That approach saves a company from the tedium of setting up R/3 from scratch, which entails creating whole tables and forms in wide-open data fields--often the preference of large manufacturers, says Christine Clevenger, SAP product manager for Business Engineer. Large companies want their sales orders, for instance, to look the way they've always looked. "But we're finding that smaller companies are willing to accept more flexibility," she says.
Still, implementing R/3 even with Business Engineer is no day in the park: the process takes on average about six months and can cost a bundle. R/3 Release 4.0 aims to address those weak spots by automating installation even further. It asks simple questions like "Does your company export?" or "Do you reuse packaging equipment that customers return?" Based on the answers, it builds a business model for the company and automatically configures R/3 accordingly.
Oracle, like SAP, has a small-company approach to ERP: a service called FastForward, which it offers with its Oracle Applications family of ERP tools. Under FastForward, Applications is already customized for the client when it's loaded, although the extent of that customization is limited by the vendor. "In consultant-speak, it's called a 'fixed-scope implementation," says Keith Costello, senior director of Oracle Consulting. That means the type, configuration, and number of reports, data charts, and tables are predetermined by Oracle. "If you wanted to modify a standard report, that would not be included," Costello explains.
So if a company wants to, say, tack additional detail to the canned listing of parts numbers in its inventory, it either pays extra or modifies the report itself, using the Oracle software-development tools it gets with the package. "The program is intended to get you up and running," explains Heller. "It's not that you're getting anything less. What you're doing is cutting out the implementation project."
Of course, the small-company specialists would beg to differ, claiming that only software developers with an intimate knowledge of small manufacturers' practices are in a position to optimally preconfigure a product for that market. "We provide systems in which there isn't a lot of care and feeding involved," says John Hiraoka, vice-president of advanced client/server development at DataWorks, a vendor to small and midsize companies. He notes that typical installations of DataWorks' three systems span only three to six months.
That's because DataWorks sells packages already customized to the common operating practices of small and midsize companies in certain industry sectors, like electronics and medical instruments. For example, a company that makes medical equipment regulated by the Food and Drug Administration must adhere to stringent record-keeping requirements, like cataloging all the parts by serial or batch number. So DataWorks builds the necessary part-tracking capability into the systems earmarked for medical-instrument makers. "When we begin the implementation, we're starting 80% of the way there," says Hiraoka.
Yet even companies using simplified ERP systems often require help, whether that aid comes from the software's developer or from a VAR. Tom Dykstra, vice-president of marketing strategies for Effective Management Systems, another small vendor, says the consulting costs for training and installation associated with its Time Critical Manufacturing package typically run from $25,000 to $50,000 over a six- to nine-month period.
To minimize those costs, companies should shop for an ERP package that's already somewhat aligned with the way they work, says Bruce Bond, research director of business applications for GartnerGroup, a technology advisory firm in Stamford, Conn.
For example, a food maker that cooks in batches and then cuts up portions for packaging will go through contortions if it purchases ERP tailored to a manufacturer that assembles products from discrete parts. "Generally, a 75% to 80% fit between software and existing business practices is considered a good match," says Bond.
Tallying up the bill
The cost of ERP is tough to calculate. Pricing depends on such factors as product, number of users, number of modules purchased, and consulting needs.
Noting that all contracts are negotiated individually, a spokeswoman for large-system vendor SAP refused to discuss pricing even in general terms. Most small manufacturers won't buy directly from SAP anyway; they'll buy from certified VARs, systems integrators, and regional consultants.
Oracle's FastForward service includes the software plus installation services, training, and support for one year for $400,000 for the FastForward Financials package and $840,000 for the complete Fast-Forward ERP package. The license that comes with the service covers a system sized for 20 concurrent users.
Effective Management Systems' Time Critical Manufacturing software typically prices out at $75,000 to $150,000 for small companies, plus another $25,000 to $50,000 for training and implementation.
DataWorks sells a range of ERP systems. For example, Vista is for job-shop manufacturers with annual revenues of less than $5 million that make one-of-a-kind products for special orders. AvantÉ is designed for manufacturers taking in $50 million to $500 million. Prices range from $3,000 to $5,000 per user, with implementation costs at or below 40% of the total software tag.
ERP can involve some hardware investment, too. The least expensive server to manage the system, probably running Windows NT, might cost from $10,000 to $25,000, while a high-performance server running Unix could reach $100,000. Client workstations typically average about $2,500 apiece. A company not already suitably equipped might have to throw in an additional $10,000 for network equipment, printers, and other peripherals.
