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Manufacturers begin
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CLOUD ERP CASE STUDIES AND TRENDS FOR MANUFACTURING EXECUTIVES
ecurity and control issues have plagued
thecloudERPbusinesscaseformanufac-
turers, but the relief for IT is increasingly
tuning out these common culprits. Learn
how four manufacturers leveraged their cloud ERP investments,
emerging ERP trends to watch out for, and tips for manufacturers
with digital aspirations.
S

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Manufacturers begin
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How manufacturing
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MANUFACTURERS BEGIN TO EMBRACE CLOUD ERP
SOFTWARE
Jim O’Donnell, News Editor
Manufacturing has been one of the slowest enterprise segments to move their
ERP systems to the cloud, but more options and more familiarity with the
advantages of the cloud may be changing this.
ThereasonsmanufacturershavebeenreluctanttoruncloudERPsoftware
areasvariedasthecompaniesthemselves,buttheygenerallyboildowntotwo
mainissues:securityandcontrol.Now,however,itappearsthatmanufacturers
are going to the cloud for the reason that most other segments do: It’s simply
less hassle to have someone else run ERP. This is particularly attractive to
smaller manufacturers who often lack the IT resources to run ERP systems
on-premises.
OptionsaboundnowforanycompanythatwantstoruncloudERPsoftware
systems. Large vendors like SAP, Oracle, Microsoft and Epicor have come out
with cloud versions of flagship ERP systems or ramped up new cloud-first
products. Smaller players in the ERP market also offer cloud versions, some

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Manufacturers begin
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Four developing ERP
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How manufacturing
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that have been born and raised as cloud-only systems. Some of these smaller
vendors may be more attractive to manufacturers because they offer targeted
functions for manufacturing or specific industry segments.
LUXURY VAN BUILDER FINDS CLOUD WORTH INVESTMENT
Waldoch, based in Forest Lake, Minn., a company that builds luxury vans and
customized trucks, moved to the cloud with Epicor ERP two years ago. The
resultshavebeensomewhatmixed,butsatisfyingforthemostpart,according
toBillyWaldoch,thecompany’sgeneralmanager.Notworryingaboutmanaging
the system is a plus, but Waldoch is concerned with diminished control over
the system.
“AnyERPhasstruggleswithuploadtime,butthenicethingabouthavingit
inthecloudisthatwedon’thavetoworryaboutitgoingout--theydo--sowhen
it does go out we’re calling them wondering why we’re down or vice versa,” he
said.“Thebadpartaboutthatisthatit’snotasfast,andwecan’talwaysdowhat
we want to do with it because it is in the cloud. When it’s on-site we can mess
withitanddowhatwewant,andit’salotfasterbecausewhenyou’regoingover
the Internet, you’re dealing with how fast your Internet speed is.”

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Manufacturers begin
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How manufacturing
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Althoughcosteffectivenessisoftentoutedasamajorreasontomovetothe
cloud, Waldoch cautioned that this may not always be the case. Implementing
Epicor ERP on the cloud cost much less upfront than any of the on-premises
systems that Waldoch considered, but there have been significant ongoing
costs. Nevertheless, on balance, the system is worth the investment, Waldoch
said,anditallowsthecompanytorunERPwithfarfewermanagementissues.
“Ifeverythingworksright,youwillsavemoneywithacloud-basedsystem,
butit’stheinitialgettingitupandgoingiswhatalotofpeopledon’trealize,”he
said.“Iwouldsaytoanybodyelsethat’slookingforone,getthesalesperson,get
theITperson,getthepersonthatyou’regoingtobecommunicatingwith[from
the vendor], and if there’s a problem, you get all those people involved before
you make the decision.”
CLOUD-BASED ERP FREES UP IT DEPARTMENT
Freeing up the IT department has been a major benefit of running ERP in the
cloud for AMVAC Chemical Corporation. The company, based in Newport
Beach, Calif., develops, manufactures and markets crop protection and other
agriculturalproducts,withthreemanufacturingfacilitiesintheU.S.andthree
in other countries. AMVAC has been running QAD’s ERP system since 1996

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Manufacturers begin
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Four developing ERP
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How manufacturing
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and moved everything to the cloud in 2012, which has helped them improve
business processes, according to Ranier Laxamana, AMVAC’s IT director.
AMVAC, a relatively small company that competes against giants like
Dow, DuPont and Monsanto, does not have the resources to employ a large IT
department,Laxamanasaid.WhenthecompanyranQADon-premiseshistwo-
personITstaffspentmostoftheirtimeondatabaseandsystemadministration
issues. Now that AMVAC is in the cloud, all that administration is done at the
QAD data center, and the IT staff focuses on more important tasks.
“WhywerewespendingsomuchofourtimekeepingQADupandrunning,
when somebody that does that for a living can do that for us?” Laxamana said.
“Freeing up their time allowed them to help the business grow because now
we spend most of our time sitting with our business unit managers and asking
them what their pain points are, what we can automate for them. We ended up
implementingalotofprojectswithinQAD,somemodulesthatwe’dneverused
before.”
THE CLOUD FREES UP ERP FOR SMALLER MANUFACTURERS
Thecloudmaybeanoptionworthconsideringforlargeorganizationswithfully
staffed IT departments, but it might be the best option for small companies.

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ThiswasthesituationforNationalCircuitAssembly(NCA),asmallelectronic
manufacturingservices(EMS)firmthatbuildselectronicproducts,primarily
for the military and automotive companies. The company, based in Garland,
Texas, recently implemented a cloud ERP system from IQMS to tie together
its headquarters and two manufacturing facilities.
“OneofthereasonsweimplementedIQMSisbecauseofourmultipleplants
and being able to run from a central location, where we have the individuality
for each plant to have their own PLM [product lifecycle management], but at
the same time someone here in corporate can look at the combined for both,”
RaulCantero,NCA’svicepresidentofoperations,said.“Youcandothatwithan
in-houseserver,butacompanylikeoursdoesn’treallyhaveanITdepartment.”
Cantero explained that NCA needed to replace an aging and inadequate
ERP system, and after considering several on-premises and cloud systems,
decided that IQMS’ cloud system made the most sense given its available
resources.
“My IT group here is two -- and one of them is me -- so running the ERP
systeminhouseissomethingwecan’taffordrightnow,”Canterosaid.“Weare
obviouslypayingforittohaveitonthecloud,butitputsitwithsomebodyelse.
I don’t have to worry about it. The updates are automated, and the backups are

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Manufacturers begin
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Four developing ERP
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How manufacturing
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automated, so if we ever have a hiccup I don’t have to panic, so that peace of
mind is worth the price.”
CHANGING REGULATIONS SPUR A MOVE TO THE CLOUD
The major ERP vendors are revamping their cloud strategies with a variety of
products and deployment options. SAP offers the SAP HANA Cloud Platform
andthecloud-firstSAPBusinessByDesign,anERPproductaimedspecifically
at the SMB market. Microsoft earlier this year released a cloud-first upgrade
of its Dynamics AX ERP, which is deployed from the Microsoft Azure cloud
platform.
This means that Dynamics customers are going to the cloud eventually,
whethertheywanttoornot.UmbraGroup,anItalianaerospacemanufacturing
company, has run Dynamics AX on-premises since 2006 and has been an
early adopter of the new cloud-first version. The company has no choice in
themove,accordingtoGiacomoBonora,DynamicsAXapplicationconsultant
and developer at Umbra, but this is only possible now because of industry
regulation changes that allow cloud deployments.
“In our business, you have strict laws and market requirements about
document segregation, security and access, and because of these regulations,

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Manufacturers begin
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Four developing ERP
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How manufacturing
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wecouldn’tdocloudbefore,”Bonorasaid.“ButnowtheDynamicsAXsolution
is certified by the major authorities like the FAA in the U.S., so it’s compliant
with their requirements.”
Bonora said that when the regulations changed, Umbra began to evaluate
an upgrade to the cloud-first Dynamics AX. “We did an analysis about cost,
maintenance and everything, and it appeared to be better in terms of cost
control,intermsofinvestmentandsoon,”hesaid.“Ican’tsayyetthatif,inthe
end, we will decide to keep everything on cloud or not or take advantage of the
hybrid solution they’re offering up next year; it depends.”
These moves to the cloud by manufacturers are not that surprising as they
grow more comfortable with the technology, explained Adam Boyce, manager
of IT strategy for Panorama Consulting, a Denver-based firm that provides
ERP-related services.
“Traditionally, a lot of manufacturing companies have a lot of positive
controlovertheirsystemsandinformation,especiallyveterancompaniesthat
haveanestablishedIT.Forthem,alotofitisbeingabletobecomecomfortable
and transition,” Boyce said. “One of the bigger advantages that you hear about
thecloudstructureisthatbecausethere’sminimalhardwareandinfrastructure
andyou’reusingthinclient,there’sacostbenefit.Soforacompanytohavethat

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Manufacturers begin
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How manufacturing
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established IT, [they] might have a concern on how they adopt this new model
because they’re familiar with what they have.”

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Manufacturers begin
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Four developing ERP
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How manufacturing
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FOUR DEVELOPING ERP TRENDS THE C-SUITE MUST KNOW
Christopher Wilder, Practice Lead and Senior Analyst, Moor Insights &
Strategy
Nimbletechnologystartups,widespreadmobilityandsocialcollaborationhave
exerted major changes on society at large, and enterprise application vendors
are finally following suit. Where enterprises were once tied to extremely
expensive systems that required lengthy implementation cycles -- and to the
vendors that sold them -- today, radical changes are occurring in the ERP and
enterprise systems market.
ERP and business applications vendors are in danger of being caught and
passed by born-in-the-cloud competitors that are just quicker to recognize
developing ERP trends and other disruptive forces. Software vendors that
want to play catch-up face a number of obstacles, but with proper planning,
positioningandfocus,theycanidentifyanicheandcapitalizeontoday’smarket
needs.
However,businessleaders,whomustalsoadapttothischange,havemuch
togainastheERPmarketevolvesintoonefocusedonusersandsophisticated,

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forward-looking technology. Here are four trends happening today that CEOs
and other business leaders should watch.
ENTERPRISE UX AND UI ARE QUICKLY BECOMING A BUSINESS PRIORITY
One of the most important ERP trends is the step away from clunky, difficult-
to-use systems. Indeed, user experience is driving the development of new
systems. In the high-velocity, data-driven world we live in, many CEOs want
anintegratedsupplychainwheretheyhavereal-timeintelligenceandvisibility
across the entire network to ensure they can make effective decisions and
actions.Newtoolsarebecomingavailablethatgivecompaniesreal-timeinsight
into not just business activities, but also customer personalization, including
what their customers need and what products and services they can offer.
Consolidating contextually relevant information into a single, customizable
dashboard has become vital for ensuring businesses can quickly respond
to customer and market demands. Further, users are demanding interfaces
that are clean, easy to use and customized to fit the way they interact with the
system.Executivesandemployeesnolongerwanttosearchthroughfiles,tables
and systems to find the information relevant to their role.

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INTEGRATION IS OFFERING NEW OPPORTUNITIES
One of the most critical aspects and, oftentimes, the most challenging issue
for companies is getting their systems properly integrated. Historically,
integration has been accomplished by paying systems integrators enormous
amountsofmoneytowritelargeamountsofcodethatlinkAPIs,processesand
legacy or disparate systems onto a common infrastructure. In recent years,
more companies are emerging that develop products to integrate things like
information and data, and advances in data management tools are making
it easier for companies to coalesce multiple data formats and sources into a
common information model or data standards.
On the other hand, there is more complex business process integration --
the flow of information across a business process or workflow that touches a
constituent -- whether those are customers, suppliers, partners or employees.
To be successful, process integration must merge information in a way that
appropriately solves business problems. As such, it is both more expensive
and difficult to integrate, with fewer companies that can deliver. But that
is changing. In addition, as vendors rise to meet this challenge, so too must
implementation partners and consultants who must work on updating their
skills to meet new demands.

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Manufacturers begin
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COLLABORATION IS BECOMING MORE SOPHISTICATED
Mobility,socialnetworks,cloudandcollaborationarenolongernew,disruptive
factors--theyarethenorm.Mobileandsocialcapabilitiesallowcompaniesto
bettertrackcustomerinteractionswiththecompanyandrespondtocustomer
demands or product issues more quickly -- capabilities that enterprise
applicationvendorsarerespondingto.Indeed,morevendorsareincorporating
into their products the more sophisticated mobility, collaboration and
notification systems to help to facilitate improved communications and
process among lines of business, customers and employees. This is critical,
since real-time collaboration across functional business areas improves
application usage and adherence, faster response times and streamlined
workflow by giving employees the tools necessary to make informed data-
driven decisions dynamically. Further, more companies are attempting
to access and use structured data -- including data on parts, suppliers and
components -- and pair it with unstructured data from social networks on
pricing trends, quantities and global intelligence to gain revenue-generating
insights. With more vendors focusing on such capabilities, a greater number
of choices will become available.

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MACHINES AND CUSTOMERS WILL INTERACT IN NEW WAYS
New data models, artificial intelligence, machine learning and analytics are
becomingthemostcompellingelementsofthefutureofERP.Thesenewtech-
nologies change how we interact with customers, develop sales pipelines, and
bring awareness and consideration to marketing opportunities.
These technologies are being used today to help companies improve cus-
tomersatisfactionwhilereducingoverallcosts.Takebots:Thesepiecesofsoft-
ware use artificial intelligence and machine learning, and can be programmed
toidentifyanomaliesordegradationinequipmentperformanceovertimeand
automatically make adjustments autonomously. If something breaks, these
bots open a trouble ticket through the help desk, schedule the maintenance,
orderthereplacementpartsandhavethemdeliveredtothetechnicianwithout
any human interaction. Once the technician repairs the unit, the system then
closes out the trouble ticket and resumes its monitoring.
In another example, sensors are being applied to train doors to measure
pressurewhenthedoorsclose. Howthedoorscloseisanindicatoroftheover-
allhealthofthetrain,andtakingatrainoffthetracksformaintenanceiscostly.
As pressure declines over time, these sensors proactively notify maintenance
to schedule the train for repair. This gives the operators the ability to ensure

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Manufacturers begin
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scheduledmaintenanceandupkeeparecoordinatedanddowntimeisreduced.
Eachoftheseexamplesuseintegratedinternalbusinesssystems,suchasMRO,
ERP and field service automation to perform each task.
Developing ERP trends and other changes to the business landscape will
demand profound transformation from organizations over the next few years.
Companies that wish to thrive will need to make drastic changes -- not only
to their enterprise systems, processes and technologies, but a fundamental
change in philosophy, metrics and workflows.

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HOW MANUFACTURING COMPANIES CAN JOIN THE
DIGITAL REVOLUTION
Diann Daniel, Editor
The concepts of digital manufacturing, digital thread and digital supply chain
can seem far more straightforward and easy to understand when discussed in
general terms. But, in practical terms, when fully realized, these concepts are
huge and complex, and it’s understandable that they can seem overwhelming
to business leaders who want to bring their manufacturing processes into the
“digital revolution.”
Indeed, entire organizations across the globe are devoting themselves
to addressing the complexity of digital manufacturing and helping business
leaders create roadmaps for the digital manufacturing future. In the United
States,theDigitalManufacturingandDesignInnovationInstitutewascreated
for just this reason. DMDII, a public-private partnership, focuses on helping
businessesdevelopthetechnologiesandprocessestosolvetheirmostpressing
manufacturing challenges.

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In part two of our interview with Brench Boden, CTO of DMDII, Boden
shares advice on how business leaders can simplify a complex issue and take
steps toward joining the digital revolution. And be sure to check out part one,
where Boden discussed digital manufacturing benefits.
WHAT FIRST STEPS TO BECOMING DIGITALLY ENABLED DO YOU RECOMMEND
THAT COMPANIES TAKE, PERHAPS BEGINNING WITH THE SUPPLY CHAIN?
Brench Boden: The challenge of the digital supply chain is the maturity of
each individual supplier -- their capability for operating in a digital environ-
ment. There are some medium-sized suppliers that are incredibly sophisti-
cated. They have a couple of engineers. They have access to design tools. They
have computer-numerical controlled equipment on the floor. They may have
3Dprintingcapabilities.So,therearethosesuppliers--they’rereadyforadigi-
tal age; they have the skill set to do it -- but at the other end of the spectrum are
theso-calledmom-and-popshops,whichmayhavenoequipmentthatactually
can be interfaced to a computer. So, the answer to the question is it depends.
If you’re at that low end and you have no digital equipment, there are a
lot of different ways to go about [creating some digital manufacturing capa-
bilities]. You can engage state or local support organizations -- every state and

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municipality has those. You can engage the Department of Commerce Manu-
facturing Extension Partnership for help in working on some of those issues.
DMDII actually has a project that will be starting soon where we are trying to
develop a very low-cost -- like $500 to $1,000 -- kit that can be used on a very
old piece of equipment to make it internet accessible and for us to be able to
draw data off of that. Now, that doesn’t necessarily make it a fully digital … but
it’s a start in that direction.
If you’re an OEM, one of the things you have to wrestle with is: I want to
[fullyjointhedigitalrevolution],buttherearejustsomecompaniesinmysup-
plychainthatI’mgoingtohavetoholdtheirhand.I’mgoingtohavetogivethem
accesstomytoolsjusttohelpthemdobusinessbetter.AnobjectiveforDMDII
is to look at: How do we transform build to print, which is the shorthand way
of talking about suppliers who just take the design and they get the contract
award and then they go off and figure out, ‘How I am going to build this?’ And
theybuildandtestandsenditin.So,howdotheylookatthisprocessandreally
transform that using digital manufacturing capabilities?
LET’S EXPAND THIS DISCUSSION TO THE MORE OVERARCHING ISSUE OF EN-
ABLING DIGITAL MANUFACTURING. WHAT FIRST STEPS OR AREAS SHOULD

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COMPANIES CONCENTRATE ON TO GAIN SOME OF THE BENEFITS OF DIGITAL
MANUFACTURING?
Boden: My recommendation, if I was sitting across from a manufacturing
company,wouldbetosay:Pickacoupleofyourmostcostlyissuesoryourmost
difficult problems [to start with]. Maybe you have a quality problem because
you’re not tracking the variability of your production processes, maybe your
designfunctiontakestoolong,maybeyouarelosingmarketsharebecauseyou
don’t know what your customers’ usages is. But it has to be business-objective
driven.
Don’t go out and buy a bunch of monolithic software. First, look at what
areyourmostcostlyissuesorwhatyourgreatestopportunitiesare.Startfrom
there and build outward.
So, that’s sort of a strategic look at how to do digital manufacturing. No
businesshaseverbeensuccessfultransformingsomethinglikethisovernight.
Theimplementationsofbig,hugesoftwareprogramsendupcostingalotmore
than anybody ever thought.
HOW DOES A DIGITAL THREAD FACTOR INTO YOUR ADVICE?
Boden: My advice would be to pick a key problem and think digital thread in

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how you solve that problem. What data would make this decision more effec-
tive? What insights do you wish you could get that you don’t have now when
you’remakingthisdecision?Ifyou’vemadethisdecision,istrackingtheresult
of that decision and rationale important for something later in the process?
My other piece of advice would be -- and this is based on a lot of dialogue
in the Institute and this is, frankly, the purpose for it -- you should know that
you’re not alone. Everybody’s got similar problems. What DMDII provides is
an opportunity to collaborate with others who have similar issues. They may
be large companies, they may be small, they may be universities who have
particular research interests, but the value is that we can create these small,
temporaryecosystemstoworkondigitalmanufacturingchallengeslike,‘How
doIcreateadigitalthreadforreliabilitystudies?’or,‘HowdoIgetbettervisibil-
ity in my supply chain?’ or, ‘How do I do digital work instructions and present
them through some augmented reality?’ Or the members define the problems
and then they join together in odd teaming arrangements -- companies you
would never expect to work together -- because they have a common interest
in whatever that particular [problem] is.

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