Yesterday I mentioned a survey I helped IFS North America conduct on the impact of mergers and acquisitions on the enterprise applications market. In that same survey of executives and professionals of manufacturers with annual revenues in excess of $100 million we also investigated the requirements for industry specific functionality. We looked at the importance of industry-specific functionality in enterprise applications, investigated how well those needs are met and explored the impact lack of fit might have on the business.
We reached over 340 of these manufacturing executives and found 67% of them required industry-specific functionality and even those that did not still expressed a desire for it. Those who require industry-specific functionality were 12% less likely to have implemented ERP, leading us to believe that not finding a proper fit caused some to delay a purchase, but if implemented, those requiring industry specific functionality rate the fit of their current applications only slightly lower than those who have no industry-specific needs. Solutions are out there if you know where to look.
As you might expect, gaps are often filled with additional applications and spreadsheets. And those requiring industry-specific functionality were more likely to have implemented other applications like Customer Relationship Management (CRM) and Project/Portfolio Management (PPM). And those requiring this added functionality are 66% more likely to require multiple applications rather than being satisfied with a single integrated suite. Gaps in functionality definitely add risk and present barriers to serving customers.
While industry specific functionality is much in demand among the respondent base, vertical industry is not a good predictor of which businesses require greater specialization in ERP. A better predictor may be the types of processes businesses are involved in. Those involved with extensive customer collaboration in high value, complex projects reported a greater need, as did those involved with management of large fixed assets (think heavy duty machinery) and service management. Among those companies with the most pronounced need for greater specialized functionality were those where managing return on assets (RoA) is a core discipline. The need for ERP with enterprise asset management (EAM) functionality creates a “perfect storm” that many enterprise solutions do not handle well. Of course this was music to the ears of IFS since these types of businesses are exactly the type it targets with its extended ERP solution, which also includes Enterprise Asset Management (EAM) and field service functionality.
So how do gaps in solutions impact the business? Regardless of the need for industry specific functionality or not, the most likely impact is the need for non value added work like double entry in multiple systems, negatively impacting productivity. But where the lack of industry specific functionality had a more direct impact was in added risk resulting from not having the needed visibility to the business and in limiting the ability to adequately serve customers.
To see the actual results of the survey, click here.