Manufacturing Software Costs: 3 Hidden Factors
As manufacturers look to survive through uncertainty, grow their operations, increase profits, and prepare for the future, they often take a hard look at the systems they use every day. How can systems like ERP, MES, or other adjacent systems make quoting, sales orders, production planning, job tracking, invoicing, or fulfillment better?
“You lose with potential. You win with performance.” – Bill Parcells
For shops that are expanding, especially made-to-order firms, justifying the right path to take can be daunting. If you’ve outgrown scheduling spreadsheets and paper travelers, your next move is a software solution. But a typical ERP system can take months or quarters to implement, and you don’t have to search far to read a horror story about a system that’s bloated, slow, or your team hates to use.
Even with that baggage, the gains of better production software is real. But the path to those gains isn’t always easy.
The same forces have shaped manufacturing operations technology like ERP, MES, PLM, and more to move to the cloud, with a delivery model of Software-as-a-Service. With all this change, some of the costs of manufacturing software can get lost.
Let’s breakdown elements of cost and value and how manufacturers can set up maximum return on investment:
#1 Go Fast, Get Value
If you’ve been a part of an ERP implementation, you know that time can, in fact, stand still. Or at least seem like it. But the brighter future of software – including how it’s implemented – is here. Implementation timelines measured in quarters or years are over. Now more than ever, manufacturers need to move fast to seize opportunities in the market and make sure a long, drawn-out implementation won’t cause a slowdown.
Speed also means having a system that is built for modern users. Your team can’t wait to access quotes, sales orders, bom/routing, product or operation documents. You don’t want to wonder how their jobs are performing, what WIP is on the shop floor, and whether enough inventory is available to meet demand.
#2 Don’t Fall Behind on Day One
Legacy systems were delivered “on-premise”, meaning they were installed on local servers and would require manual updates usually done by expensive consultants. What modern software buyers know is that the cloud is a better way to get automatic improvements, delivered as soon as they’re ready, at no additional cost. That’s why the cloud is so powerful: the money you spend on a software subscription goes to making the software better so you re-subscribe. The incentive for the software creator (renewal) is aligned with your incentive (getting value so you renew).
#3 Avoid the IT Support Trap
When you buy on-premise software, you become an IT support company. Every integration, customization, and specific workflow adds to a house of cards. The wrong move and the whole system grinds to a halt. That means your business can be at the mercy of a consultant who is ready to start billing you, or an internal employee with enough institutional knowledge that they call the shots. Not a good position to be in when all you really want to do is fulfill orders and keep customers happy.
From entertainment (Netflix), travel (AirBnB), to investing (Robinhood) and beyond, the way we all use technology and what we pay for it has evolved. And with it, the way manufacturers should evaluate total cost of ownership needs to evolve as well. The cloud and subscription software has opened up new possibilities for constant improvement without all the pain, and with more value than ever.
To see firsthand what the future of manufacturing ERP software looks like, schedule a live demo today.
// This article was last update 4/04/23.
