5 tips for a less stressful ERP migration

Thorough preparation can limit surprises and keep the focus on original project goals

THE FABRICATOR® MARCH 2012

March 12, 2012

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A migration from an older software package to a new enterprise resource planning software system is almost assured to test even the most forward-thinking metal fabricating organization. Every part of the organization is touched in this move, and everyone has to work together to ensure that initial business objectives are achieved once the software is rolled out. Luckily, preparation before actual software implementation can make a big difference.

5 tips for a less stressful ERP migration - TheFabricator.com

Screaming may help relieve tension for a moment, but it won’t make an enterprise resource planning software implementation go any smoother. Only upfront planning can do that.

Can a successful metal fabricating shop be run using inexpensive business accounting software? Yes. Many shops still operate that way, and some have annual revenues in excess of $25 million. Can a metal fabricating shop aggressively expand its business, reaching into new markets and increasing its manufacturing capabilities, with the same kind of software? Probably not.

That type of step forward requires company management that has complete confidence in its operations. That confidence comes only by knowing how the business is performing on a daily, if not real-time, basis. That type of immediate knowledge can be gathered only through an enterprise software package that collects, assembles, and reports key performance metrics.

The metal fabricating business that still relies on a basic business accounting software package probably does so because the two grew up together. The software did the job in the early days of operation, and as the years passed, processes were tailored around it. The same goes for those companies that developed their own homegrown shop software management systems or used basic off-the-shelf products.

That’s why a migration to an enterprise resource planning (ERP) software can prove to be so stressful. It’s not going to be a plug-and-play installation because it’s typically not going to be an exact fit.

But that doesn’t mean a metal fabricating company’s front-office personnel has to lose tons of sleep over the effort. These five tips can help to turn what may seem like a daunting task into a much more manageable one.

1. Prioritize the software deliverables.

Sometimes it’s easy to get caught up in the bells and whistles of an ERP system. The key is to find common ground so that everyone agrees upon what will be implemented and available when the go-live date is reached.

“The best ERP implementations are those that provide you what you need today and can grow with you as you need to add more features and options,” said Dave Lechleitner, presales principal, Exact Software.

If a vendor oversells its software’s capabilities, “it is likely that you will never by happy with the implementation when you are using only 20 percent of the solution or … it is overly complicated and cumbersome for the day-to-day user,” he added.

That’s why a metal fabricator needs to be very direct about the expected project goal during the first phase of implementation. That’s right—to get the full-blown ERP experience, a metal fabricator probably will have to undertake a multiphase implementation process. The good news is that the phases don’t have to occur back-to-back, if at all. The metal fabricator might be content with very basic ERP functionality.

Christine Hansen, product marketing manager, Epicor Software Corp., said the first phase of an implementation focuses on business-critical goals, such as the quote-to-cash cycle. It’s also an opportunity to identify those key performance indicators that company management wants to track.

For metal fabricators, she recommends that shop floor data collection be a part of a phase one implementation. It provides management with real-time visibility of orders and capacity, while also providing a means to determine almost instantaneously if the manufacturing operations are profitable. In addition, that functionality is a natural gateway to implement more accurate scheduling down the road, during a second phase of implementation.

“It’s one of those modules that a lot of shops aren’t implementing, amazingly enough,” she said.

Actually, advanced scheduling is also a commonsense functionality for some metal fabricator’s phase one implementation.

“I don’t want to have a person take the ERP results, put it into a spreadsheet, and manipulate it,” said Dusty Alexander, president, Global Shop Solutions. “We want to run all of that all the way down to the shop floor, so the operator walks up to the touchscreen and it tells him what to do next.”

2. Scrutinize existing processes before mapping them.

This is the time to be honest: Can current business processes be streamlined? The third-party software vendor’s observations could prove enlightening.

“A lot of those processes grew up over time and because of a lack of an integrated system. Today’s modern ERP systems are really integrated, and they represent best practices that are contained inside the package,” said Mark Symonds, CEO, Plex Systems Inc. “What I recommend is looking at the processes in light of what the new systems are capable of and then determining the best approach. So not just automating what’s being done today, but really taking a look at what’s possible with the new system.”

Such a process could be something as simple as streamlining shipping efforts. With an ERP system, data is entered once—when the initial order is made. When the order is complete and ready for shipping, a clerk can hit a button, creating a shipping document with the customer’s contact information, shipping instructions, contents description, and invoice. Symonds said he has seen shops where the shipping department had to seek OK from the front office before any shipment was made; that type of checks and balances might work for a shop with fewer than 10 people, but such a scenario could get tiresome for a business preparing multiple shipments per day.

Other typical shop floor processes that should be scrutinized include shop order coordination, engineering change management, shop floor execution, and material management. The front-office processes to review involve all aspects of interaction with customers and suppliers.

The same type of critical look can be applied to more unique processes, those that help to separate one metal fabricating business from another. For example, a medical device manufacturer has to be thorough when it comes to traceability during the manufacturing process—marking parts with a serial number and detailing the lot in which the part was manufactured. That’s something that not all manufacturers have experience with, so it needs to be mapped out accordingly prior to the ERP implementation.

Hansen said today’s software has evolved so that these types of business process specializations can be addressed in the software without rewriting code. This is accomplished with rules that keep a process aligned within agreed-upon parameters. If that medical device manufacturer wants to ensure that product can be shipped only with required documen- tation, rules can be written to prevent the shipping label from being made available until all documents have been approved and gathered.

This rule-making ability “helps them to take the unique things that they do in their business, whether industry- or business-specific; define them within the confines of the system; and put the controls in place to make the processes work,” Hansen said.

But be forewarned. If manager think that a core process is so unique that software needs to be reconfigured to accommodate it, they are probably heading down the wrong path.

“Most ERP systems correctly designed around thousands of similar manufacturers should fit at least 80 to 90 percent of your core requirement,” Lechleitner said. “If you are constantly asking a prospective vendor to customize its solution to fit your requirements, it should likely tell you that you are looking at the wrong solution.”

3. Choose which information needs to make the migration.

Needless to say, just because data exists doesn’t necessarily mean it should be dragged over to the new software.

“There are a lot of factors impacting the decision on how much data to bring along,” Symonds said. “[One factor is] the relative cost and ease of keeping the old system around for reference purposes. It’s real cheap to keep an old computer in the corner that has some reference data in it.

“The next is the quality and completeness of the data in the old system versus the new one. So often the old system or the spreadsheets data is coming from is missing a lot of information that’s needed in the new system, such as operation type or lead-time,” he added. “In that case, it’s easier to start fresh.”

Alexander said that by classifying data according to importance, a fabricator can understand quickly what is needed and what can be left behind. The older files should be classified as:

  • Static data, such as a customer master list, which is a “must convert.”
  • Dynamic data, which can be open work orders and is a “nice to have.”
  • Historical data, which is the work order history and is “optional” in bringing over.

Mike Melzer, vice president, operations, Global Shop Solutions, said that data mapping tools in his company’s software have made this chore a lot easier for manufacturers. It’s almost as simple as directing information from one column of an old spreadsheet to its new home in a file in the ERP system.

The optimal situation for this type of data migration is for the manufacturer to go live over a weekend or holiday, Melzer said. Some business owners want to run parallel systems to ensure that the data is available—whether on the old system or the new ERP software— but that only doubles the work for those who have to enter the data. Melzer added the situation can get out of hand as the running of parallel systems can continue as long as a month, in some instances.

“We like the parallel situation to be as limited as possible,” Alexander said.

For those metal fabricators that find themselves struggling to decide whether to bring over old records or re-create them, Leonard Marks, Epicor’s director of worldwide program management, offers a simple rule of thumb: If there are 1,000 or fewer records, consider re-creating them.

4. Determine security plans.

If things are locked down, the pace of business is slowed down tremendously.

“I’ve been involved in implementations where the network guy walks in and has everything so secured that no one can do anything,” Hansen said. “It’s incredibly frustrating.”

Once again, the metal fabricator needs to delve into the process, but this time from the user perspective, not from a macroperspective. Management has to determine who requires access to data, who has to enter new data, and who needs to have the ability to change or delete data.

From a software perspective, Symonds said he recommends locking out employees’ abilities to change “reason” codes. For example, when a metal part requires rework, an employee goes into the ERP system and logs in a reason code, such as imperfect weld or marred finish, for that rejected part. If the codes are locked down, the employee doesn’t have the chance to create another code, which to him may better describe the reason for rework.

Because those types of codes are an integral part of managing operations, a fabricator needs solid figures, not totals that have been watered down because 20 different rework codes have been introduced into the system. It’s hard to analyze overall operations with that impediment, Symonds said.

Lechleitner stressed that a company should make these security decisions correctly before the software goes live.

“By determining the security profile in the beginning of the implementation, you can best deal with the psychological impact of eliminating rights to the various aspects of the system later. Nothing communicates a lack of trust to your staff than after an implementation has started than you remove a user’s specific rights to do a specific task,” he said.

5. Consider the cloud.

An interesting choice for manufacturers considering a new ERP software implementation is whether it should actually host the software on its own information technology (IT) infrastructure or subscribe to use the software, which means it is hosted in some other location and accessed over the Web—or through the “cloud.” This software-as-a-service (SaaS) approach is growing in popularity with many companies because they aren’t burdened with the upfront costs of purchasing new hardware to support the software and the ongoing costs of employing a full-scale IT staff to maintain the system. In fact, enterprise software analyst Cindy Jutras conducted a 2011 survey of 1,250 companies and found that only 56 percent would consider a traditional on-site deployment of software; only a few years ago that percentage would have been in the 90s.

“People, especially new businesses and start-ups, don’t want the pain of the technology at their plant. They want to be able to access it easily and have it done for them,” Hansen said.

The big hesitancy about SaaS has to do with trust. Can a manufacturer afford to hand over all of its business information to a third party? Many companies have no qualms about having their customer engagement software deployed as an SaaS, but that thinking changes when the business’s “transactional system of record”—the quotes, designs, order history, etc.—is being looked at as a candidate to be housed at another location, according to Jutras.

“The cloud-based system is always secure and online. It’s always backed up and has a secure disaster recovery program,” Hansen said. “I would argue that the information is more secure than most of the plants that I have been to in terms of people accessing information that they shouldn’t get to.”

Melzer, however, said that a metal fabricator may be required to have its data stored on-site, depending on the industries being served. In that instance, cloud computing may not make sense.

Addressing these issues won’t guarantee a smooth and quick ERP implementation, but it surely will help.

“If a company spends more time on the front end, chances are exponentially higher that they will have a successful deployment on the back end,” Lechleitner said. “No one likes ‘fire drills,’ and in an ERP deployment, small and midsized fabricators usually don’t have the personnel or financial resources to deal with a failure.”



FMA Communications Inc.

Dan Davis

Editor in Chief
FMA Communications Inc.
833 Featherstone Road
Rockford, IL 61107
Phone: 815-227-8281

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The FABRICATOR® is North America's leading magazine for the metal forming and fabricating industry. The magazine delivers the news, technical articles, and case histories that enable fabricators to do their jobs more efficiently. The FABRICATOR has served the industry since 1971. Print subscriptions are free to qualified persons in North America involved in metal forming and fabricating.

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