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How Well Does ERP Facilitate Project-Based Business Models?
How Well Does ERP Facilitate Project-Based Business Models?
How Well Does ERP Facilitate Project-Based Business Models?
How Well Does ERP Facilitate Project-Based Business Models?
How Well Does ERP Facilitate Project-Based Business Models?
How Well Does ERP Facilitate Project-Based Business Models?
How Well Does ERP Facilitate Project-Based Business Models?
How Well Does ERP Facilitate Project-Based Business Models?
How Well Does ERP Facilitate Project-Based Business Models?
How Well Does ERP Facilitate Project-Based Business Models?
How Well Does ERP Facilitate Project-Based Business Models?
How Well Does ERP Facilitate Project-Based Business Models?
How Well Does ERP Facilitate Project-Based Business Models?
How Well Does ERP Facilitate Project-Based Business Models?
How Well Does ERP Facilitate Project-Based Business Models?
How Well Does ERP Facilitate Project-Based Business Models?
How Well Does ERP Facilitate Project-Based Business Models?
How Well Does ERP Facilitate Project-Based Business Models?
How Well Does ERP Facilitate Project-Based Business Models?
How Well Does ERP Facilitate Project-Based Business Models?
How Well Does ERP Facilitate Project-Based Business Models?
How Well Does ERP Facilitate Project-Based Business Models?
How Well Does ERP Facilitate Project-Based Business Models?
How Well Does ERP Facilitate Project-Based Business Models?
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How Well Does ERP Facilitate Project-Based Business Models?

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What is Project ERP? It is enterprise resource planning (ERP) software designed fo r project-intensive environments like engineer to order manufacturing, engineering procurement and construction …

What is Project ERP? It is enterprise resource planning (ERP) software designed fo r project-intensive environments like engineer to order manufacturing, engineering procurement and construction contracting or even asset-based environmetns like process manufacturing. This study from IFS North American and Mint Jutras indicates that many of these industries lack the Project ERP functionality necessary to increase productivity and manage risk.

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  • 1. How Well Does ERP FacilitateProject Based Business Models? November 2012
  • 2. BackgroundIn September 2012, a study was conductedamong manufacturing executives and This study wasprofessionals of middle market to large conducted by IFSmanufacturers to better understand how North Americawell current enterprise resource planning and Mint(ERP) options meet the needs of Jutras, ancompanies in project-driven industries independentincluding: research-based• Engineer to order manufacturing. consulting firm that specializes in• Aerospace and defense manufacturing. analyzing the• Engineering, procurement and business impact construction contracting. of enterprise• Asset-intensive business like batch applications. process manufacturing. 2
  • 3. Methodology• A survey was sent to subscribers to a specialized industrial publication. This study was conducted by IFS• Sample size: 200. North America• Respondents were screened for and Mint Jutras, an involvement in enterprise software independent decisions and for company size of research-based greater than $100 million in annual consulting firm that specializes in revenue. analyzing the business impact of enterprise applications. 3
  • 4. Methodology• Frequencies on the data were run to reflect the differing technological approaches taken This study was by some specific types of companies, conducted by IFS including: North America – Companies engaged in engineer to order and Mint Jutras, manufacturing. an independent research-based – Companies delivering projects as an consulting firm engineering, procurement, and that specializes in construction contractor. analyzing the – Those involved in batch process, which business impact would cause them to be involved heavily of enterprise in enterprise asset management of applications. process manufacturing plants and equipment. 4
  • 5. Major Areas Explored– Which project elements can be Applications such as: controlled in real-time in a  Enterprise Resource combined ERP and Project Planning (ERP)  Project and portfolio Management software Mgt (PPM) environment.  Customer Relationship Mgt (CRM)  Enterprise Asset– What level of integration exists? Management (EAM)  Computerized Maint.– How well applications currently Mgt System (CMMS)  Supply Chain Mgt (SCM) satisfy needs. 5
  • 6. Key Findings– Most manufacturers must deal with managing a variety of styles of manufacture including multiple flavors of “to order.” • Engineer to order • Configure to order • Make to order– While projects are a necessity for 85% of respondents, 39% have no integration between their project management systems and enterprise system of record.– The ability to control processes in real-time correlates directly with better integration. 6
  • 7. Company Size (Annual Revenue) $100M - $149.9M, 16% $2.5 Billion or more, 29% $150M - $249.9M, 10% $250M - $1B - $499.9M, 20% $2.49B, 12% $500M - $999.9M, 13% 7
  • 8. Manufacturing Styles Make to Order 66% Make to Stock 48% Batch Process 36% Engineer to Order 36% Custom Manufacturing 32% Configure to Order 31% Continuous Process 27% Design Fabricate Install 15%Engineer Procure Construct 12% 0% 10% 20% 30% 40% 50% 60% 70% Respondents were allowed to select all that apply. On average each respondent selected 3.26 different styles, adding to the complexity of the environments. 8
  • 9. Why is This Interesting?• Although projects are an integral part of the environment for 85% of respondents, 39% had no integration between their project management and their enterprise system of record, which is typically an ERP solution.• Whether an enterprise handles projects through a fully integrated suite or an accounting, order administration and manufacturing system of record, that system needs to integrate with project management functionality in a meaningful way.• The ability to control processes in real time correlates with better integration, with the ideal being an ERP solution that is set up to be for project-oriented companies. 9
  • 10. Length of Projects Engineer to Order Batch Process Engineer Procure Construct40% 37% 38% 31% 30%30% 26% 23% 19% 20%20% 13% 12% 12% 13% 12%10% 7% 5%0% We don’t use Less than 1 1 to 6 months 6 to 12 months Multi-year projects month projects The longer the duration of the project, presumably the more complex. How are these ETO managing the order without 10 projects?
  • 11. Months-Long Projects Require Project Management Software• Another measure of complexity is the length of projects. The longer the duration of the project, the more complex.• In some cases, projects are fairly well contained at less than a month long. But the largest percentage of engineer to order environment respondents are involved in projects of between one and six months.• Batch process manufacturers are likely handling projects that are refits or design of a batch process or process equipment. 11
  • 12. Enterprise Applications in Place Enterprise Resource Plan. (ERP) 71% Supply Chain Mgt (SCM) 40% Manufac. Execution Sys. (MES) 29% Computerized Maint Mgt (CMMS) 29% Product Data Mgt (PDM) 27% Customer Relationship Mgt (CRM) 26% Enterprise Asset Mgt (EAM) 23% Human Capital Mgt (HCM) 19% Project Portfolio Mgt (PPM) 15% Field Service Mgt (FSM) 12% All Respondents Other 7% 0% 25% 50% 75% On average companies have a total of 3.24 different enterprise application products implemented. 12
  • 13. What Level of Integration?Between Project Management & Enterprise System of Record All Respondents 40% 39% 30% 30% 20% 13% 14% 10% 4% 0% None Selective Financial Full Embedded as integration integration integration a native part of ERP 13
  • 14. Most Common Solutions Used to Manage Projects1. Microsoft Project (71%)2. Microsoft Excel (48%)3. A module of an ERP solution (20%)4. IBM (10%)5. Primavera (8%)6. No others named were used by more than 4% Many projects are still managed using desktop applications. Use of enterprise- level apps is quite fragmented. 14
  • 15. Avoiding Fragmented Data• Many respondents are still using desktop applications to manage projects. This can fragment data by pulling it out of shared enterprise environment.• Microsoft Project is prevalent. There is an enterprise level version, but the vast majority of Microsoft Project use is in a desktop configuration.• Microsoft Excel, the universal spreadsheet management tool, is also heavily used. The key to using Excel without creating silos or islands of data is to integrate it with your enterprise applications so you can share the enterprise data through Excel while it still in fact resides in ERP. Once an Excel spreadsheet exists wholly outside of the enterprise software environment, managers are at risk of making decision based on bad data, or your enterprise application may cease to be the true system of record.• One in five reported using a module of their ERP solution. 15
  • 16. Which of the Following Project Elements Can You Control in Real-Time in Your ERP/Project Management Integration? Time/Schedules 78% Cost 76% Materials 52% Human Resources 40%Machinery Resources 39% All Respondents Cash 34% Risk Management 34% 0% 20% 40% 60% 80% Schedules & Costs are controlled fairly well – these are the primary objectives. But other elements lack. 16
  • 17. Which of the Following Project Elements Can You Control in Real-Time in Your ERP/Project Management Integration? Cost 90% 70% Time/Schedules 88% 74% Materials 63% 48% Human Resources 63% 31% Full or 56% embeddedMachinery Resources 33% Cash 56% Partial 25% integration Risk Management 49% 28% 0% 20% 40% 60% 80% 100% Yet with full integration, the level of control typically doubles. 17
  • 18. Controlled in Real-time? 82% Cost 75% 76% 59%Manufacturing Materials 48% 52% 55% Time/Schedules 92% 81% 41% Cash 25% 57% Engineer to Order 36% Machinery Resources 38% 52% Batch Process 27% Risk Management 29% 57% Engineer Procure 23% Construct Human Resources 44% 67% 0% 50% 100% Engineering Procurement Construction respondents have best control but use different 7.6 applications. ETO uses 3.8 and Batch Process uses 4.6. 18
  • 19. The Risk Management Gap• Risk management may be intuitively associated with assuring on time and under budget project performance, but also has implications for the environment, safety risks & hazardous material risks & contractual commitments. – These more challenging areas of risk, which extend beyond the budget and timeline, become harder to manage than more concrete factors like cash, machines and materials. – While 78% of respondents can control schedules in real time and 76% can control costs, a much smaller percentage can manage risk in real time. However, respondents reporting full integration or embedded project control within their ERP system, the ability to control the cost and schedules goes from the high seventies to 90% and 88%. – The ability to manage the materials, the human resources, machinery, cash and risk also increases from the 30% range to about 50% with increased integration. 19
  • 20. Integration Fosters Better Control Engineer to Order Batch Process Engineer Procure Construct50% 45%40% 38% 33% 31% 30% 30%30% 24% 20%20% 10% 10%12% 10%10% 5% 2% 0%0% None Selective Financial Full integration Embedded as a integration integration native part of ERP Engineer Procure Construct also has better integration, so not surprising they have better control 20
  • 21. Varying Levels of Integration• It is amazing that a sizable minority that an engineer to order, engineering, procurement or construction or even batch process oriented company reports no integration between their system of record and project management.• They may be discounting the need for that level of integration or could fear the cost and/or the limited returns that come from point-to-point integrations between disparate products• The data shows us that many elements of project management are underserved by existing ERP offerings.• Overall, the ability of enterprise software to facilitate a spectrum of important business processes increases with greater project integration, with the use of Project ERP being a gold standard. 21
  • 22. Project Integration Facilitates Business Processes 22
  • 23. About IFSIFS is a public company (OMX STO: IFS) founded in 1983 thatdevelops, supplies, and implements IFS Applications™, acomponent-based extended ERP suite built on SOA technology.IFS focuses on agile businesses where any of four coreprocesses are strategic: Service & assetmanagement, manufacturing, supply chain and projects.The company has 2,000 customers and is present in more than50 countries with 2,8 00 employees in total. 23
  • 24. Contact Information: Charles Rathmann, Analyst IFS North America 262.317.7419chuck.rathmann@ifsworld.com

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