Multi mode manufacturing and increased diversification in business models across all industrial sectors is straining the capabilities of many standard enteprise resource planning (ERP) products. This study from IFS North America and Mint Jutras reveals how some highly complex companies need to run as many as seven different types of enterprise applications. Engineer to order manufacturers, engineering procurement and constrution contractors and process manufacturers proved to be the most complex.

1. Complexity in Industrial ERP:
Getting Back to One
Version of the Truth
November 2012

2. Background
In September 2012, a study was conducted among
executives and professionals at middle market to large
manufacturers to better understand how well current ERP This study was
options meet the needs of companies in selected
industries conducted by IFS
North America
This study illuminates: and Mint Jutras,
• How companies in a number of industries face an independent
increasing complexity by way of diversification research-based
towards more demanding business models. consulting firm
• The fact that integration is key to supporting these that specializes in
new and complex business models and processes. analyzing the
• The degree to which more complex industrial business impact
businesses are now forced to rely on a variety of
different enterprise software applications. This of enterprise
increases license and maintenance cost and non- applications.
value added work while decreasing efficiency.

3. Methodology
• A survey was sent to subscribers of
specialized industrial publications. This study was
conducted by IFS
• Sample size: 200. North America
• Respondents were screened for and Mint Jutras,
an independent
involvement in enterprise software research-based
decisions and for company size of consulting firm
that specializes in
greater than $100 million in annual analyzing the
revenue. business impact
of enterprise
applications.

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 and Mint Jutras,
order 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 of enterprise
heavily in enterprise asset applications.
management of process manufacturing
plants and equipment.

5. Major Areas Explored
– How complex is the modern
Applications such as:
manufacturing and industrial  Enterprise Resource
environment? Planning (ERP)
 Project and portfolio
– How does this complexity affect the Mgt (PPM)
number and type of enterprise  Customer Relationship
software applications respondents Mgt (CRM)
 Enterprise Asset
use to run their business? Management (EAM)
– How can industrial companies  Computerized Maint.
Mgt System (CMMS)
better manage this complexity?  Supply Chain Mgt (SCM)

6. Key Findings
– Most manufacturers must deal with managing a variety
of styles of manufacturing including multiple flavors of
“to order.”
– Batch process manufacturers, engineer to order
manufacturers and engineering, procurement and
construction contractors all are involved in multiple
other business processes.
– This creates a need for multiple enterprise applications;
companies average 3.24 different types of applications -
and as many as 7.
– The better an enterprise software environment
facilitates project management in an integrated way, the
better it meets a variety of complex needs.

7. Why Is This Important
– The promise of an enterprise solution like ERP is to pull the entirety
of key enterprise data and processes into a single application. This
yields:
• Enhanced visibility for corporate management
• Improved access to operational data for middle market
managers.
• A consistent, streamlined work environment for individual
contributors.
• Increased diversification and complexity causes the business’
needs to grow beyond the capacity of their existing systems, and
they augment them with additional applications.
– This threatens to defeat the purpose of the enterprise system.

8. 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%

9. 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.

10. ETO is Typically Combined with Other Styles -
Adding More Complexity
Engineer to Order 100%
Make to Order 79%
Make to Stock 50%
Configure to Order 43%
Custom Manufacturing 33%
Design Fabricate Install 21%
Continuous Process 14%
0% 20% 40% 60% 80% 100%

11. ETO is Typically Combined with Other Styles -
Adding More Complexity
• Engineer to Order manufacturers are really multi-mode
manufacturers as they combine ETO with other styles as well.
• This increases complexity.
• Among participants reporting involvement in engineer to order:
– 79% also do make to order
– 50% also have some element of make to stock
– 43% configure to order.
– 33% are doing some level of custom manufacturing. Custom
manufacturing differs from ETO in that the specification or
design is generally provided to a custom manufacturer whereas
an ETO manufacturer typically needs to design a product or
system to meet specific deliverables.

12. Batch Process is Typically Combined with
Other Styles - Adding More Complexity
Batch Process 100%
Make to Order 71%
Make to Stock 45%
Some of these styles
Custom Manufacturing 32% require VERY different
Engineer to Order 32% approaches and types of
enterprise software
Continuous Process 31% functionality.
Configure to Order 29%
Batch Process
Design Fabricate Install 13%
0% 20% 40% 60% 80% 100% 120%

13. Batch Process is Typically Combined with
Other Styles - Adding More Complexity
• Batch process is normally associated with a more repetitive manufacturing
environment. This data, however, suggests that in the modern batch
process environment, make to stock is not the default method.
• Among batch process manufacturers, 71% are making to order – and this
was the most common business model associated with batch process.
• Other associated business models include make to stock, custom
manufacturing, and even engineer to order.
• Engineer to order can be a factor for process manufacturers involved in:
– Adhesives
– Explosives/Energetics
– Chemicals
– Lubricants

14. EPC Involves Multiple Other Styles -
Adding More Complexity
Engineer Procure Construct 100%
Engineer to Order 70%
Make to Order 53%
Custom Manufacturing 50%
Configure to Order 50%
Design Fabricate Install 47%
Make to Stock 43%
Engineer
Continuous Process 40% Procure
Batch Process 37% Construct
0% 20% 40% 60% 80% 100%
Multiple business models are a necessary part of EPC.
Process was a surprise here, but perhaps shouldn’t be
given large diversified industries.

15. EPC Involves Multiple Other Styles -
Adding More Complexity
• Engineering, procurement and construction is the most complex
business model among those dealt with in this study.
– Engineering drives design data and product data management
requirements.
– Construction drives project management and subcontract
management requirements.
– Fabrication or manufacturing requires standard manufacturing
and shop floor management functionality.
• Companies doing engineering, procurement, construction are using
the largest number of different types of applications.
Multiple discrete manufacturing models are a
necessary part of EPC. Batch process may be listed
due to the diversified nature of these companies.

16. Processes Important to Your Business
Repetitive or continuous process MFG 67%
Lean manufacturing 58%
Maintenance of capital assets 52%
Mgt of outside manufacturing 49%
Mgt of one-off projects (engineering or fabrication) 47%
Planning or project mgt for new capital assets 45%
Vendor-managed inventory 35%
Recipe management 33%
Field Service Management 30%
Aftermarket service or support 30%
Satisfying defense MFG business req'ts 16%
0% 25% 50% 75%

17. Important Business Processes
• It is remarkable how many different processes there are and the
degree to which they overlap.
– Repetitive manufacturing.
– Continuous processes.
– Lean manufacturing. Lean is often associated with inventory
reduction in repetitive discrete manufacturing
environments, but this data reminds us it is also relevant to
process manufacturing and to project-driven discrete.
– Process manufacturing.
– Asset management is particularly important in a process
environment, because the machines are delivering as much or
more value than people. Intelligent maintenance of those
capital assets on an ongoing basis is critical.

18. Complicating Factors
• Virtually everyone today has to deal with some level of outside
manufacturing, whether it is offshore, near-shore or on shore.
More than half of respondents reported managing manufacturing
contractors as a key process.
• Field service as a discipline requires effective scheduling and
management of engineers in the field. This extends the application
environment into new functions including dispatch, geospatial
analysis and mobile work order reporting, management of mobile
inventories, etc.
• Field service management, vendor managed inventory, aftermarket
service or support and capital projects management all require
increasing degrees of involvement with the enterprise data from
outside the four walls of facility.
• Defense department requirements for manufacturing tends to be
extremely complex, particularly in the project reporting and control.

19. Which Processes Produce the
Most Software Complexity?
Number of Applications
5.1 After Market Service
7.0 Defense Department
Requirements
4.0 Maintenance of capital
assets
3.1 One off projects
0.0 2.0 4.0 6.0 8.0

20. Which Processes Produce the
Most Software Complexity?
• Several specific business processes stood out as the most
complex, requiring the largest number of software applications.
• Companies in these industries may need to find enterprise
applications that better support their unique needs in order to:
– Reduce software license and maintenance costs by cutting down
on the number of different software products they run.
– Eliminate duplicate data entry and non-value added work.
– Eliminate data silos that prevent thorough, real time visibility of
the business.
– Increase the ability of different parts of the business to
collaborate and work together.

21. Which Processes Produce the
Most Software Complexity?
• Aerospace and Defense and After Market Service are the two most
demanding, followed by Asset Management and project environments like
Engineer to Order and Engineering Procurement Construction.
– Regulation originating with the defense department or ministries of
defense requires very specialized reporting, control, and inventory
segregation.
– Combine this with the very complex projects that characterize the
defense environment and we see why they are running on average 7
different types of applications
– Companies involved with the after market service are field
support, may require depot repair, customer relationship
management, contract management, tools to ensure they meet
specific service level agreements – plus maintenance, repair and
overhaul and other functionality. That is why on average they are
running 5.1 different types of applications.

22. Which Processes Produce the
Most Software Complexity?
• Companies involved with maintenance of capital assets also face a
complex enterprise software environment, with an average of 4
types of enterprise software in place.
• Companies managing one-off projects are actually using relatively
few different types of applications at only 3.1. Based on the
data, they are probably not using enough and they don’t have the
level of control that they need given what we have found about the
lack of integration between project management tools and ERP.
• The kinds of applications that are in place across respondent firms
range from ERP to supply chain management to manufacturing
execution, computerized maintenance management
systems, product lifecycle management or product data
management and others.

23. Enterprise Applications in Place
• ERP is the most widely used application of any in this study. At 71%, this
falls within a range seen in other studies that show between 70% and 80%
of manufacturers have implemented ERP. That percentage drops outside
of the manufacturing space.
• Because ERP solutions have grown in footprint, over time, different
applications could be included as part of an ERP platform. This is generally
a positive because a company running a broader footprint of ERP will not
have to integrate ERP with various other applications.
• In some demanding environments, however, ERP is not satisfying
requirements for human capital management, project portfolio
management, field service management, product data management, etc.
This would force a company to implement additional software products.
• Greater complexity drives the implementation of more and more
enterprise software products.

24. Enterprise Applications in Place
ERP 71%
Suppy Chain Mgt (SCM) 40%
MES 29%
CMMS 29%
Product Data Mgt (PDM) 27%
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.

25. Role of Projects
• Project management plays a key role in many of the different
business models dealt with in this study.
– Very few respondents report strong integration between
systems used for project management and their enterprise
systems like ERP, EAM, etc.
– On the whole, greater integration between project
management functions increases the degree to which an
enterprise software system supports business processes.
– Only 4% report that they use a module within their ERP
system for project management, which would constitute
the highest level of interactivity between projects and
other business functions.

26. What Level of Integration?
Between Project Mgt & Enterprise System of Record
All Respondents
40% 39%
30%
30%
20%
13% 14%
10%
4%
0%
None Selective Financial Full integration Embedded as
integration integration a native part of
ERP

27. Project Integration Matters
How well does your business software facilitate Level of Integration
these important processes? (Rate on scale of 1 to Full or Partial
Total None
5 with 1 being no support and 5 being very well embedded integration
Management of repetitive manufacturing or
3.70 4.05 3.77 3.45
continuous process manufacturing
Management of one-off projects like
3.31 3.81 3.51 2.84
engineering or fabrication
Recipe management as used in batch
3.50 3.74 3.62 3.25
manufacturing
Management of outside manufacturing
3.19 3.76 3.36 2.74
partners and suppliers
Aftermarket service or support through
maintenance contracts, repair, 3.26 3.59 3.53 2.70
replenishment, etc.
Field Service Management 3.24 3.54 3.33 2.93
Maintenance of capital assets, i.e.
3.33 3.67 3.55 2.90
manufacturing equipment
Planning or project management for new
capital assets including manufacturing 3.30 3.82 3.53 2.76
facilities, refits, rebuilds, etc.
Satisfying defense manufacturing business
3.33 3.63 3.57 2.75
requirements
Vendor-managed inventory 3.22 3.77 3.34 2.75
Lean manufacturing 3.20 3.75 3.29 2.84

28. About IFS
IFS is a public company (OMX STO: IFS) founded in 1983 that
develops, supplies, and implements IFS Applications™, a component-
based extended ERP suite built on SOA technology.
IFS focuses on agile businesses where any of four core processes are
strategic: service & asset management, manufacturing, supply chain
and projects.
The company has 2,000 customers and is present in more than 50
countries with 2,800 employees in total.

29. Contact Information:
Charles Rathmann, Analyst
IFS North America
262.317.7419
chuck.rathmann@ifsworld.com