Managing Automation - May 2008 - (Page 29)

ay rue or false? Because most small and medium-sized manufacturing companies have fairly common, simple business processes, they don’t need to invest in robust, flexible, and up-to-date enterprise software. Most, in fact, can get by with generic applications or even homegrown, spreadsheet-based systems. Those may have been true statements at one time, but not anymore. These days, manufacturing companies with less than $1 billion in revenue and fewer than 2,500 employees face many of the same daunting business challenges familiar to larger, global manufacturers. Confronted with the need to cut production costs and access fast-growing developing economies, for example, small and medium-sized manufacturers are being forced to globalize their operations, just like larger companies. At the same time, small and medium-sized enterprises (SMEs) must respond to rising customer demands for improved service, supply visibility, and product quality and choice. And, like larger companies, SMEs must generate and track information needed to comply with increasing government regulation. And SMEs must do all of that with far fewer IT and other resources than larger enterprises. It’s not surprising, then, that many small- and medium-sized manufacturers are looking to get more efficient by replacing homegrown or legacy systems with modern and more flexible enterprise suites. According to a recent AMR Research survey of companies with fewer than 1,000 employees, 64% said they are increasing IT spending in 2008. Customer relationship management and manufacturing operations software were the two biggest target areas for the spending increase, as SMEs cited the need to satisfy rising customer expectations and respond to competitive pressures. Take JR286 Inc. as an example. The $130 million maker of athletic equipment licensed under the Under Armour and Speedo brands decided 18 months ago it could no longer get by with its aging MAS 90 small business accounting package and a collection of semi-automated and paper-based processes. Increasingly, says Ruben Inofuentes, chief operating officer, the company’s retail customers were demanding visibility into JR286’s available inventory and their own order status. Because the company’s warehouses and distribution centers were run on paper, however, JR286 often couldn’t provide that visibility. “One customer told me we were the worst vendor they had,” Inofuentes recalls. “They didn’t have confidence that we knew how to run a business.” JR286 in March 2007 deployed Oracle’s E-Business Suite applications using a rapid deployment program tailored for mid-sized companies, called Accelerators. The system has helped JR286 provide customers with real-time, reliable available-to-promise information and restore its customer relationships. Such willingness on the part of SMEs to invest in enterprise applications has not gone unnoticed by software vendors that traditionally have focused the bulk of their attention on very large manufacturing enterprises. As growth in the large enterprise portion of the applications market has slowed, market leaders SAP AG and Oracle Corp., in particular, have, in recent months, increasingly coveted the SME space. Although the two companies have significantly different product and software deployment strategies for selling to SMEs, SAP and Oracle increasingly are facing off in an attempt to win over SME hearts and budgets. “The small- and medium-sized part of the market is where all the growth is coming from, particularly if you include divisions of larger enterprises,” says Ray Wang, an analyst at Forrester Research. “There are a lot of software upgrades going on right now, and the focus among SMEs is on improving effi- 29 May 2008 ma Photo: Glowimages Photo: Robyn Mackenzie

Table of Contents Feed for the Digital Edition of Managing Automation - May 2008

Managing Automation - May 2008 Contents Take 1 Award-Winning Shoe-Maker Otabo Alters Course, Shifts Production to China IBM Partners with Universities for Cloud Computing Getting Noise in Production Under Control Incuity Embarks on a Vertical Market Strategy Foundation Intensifies OPC Standard Testing Mailbox Notes PM Roundtable Cover Story: The Business of Going Green Special Report: Night and Day Delivering on Promises Finding the Right Fit for Wireless Driving RFID Product Scan Advertiser Index Next

Managing Automation - May 2008

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