Production Scheduling) 31% 38% Forecasting and Demand Planning 45% 54% Human Capital Management 8% 8% Order Management 81% 85% Project Management 16% 16% Shop Floor Control 55% 67% Purchasing 94% 97% Inventory control 94% 97% After Market Service Field Service/Depot Repair) 9% 16% Engineering change management 22% 30% Enterprise asset management (EAM) 3% 8% Supplier collaboration/scheduling 8% 14% Event management 3% 8% Workflow technologies 13% 20% Sales and marketing 46% 55% Product configuration 19% 27% Payroll 28% 25% Source: AberdeenGroup, August 2006 Our findings showed the average manufacturing company used 10.51 modules of the ge- neric set of 24, which represents an un-weighted average of 43.8%. This average dips in smaller companies to an average of 9.92 modules used, representing an un-weighted av- erage of 41.3% Recognizing that implementation of a module does not necessarily imply 100% of its functionality is used, Aberdeen further surveyed its participants to determine what per- cent of the functionality was used of the modules implemented. We found this to be about 63.1%. If we apply that weight to the un-weighted result, we find on average com- All print and electronic rights are the property of Aberdeen Group © 2006. Aberdeen Group • 17
  • 21. Benchmarking ERP in Small Manufacturers panies are using 27.6% of ERP. How does this compare for small companies? We found small companies using a slightly lower percentage (62.2%) of the functionality of the modules implemented, which results in a weighted average of 25.7%. Total Cost of Ownership Aberdeen’s ERP in Manufacturing Study actually recognized three different ele- ments of total cost associated with ERP implementations: • Amount spent on software • Amount spent of external services • Internal costs While internal costs are known to be a significant portion of total cost, a large percentage of respondents did not provide this answer and many who did provided a number which Aberdeen felt to be significantly lower than expectations. These facts and follow-up in- terviews led us to conclude that the majority of companies do not have a means to accu- rately measure these costs. Therefore, while we still believe this adds significantly to the total cost of implementation, Aberdeen chose not to include this element in the compari- son. Costs Scale with Company Size One would naturally expect a correlation between size of the ERP deployment and costs. As the company grows, the number of users goes up, along with the total cost of software and services. Since volume discounts are standard fare in ERP pricing, one would expect the costs per user to go down as the number of users goes up. This expectation was proven to be true, as shown in Table 3. Also, as the number of users goes up, the expecta- tion is that the total cost of software and service also rises, as was the case. However, note that the total cost of software and services per user is not as linear a func- tion. Small companies actually spend less per user than companies in the $50 to $100 million range in spite of paying more per user for the software, indicating less spent on accompanying services. This would tend to explain the high incidence of training chal- lenges felt by small companies (refer back to Figure 7 in the previous chapter.) Given the limited budgets of small companies this appears to be one budgetary consideration that gets short-changed. Table 3: Average Software and Services $’s by Company Size Average Software + Average Average Software Average SW+Service Services Number of Software $’s per Service $’s $ $’s per Users $’s User User Under $50 million 38 $138,806 $4,820 $98,635 $235,606 $7,853 All print and electronic rights are the property of Aberdeen Group © 2006. 18 • AberdeenGroup
  • 22. Benchmarking ERP in Small Manufacturers Average Software + Average Average Software Average SW+Service Services Number of Software $’s per Service $’s $ $’s per Users $’s User User $50 million to $100 mil- lion 84 $363,425 $4,622 $339,321 $702,746 $8,827 $100 million to $250 mil- lion 150 $480,048 $3,171 $485,590 $965,638 $6,869 $250 million to $500 mil- lion 256 $527,273 $2,916 $600,455 $1,127,727 $6,247 $500 million to $1 billion 292 $561,667 $2,463 $495,000 $1,056,667 $2,537 Over $1billion 1,485 $1,137,500 $1,535 $1,562,500 $2,700,000 $3,278 Source: AberdeenGroup, August 2006 But size of company and number of users doesn’t necessarily tell the whole story. Aber- deen therefore set out to determine the cost per percentage point of functionality de- ployed by company size and saw a steady decline in the cost per percentage of function- ality used as more and more functionality was deployed (Table 4). Once a threshold is reached and dues are paid, payback multiplies as ERP penetrates more broadly and deeply into an organization. The key to improving TCO in terms of functionality is to continue to drive the use of ERP more broadly and deeply across the organization. Table 4: Costs Per Utilization by Company Size Average # of Average % of Cost per user per Weighted Aver- Modules functionality percentage point of age Used Used functionality used Under $50 million 9.79 62.01% 25.29% $314 All print and electronic rights are the property of Aberdeen Group © 2006. Aberdeen Group • 19
  • 23. Benchmarking ERP in Small Manufacturers Average # of Average % of Cost per user per Weighted Aver- Modules functionality percentage point of age Used Used functionality used $50 million to $100 mil- lion 10.31 61.52% 26.43% $316 $100 million to $250 million 10.13 63.09% 26.64% $241 $250 million to $500 million 10.83 63.10% 28.48% $154 $500 million to $1 billion 10.86 57.65% 26.08% $139 Over $1billion 11.71 69.72% 34.01% $53 The Cost of Achieving Business Benefits As noted earlier, Aberdeen contends the success of an ERP implementation needs to be measured in terms of the business benefits derived. Therefore, for one final measure of Total Cost of Ownership, Aberdeen sought to measure the cost of each percentage point of improvement gained from the deployment of ERP implementations. While we found variations in performance levels, we found little variation across small to mid-size com- panies in terms of cost per average percentage point of improvement (Table 5). Table 5: Cost of Performance Improvement by Vendor Small Compa- Mid-Size Large nies Companies Companies (<$50m) ($50m-$1b) (>$1b) Reduction in inventory costs 13.9% 14.5% 18.1% Reduction in manufacturing opera- tional costs 12.8% 12.8% 15.4% Reduction of administrative costs 13.4% 16.4% 11.4% Improved complete and on-time shipments 20.2% 21.0% 13.0% Improved mfg schedule compliance 19.3% 17.3% 12.1% Average 15.9% 16.4% 14.0% Cost per % point of improvement $389 $347 $130 Source: AberdeenGroup, August 2006 All print and electronic rights are the property of Aberdeen Group © 2006. 20 • AberdeenGroup
  • 24. Benchmarking ERP in Small Manufacturers We see from these results a variety of levels of achievement in terms of general im- provement, and also a range of costs associated with each percentage point gained. How- ever, what we do not see is a direct correlation between spending and benefits achieved. Software as a Service – A New Twist to an Old Delivery Model An alternative delivery model has recently emerged on the enterprise application horizon that promises low cost of entry, shorter implementation times, lower risk and flexible access to functionality. Software as a Service (SaaS), also known as hosted or on-demand applications, has “How do you motivate the team to look be- proven to be an effective alternative, particularly for small companies, to yond the current implementation, to im- on-premise applications which are plement more functions and therefore paid for upfront and installed on site. bring more value? We are now bringing The concept is not new. “Time shar- our ERP provider in as consultants to help ing” services were plentiful in the us understand where we are and where 1980’s, but disappeared for the most we could be.” part from the market as hardware be- came more affordable and operating - Don Miller, IT Manager, parent company systems became friendlier to small of Jamak Fabrication companies with little or no on site IT staff. ERP solutions have been among the most recent offerings available through SaaS, and new enough on the scene that benchmark data is not readily available. However, Aber- deen conducted benchmark research from March – July 2006 across 631 companies to evaluate the current state of SaaS in enterprise applications in general. These findings show that SaaS solutions reduce implementation barriers common to small companies and should therefore factor minimally into decisions being made today by those 14% of small companies (refer back to Figure 1) that might be embarking on their first ERP im- plementation. Typical implementation and ROI times for a variety of different applications are pre- sented in Table 5. This delivery model can be particularly enticing for small companies who have yet to invest in or develop their own IT staffs. Typically a single monthly fee includes ongoing application usage, maintenance and upgrades, support and access to hardware and database software. Table 6: SaaS Enterprise Application Value Summary Application Area Typical Implementation & ROI Times for SaaS Customer Relationship • Implementation in less than 2 months Management • ROI in less than 6 months Supply Chain • Implementation in less than 3 months Management • ROI in less than 1 year All print and electronic rights are the property of Aberdeen Group © 2006. Aberdeen Group • 21
  • 25. Benchmarking ERP in Small Manufacturers Application Area Typical Implementation & ROI Times for SaaS Sourcing & Procurement • Implementation in less than 2 months • ROI in less than 1 year Financial Management • Implementation in less than 3 months • ROI in less than 6 months Product Lifecycle • Implementation in less than 6 months Management • ROI in less than 1 year Source: AberdeenGroup, August 2006 All print and electronic rights are the property of Aberdeen Group © 2006. 22 • AberdeenGroup
  • 26. Benchmarking ERP in Small Manufacturers Chapter Four: Recommendations for Action • Improved hardware price performance and alternative delivery models such as SaaS Key Takeaways (Software as a Service) make ERP within reach of any small company today • Set goals for your ERP implementation. Many fall short of best-in-class status because performance metrics are not established. • Standardize processes; automate and eliminate manual and spreadsheet intensive ac- tivities C ost, revenue, profitability, and customer satisfaction benefits await all firms that are committed to optimizing their ERP implementations. But the expectations and achievements of ROI (Return on Investment) varies significantly with size of company. The length of time it takes to achieve significant returns scales directly with investment levels. However, Best in Class companies are more aggressive in their expec- tations and therefore deliver better results faster (see Table 6). As a result Aberdeen strongly recommends that small companies aggressively push be- yond the limits of current implementations for added benefits and lower TCO. Where ERP has yet to be implemented, price performance of hardware and alternate delivery models such as SaaS are removing barriers of entry and making ERP well within the grasp of any company intent on establishing and maintaining a market presence or seek- ing a competitive edge. Table 7: Expected and Actual ROI (Return on Investment) ROI BIC Small Mid-size Large Ex- Ex- Ex- Ex- Ac- pected Actual pected Actual pected Actual pected tual <1 year 15% 16% 18% 15% 10% 12% 14% 4% <2 years 43% 35% 36% 28% 36% 24% 24% 19% <3 years 31% 26% 27% 26% 33% 27% 41% 30% >3 years 11% 24% 19% 31% 21% 37% 20% 47% Source: AberdeenGroup, August 2006 Laggard Steps to Success (including those companies yet to invest in ERP) 1. Establish specific goals for obtaining business benefits from ERP Many ERP implementations fall short of best-in-class status because perform- ance metrics are not established. In many cases ERP is viewed as a necessary in- All print and electronic rights are the property of Aberdeen Group © 2006. Aberdeen Group • 23
  • 27. Benchmarking ERP in Small Manufacturers frastructure and therefore companies place more emphasis on time to implement and cost than on specific business goals and objectives. 2. Seek to automate previously manual-intensive and spreadsheet based processes. Expand your implementation to include all fundamental basics of your business. ERP provides a solid foundation on which to run your business. The opportunity has never been greater for small companies to take advantage of its capabilities to automate manual processes and measure business performance. As milestones are completed, set timelines and objectives for next steps. 3. Measure performance against business goals Strive to achieve greater visibility across your manufacturing operations, stream- line business processes in the order-to-fulfillment cycle, and make ERP your fi- nancial system of record. Being resource constrained is not an excuse to side-step the controls ERP can provide to your business. To the contrary, it provides even more incentive to take full advantage of the capabilities you have already pur- chased. Measure operational costs and schedule compliance internally and in shipments to customers. Measure the time to close your financial records, pay your vendors and collect accounts receivable. Industry Average Steps to Success 1. Review current goals for obtaining business benefits; set the bar higher and seek new opportunities Don’t be satisfied with current results based on milestone achievement to date. Once the basics have been implemented, look to take advantage of more func- tionality within currently implemented modules, and/or expand the implementa- tion to include new modules for added breadth. Most ERP companies today will offer suite based pricing and licensing which puts resource constrained small companies in a better position to increase ROI with little or further expenditure on the software itself. 2. Support all critical stakeholders’ visibility into current and accurate data Broaden and deepen ERP’s reach across your organization with additional new users in order to provide visibility into financial, manufacturing and customer service operations. Best in Class Next Steps 1. Standardize business processes Predictability and repeatability are key to achieving even higher goals in terms of finance, manufacturing and supply chain operations, as well as customer service. Pay careful attention to the balance between aligning business processes to soft- ware capabilities and aligning software to current business processes. Software must support the basic business needs but extensive customizations can hinder a business from evolving, particularly in small companies who typically little or no IT staff. All print and electronic rights are the property of Aberdeen Group © 2006. 24 • AberdeenGroup
  • 28. Benchmarking ERP in Small Manufacturers 2. Eliminate paper- and spreadsheet-based workflows, and consider Web, e-mail, and mobile technology solutions. Outdated or lack of appropriate technology will breed error and inefficiency within a manufacturing organization. Don’t be caught in the mode of “we have always done it this way.” These technologies are within reach of all but the smallest or companies today. Once clear business and customer requirements are in place, consider leveraging or expanding existing technology investments. Don’t fall into the trap of believing an ERP implementation is ever completely done. There will always be innovations technology advances to consider, and a healthy business is constantly evolving. Whether a company is trying to gradu- ally move its ERP implementation from “Laggard” to “Industry Average,” or “Industry Average” to “Best in Class,” opportunities abound to take those next crucial steps. All print and electronic rights are the property of Aberdeen Group © 2006. Aberdeen Group • 25
  • 29. Benchmarking ERP in Small Manufacturers Appendix A: Research Methodology Between July and Septembery 2006, AberdeenGroup with Manufacturing Business Technology examined ERP strategies, usage and implementation of 454 small enterprises in aerospace and defense (A&D), automotive, high-tech, industrial products, Consumer Products, Food and Beverage and other industries. Responding manufacturing, supply chain, finance, sales and marketing and IT executives completed an online survey that included questions designed to determine the following: • ROI expectations • How do companies of various sizes (small, mid-size, large) approach the evaluation and implementation of ERP? • What constitutes “success?” • What is the tipping point for replacement or upgrade? Aberdeen supplemented this online survey effort with telephone interviews with select survey respondents, gathering additional information. The full results of this study were published in the “Benchmarking ERP in Manufacturing” report. Further interviews were conducted for this report on consolidation strategies, experiences, and results. The study aimed to identify emerging best practices for ERP and provide a framework by which readers could assess their own implementations. Responding enterprises included the following: • Job title/function: The research sample included respondents from the following functional areas: manufacturing (12%); business process management (11%), lo- gistics/supply chain (4%), IT (40%), sales & marketing (6%), finance (19%) and others. Job titles included managers (27%), directors (6%), C-level & VP (31%), CIO/IT Leaders (21%) • Industry: The research sample included respondents predominantly from manu- facturing industries: Industrial machinery manufacturers (30%), metals and metal products (115%), automotive (19%), High Tech (18%), CPG/Food & Beverage (12%) and aerospace and defense (11%) manufacturers, medical devices (11%). Other sectors responding included construction/engineering, and retail and distri- bution, chemicals and pharmaceuticals. Participants were allowed to select more than 1 industry. • Geography: Study respondents were from North America (66%), Asia Pacific (12%), Europe (18%) South America (2%) and the Middle East and Africa (1%). • Company size: 100% of respondents were from small businesses (annual reve- nues of $50 million or less). Note this represented 454 responses selected from a larger sample of approximately 1200 responses. All print and electronic rights are the property of Aberdeen Group © 2006. 26 • AberdeenGroup
  • 30. Benchmarking ERP in Small Manufacturers Table 8: PACE Framework PACE Key Aberdeen applies a methodology to benchmark research that evaluates the business pressures, actions, capabilities, and enablers (PACE) that indicate corporate behavior in specific business processes. These terms are defined as follows: Pressures — external forces that impact an organization’s market position, competitiveness, or business operations (e.g., economic, political and regulatory, technology, changing customer preferences, competi- tive) Actions — the strategic approaches that an organization takes in response to industry pressures (e.g., align the corporate business model to leverage industry opportunities, such as product/service strategy, target markets, financial strategy, go-to-market, and sales strategy) Capabilities — the business process competencies required to execute corporate strategy (e.g., skilled people, brand, market positioning, viable products/services, ecosystem partners, financing) Enablers — the key functionality of technology solutions required to support the organization’s enabling business practices (e.g., development platform, applications, network connectivity, user interface, training and support, partner interfaces, data cleansing, and management) Source: Aberdeen Group, August 2006 All print and electronic rights are the property of Aberdeen Group © 2006. Aberdeen Group • 27
  • 31. Benchmarking ERP in Small Manufacturers Table 9: Relationship between PACE and Competitive Framework PACE and Competitive Framework How They Interact Aberdeen research indicates that companies that identify the most impactful pressures and take the most transformational and effective actions are most likely to achieve superior performance. The level of com- petitive performance that a company achieves is strongly determined by the PACE choices that they make and how well they execute. Source: Aberdeen Group, August 2006 Table 10: Competitive Framework Competitive Framework Key The Aberdeen Competitive Framework defines enterprises as falling into one of the three following levels of FIELD SERVICES practices and performance: Laggards (30%) — FIELD SERVICES practices that are significantly behind the average of the industry, and result in below average performance Industry norm (50%) — FIELD SERVICES practices that represent the average or norm, and result in aver- age industry performance. Best in class (20%) — FIELD SERVICES practices that are the best currently being employed and signifi- cantly superior to the industry norm, and result in the top industry performance. Source: Aberdeen Group, August 2006 All print and electronic rights are the property of Aberdeen Group © 2006. 28 • AberdeenGroup
  • 32. Appendix B: Related Aberdeen Research & Tools Related Aberdeen research that forms a companion or reference to this report include: • The Proliferation of Enterprise Applications (July 2006) • ERP in the Mid-Market (September 2006) • Benchmarking ERP in Manufacturing (August 2006) • The On-Demand Supply Management Benchmark Report (June 2006) • SAP, Oracle Users Seeking On-Demand SCM Alternatives; (May 2006) • The On-Demand Tipping Point in Supply Chain Report (March 2006) • Enterprise Strategies: The Total Cost of ERP Ownership (October, 2006) • Software as a Service Buyers’ Guide (August 2006) Information on these and any other Aberdeen publications can be found at www.Aberdeen.com. Aberdeen Group, Inc. Founded in 1988, Aberdeen Group is the technology- 260 Franklin Street driven research destination of choice for the global Boston, Massachusetts business executive. Aberdeen Group has over 100,000 02110-3112 research members in over 36 countries around the world USA that both participate in and direct the most comprehen- sive technology-driven value chain research in the Telephone: 617 723 7890 market. Through its continued fact-based research, Fax: 617 723 7897 benchmarking, and actionable analysis, Aberdeen Group www.aberdeen.com offers global business and technology executives a unique mix of actionable research, KPIs, tools, © 2006 Aberdeen Group, Inc. and services. All rights reserved Month 2006 The information contained in this publication has been obtained from sources Aberdeen believes to be reliable, but is not guaranteed by Aberdeen. Aberdeen publications reflect the analyst’s judgment at the time and are subject to change without notice. The trademarks and registered trademarks of the corporations mentioned in this publication are the property of their respective holders.
  • 33. THIS DOCUMENT IS FOR ELECTRONIC DELIVERY ONLY The following acts are strictly prohibited: • Reproduction for Sale • Transmittal via the Internet Copyright © 2006 AberdeenGroup, Inc. Boston, Massachusetts Terms and Conditions Upon receipt of this electronic report, it is understood that the user will and must fully comply with the terms of purchase as stipulated in the Purchase Agreement signed by the user or by an authorized representative of the user’s organization. Aberdeen has granted this client permission to post this report on its Web site. This publication is protected by United States copyright laws and international treaties. Unless otherwise noted in the Purchase Agreement, the entire contents of this publication are copyrighted by Aberdeen Group, Inc., and may not be reproduced, stored in another retrieval system, or transmitted in any form or by any means without prior written consent of the publisher. Unauthorized reproduction or distribution of this publication, or any portion of it, may result in severe civil and criminal penalties, and will be prosecuted to the maximum extent necessary to protect the rights of the publisher. The trademarks and registered trademarks of the corporations mentioned in this publication are the property of their respective holders. All information contained in this report is current as of publication date. Information contained in this publication has been obtained from sources Aberdeen believes to be reliable, but is not warranted by the publisher. Opinions reflect judgment at the time of publication and are subject to change without notice. Usage Tips Report viewing in this PDF format offers several benefits: • Table of Contents: A dynamic Table of Contents (TOC) helps you navigate through the report. Simply select “Show Bookmarks” from the “Windows” menu, or click on the bookmark icon (fourth icon from the left on the standard toolbar) to access this feature. The TOC is both expandable and collapsible; simply click on the plus sign to the left of the chapter titles listed in the TOC. This feature enables you to change your view of the TOC, depending on whether you would rather see an overview of the report or focus on any given chapter in greater depth. • Scroll Bar: Another online navigation feature can be accessed from the scroll bar to the right of your document window. By dragging the scroll bar, you can easily navigate through the entire document page by page. If you continue to press the mouse button while dragging the scroll bar, Acrobat Reader will list each page number as you scroll. This feature is helpful if you are searching for a specific page reference. • Text-Based Searching: The PDF format also offers online text-based searching capabilities. This can be a great asset if you are searching for references to a specific type of technology or any other elements within the report. • Reader Guide: To further explore the benefits of the PDF file format, please consult the Reader Guide available from the Help menu.