The Business Case

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Manufacturing Business Technology Magazine

Midsize manufacturers, i.e., those with annualrevenues between $50 million and $1 billion,must compete against the very largest manufacturingenterprises. Those same multibillion-dollar globalenterprises often are the midsize manufacturer’s mostimportant customers.

Midsize manufacturers, i.e., those with annual revenues between $50 million and $1 billion, must compete against the very largest manufacturing enterprises. Those same multibillion-dollar global enterprises often are the midsize manufacturer’s most important customers.

How can midsize manufacturers succeed in an era dominated by global brand-name makers of goods? Strategic initiatives involving lean manufacturing, product innovation, value-adding services, performance management and rationalized, global production often comprise the means to increased competitiveness and improved customer satisfaction for midsize manufacturers.

Information technology – especially enterprise resources planning (ERP) solutions – serves as a platform for these strategic initiatives, and as a competitive differentiator in its own right.

For years, technology spending by midsize companies as a percentage of revenue lagged that of the largest companies. According to Boston-based AMR Research, average companies spend nearly 4 percent of revenue on information technology, and are looking to increase spending in 2006 by 5.5 percent (see Figure 1).

This increase will be even more pronounced for midsize companies, as an AMR survey indicates more than onethird of small and medium-sized businesses are implementing ERP, and 71 percent of companies plan to increase ERP spending in 2006.

This is so, says AMR, because many midsize manufacturers still use off-the-shelf accounting software, outdated manufacturing resources planning systems and a mass of spreadsheets to manage their businesses. These manufacturers, says AMR, need “applications designed for their industry, easy-to-use interfaces, updated architecture, and extended functionality ... [for] customer management, human resources, and supply chain optimization.”

A SYSTEM OF RECORD
ERP solutions are the system of record for manufacturing companies, and the platform for a wide range of integrated business applications. Until recently, the costs – for consulting, licensing, implementation, upgrades, training and other services – as well as the rigidity of many ERP systems, made them unsuitable for many midsize manufacturers.

Technology advances, emerging business models and better understanding of market needs have led to a new generation of ERP systems that deliver needed flexibility to midsize manufacturers at a cost they can afford.

One ERP vendor, Epicor Software Corp., says use of Microsoft .NET as the basis for ERP is key.

Epicor’s Vantage, “a Microsoft platform-independent product,” says AMR, “targets discrete manufacturers in make-to-order industries such as electronics, industrial equipment, medical devices, and capital equipment. ... Vantage’s release 8.0, with 100-percent service-oriented architecture, includes embedded advanced planning & scheduling, and multiplant management.”

According to Bart Elia, Epicor systems architect, “The .NET Framework allowed us to focus on developing application functionality on top of a robust .NET infrastructure. We didn’t have to build the infrastructure, and won’t have to maintain it.”

Microsoft .NET is a strategy for connecting systems, information and devices through Web services for ease of collaboration and communication.

The technology is integrated throughout Microsoft products, delivering the capability to quickly build, deploy, manage and use connected solutions.

For manufacturers using .NET-based ERP, computing-infrastructure flexibility translates into business agility, gained by greater ease and less cost in implementing business-process changes. This enhanced agility plays to the midsize manufacturer’s greatest strength, which is the ability to react more quickly to market changes than larger, more bureaucratically laden enterprises.

It’s also the case that a .NET-based enterprise system is easier to implement and maintain, integrates seamlessly with other systems – including Microsoft desktop productivity tools – and puts users in a position to benefit from other Microsoft technology, including the vendor’s portal product, Microsoft SharePoint.

UNDER THE COVERS
ACE Clearwater Enterprises of Torrance, Calif., builds complex formed and welded assemblies for the aerospace and powergeneration industries. It sought the most current technology to replace a 12-yearold UNIX-based system, and found it in Epicor Vantage.

Says King Lum, ACE Clearwater director of progress, “The UNIX-based system was cumbersome and not user-friendly. The .NET infrastructure gave us the ability to implement rapidly and efficiently. It was easy to install the database server and .NET on the clients. We had the whole infrastructure in place before we began the implementation.”

Any software vendor that runs on Microsoft SQL Server can claim .NETenablement. And a wide range of enterprise and business-application vendors have pledged themselves to the framework. But many of these vendors have simply added Web services wrappers to an existing code base, and thus fail to expose the business logic. And it’s in the ability to use business logic to set business policy that a major benefit is found.

Systems built in the .NET environment should accommodate full use of Web services. But not all systems deliver the needed granularity of a true serviceoriented architecture. Thus, flexibility to customize or personalize the system isn’t available.

As Lum says, “While we found more than 100 enterprise solutions said to be .NET-based, that list got very short once we started looking under the covers.”

To react flexibly to customer requirements, for example, supply chain managers must know production status, quality data and other plant-level information. They also need an easy way to share that information with supply chain partners.

At ACE Clearwater, Epicor’s Vantage 8 already has delivered a real-time grasp of work-in-process and capacity constraints. “We deployed this system to optimize scheduling, better manage costs and increase visibility over everything we do – including sales orders, job orders and purchase orders,” says Lum. “That visibility on a real-time basis is a key benefit.

Customers constantly call wanting order status.”

MORE ON WEB SERVICES
“We believe Web services will be the way you interoperate,” says Microsoft’s Don Richardson, director of manufacturing ISV solutions. “It’s the common thread the industry is rallying around.”

Web services are pieces of software code, similar to program objects, which can be called and used by other programs or program objects. True Web services are wrapped in a layer of industry standards and communication protocols, allowing them to be deployed across diverse platforms and architectures, and used for sharing information and functionality. Groups of Web services linked together to perform specific functions are called composite applications.

John Hiraoka, a senior VP with Epicor, says .NET programming basically exposes smaller pieces of business information to other systems and processes. “If you look at how traditional applications are built, they are structured around modules,” says Hiraoka. “In a .NET environment, the programming is down to the component level, exposing smaller pieces of information – like pricing – as Web services.”

This eases integration, says Hiraoka, because “you’re now able to see the business flow and information pattern in these granular Web services, and link systems from a management perspective as opposed to a technologist’s perspective.”

Web services allow an enterprise system user, for example, to easily plug into other .NET systems – such as Epicor’s customer relationship management (CRM) solution, Clientele CRM.NET – to share information. It makes user interfaces, composite applications or mobile solutions easy to configure and deploy.

According to Paul Farrell, Epicor VP of worldwide research & development, “What had been very technical work that might require programmers can now be done by a business analyst. The advantage is that analysts understand the business goals.”

THE DAY TO DAY
Synovis Life Technologies of St. Paul, Minn., is a diversified company that develops, makes and markets medical devices for surgical and interventional treatment of disease.

Resident on an NT-based enterprise system from Epicor, “One person ran the system when we were a $4.1 million company,” says Controller Alex Neutgens. “Two people run it now that we’re a $32 million company. They spend their time adding to its capabilities, and not simply maintaining the architecture or solution.”

Separating business logic from source code makes Epicor Vantage functionally rich and easy to integrate. But it also makes ongoing system administration and maintenance easier, without the labor intensity commonly associated with customizations and upgrades in modulebased environments.

For ACE Clearwater, its two satellite sites were able to tap into the main system in Torrance without using an extra layer of Microsoft Terminal Services technology. Installation and updates to the system are administered centrally. “No touch” deployment allows updates and customizations to flow from the server to clients upon login, without needing client interaction to deploy changes.

And during system upgrades, any customizations persist, with only the base system upgraded.

“Our legacy system had proprietary communications and cabling,” says Lum. “The flexibility of .NET, as well as use of standard Ethernet, made for a low-cost implementation.”

The Windows environment itself contributes significantly to the productivity gains that follow from Microsoft .NET. As Lum observes, “Users now have multiple windows open instead of having to drill down through four or five. It’s very easy to copy and paste from one window directly into, for example, an Excel spreadsheet.”

Besides .NET, Microsoft offers a technology stack that includes BizTalk Server 2006, Microsoft Office 2003, SQL Server 2005 and SharePoint Portal Server 2003.

Over the next several years there will be increasing operability between ERP systems and the personal productivity tools found in Microsoft Office.

Finally, the flexibility that comes with Vantage 8 must extend beyond the enterprise’s four walls. To do this, manufacturers are making greater use of portal technology, such as Microsoft SharePoint.

More than that, says Erik Johnson, technology director, “Users are beginning to ‘live’ outside the classic application screens, and use tools like Outlook and SharePoint to understand what’s happening in the business. They can then drill across from those tools into the applications as needed.”

In these instances, SharePoint acts as pre-built plumbing in support of needed collaboration. Says Scott Smith, a senior manager with Epicor, “Microsoft provides a secure, collaborative portal infrastructure that we can build on and tie to our applications and role-based, industryspecific content.”

It is .NET, adds Johnson, that lets Web services integration to pull it all together.

Combining portal technology with Web-services-enabled ERP, says Smith, allows manufacturers to streamline almost any supply chain process. In conclusion, he says, “Microsoft technology breaks down barriers.”

And, it might be added, breaking barriers using Microsoft .NET-enabled Vantage 8 increases business agility by means of rich functionality and appropriate customization; ease in implementation, administration and maintenance of the enterprise system of record; and the kind of supply chain collaboration that is only possible with an enterprise system resident on today’s ruling technology infrastructure for midsize manufacturers of all types.