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Upgrading Enterprise Systems for Success in Process ManufacturingAberdeen Group
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The promise of ERP systems for the Process Industry
As the foundation of a successful
manufacturing organization,
ERP helps
Discover potential operational efficiencies
Promote standards throughout the organization
Manage front and back-end processes
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The Process Industry is not without challenges
Comply with regulations
Reduce operational costs
Face increased competition
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Aberdeen highlights top pressures to improve operations
Customers demand lower costs Need competitive differentiation
53%
65%
14%25%
43%35%
Need to comply with current and future regulations
Compliance is almost double for Process
Manufacturers
Keeping costs low is the
top pressure
Competitive differentiation is important
Source: Aberdeen Group, August 2015
All Respondents
Process
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What are the impacts of Process Compliance?
Maintaining compliance drives lower operational
costs and enables competitive differentiation!
Every year, compliance regulations increase in number and complexity
Out of compliance means millions in lost revenue
Without operational efficiencies, maintaining compliance can raise costs
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What causes non-compliance for Process Manufacturers?
Once a year
25%
15%
21%
14% 14%
8% 9%12%
9%
15%
4%
8%
Every 2 years Every 3 years Every 4 years Every 5 years More than 5 years between upgrades
We do not perform upgrades
All Respondents
Process
Source: Aberdeen Group, August 2015
Average Length between Upgrades to ERP
Process Manufacturers:
Average time between upgrades is over 3 years,
longer than all others
Twice more likely to not upgrade their ERP
systems at all
Primary reason for out-of-compliance is outdated enterprise systems
24%21%
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Process ‘Leaders’ outperform ‘Followers’
Source: Aberdeen Group, August 2015
Leaders drive higher level of compliance (99%)
This reduces impact on revenue due to out-of-compliance fines
Leaders deliver better process and operational efficiency
This reduces substantial costs associated with recalls
Leaders drive 9% higher Operating Margin than the Corporate Plan It increases top line
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What are Process Leaders doing differently?
Leaders build compliance & traceability into their production systems
They have clear understanding & control of production processes
This in turn reduces dependence of testing to ensure higher quality
Leaders drive lower costs and stay compliant. Consequently they increase chances of success in a highly competitive industry!
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Process Leader’s advantage: staying on top of technology!
Implemented on latest release
43%
27%
One release behind
40%
18%
Leaders
Followers
Source: Aberdeen Group, August 2015
Process Leaders understand the pitfalls of
obsolete technology
Over 80% of Leaders are either on latest
release or one behind
Leaders are 59% more likely than Followers to be on the latest ERP
Why upgrade ERP? Outdated systems can’t handle new reporting & responsiveness requirements of regulations, resulting in costly non-compliance!
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ERP upgrades drive Enterprise KPIs
Source: Aberdeen Group, August 2015
Higher operational KPI’s 94% On time & complete shipments with upgrade Vs 87% without
Improve bottom line (KPI) 17% Reduction in inventory with upgrade Vs 9% without
Increase top line (KPI) +5% increase in operational margin with upgrade Vs -2% without
On Time and Complete Shipment
94% 87%
Reduction in Inventory
17%
9%
Operating Margin Vs. Corporate Plan
+5%
-2%
The Benefits of Upgrading ERP
Latest Version
Not on Latest Version
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Cloud can help keep your ERP up-to-date
52% 45% 38%
38% 31% 28%
Lower Total Cost of Ownership
Configuration Flexibility
Reduced Cost and Effort of Upgrades
Ability to Scale Solution
Lower Upfront Costs
Ease of Use
• Cloud ERPs are constantly updated, with little disruption to the organization
• Cloud also lowers total cost of ownership (TCO) and scales easily
• So you can simply focus on serving your customers!
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To summarize...
Process Manufacturers are under pressure to maintain compliance and keep costs low, gain competitive advantage
Process Leaders drive higher levels of compliance, better operational efficiency, and higher operating margins
They do so by keeping ERP systems up-to-date! Over 80% of them are either on the latest release of ERP or only one behind
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