Perhaps it's just me but I see a shift in small and medium-sized manufacturing towards cloud enterprise resource planning (ERP). This is significant because before 2020 I noticed a real reluctance among many in this industry to consider cloud solutions. This change is due to both obvious and less obvious factors.
Five major reasons are apparent to me. Let's not keep you waiting.
* Covid-19 has shown that hybrid work can be both efficient and necessary.
* Cloud technology platforms are maturing, especially in the SMB sector.
* Baby boomers are retiring, which is accelerating the pathway for Gen Xers/Millennials to managerial positions.
Cloud solutions are now more feasible due to the advancements in broadband.
* The fear and risk associated with the technology's potential change are reduced by new techniques.
Hybrid Work Benefits from Cloud ERP
My entire career has been spent helping manufacturing companies adopt the technology. I have learned one thing from my experience: they are late adopters. Many owners live into their 60s, and they didn't grow up with the rapid pace of technological change.
Many manufacturing companies were forced to embrace technology changes by 2020's events. It turned out better than they had expected. Remote work was a necessity for sales, engineering, and supply chain professionals. The sky did not fall. The productivity of staff members was as high, if not more.
Problem number one was the existing ERP system. These businesses already used Office 365 and Google Workspace. It was easy to see how difficult the ERP system fitted into these products when working remotely. It was not long before the search for a better ERP system began.
Cloud ERP has many options
We now seem to be in the early majority of cloud ERP for SMB manufacturing. This is a significant change from early adopters two or three years ago.
When Microsoft entered the cloud ERP market with Dynamics 365 Business Central (which is what Sabre Limited sells), I noticed a shift. This added to the variety of ERP options offered by major brands like SAP, Oracle, IFS, and IFS. It is often assumed that Dynamics 365 products are similar to Microsoft Outlook, which I believe is incorrect.
Information technology professionals in these small businesses are typically understaffed and infrastructure-focused. They don't usually have business analysts or developers on staff. They are looking for something familiar, low-maintenance, and easy to use.
According to my view, Microsoft's ERP solution has encouraged IT and management teams to look into it. The cloud market offers many other vendors, so they begin to look. Soon, a snowball effect follows.
In the past few years, I have encountered more Gen X and millennial managers in manufacturing than ever before. My experience shows that Gen Xers, and nearly all millennials, have different expectations about technology. They were raised with smartphones, tablets, and the internet. They were also exposed to subscription services, or they experienced it.
Managers want software that can run on smart devices and supports voice or camera capabilities. These managers can see a new kind of business value that's not possible with the technology they have.
Broadband access is easier
There's always been a good reason to deny cloud technology. Manufacturing can often be found at the edges of cities in industrial parks, rural areas, or rural areas. Broadband speeds are generally slower in areas that are not served by the internet, so broadband moves away from the centers of cities.
Although there are still areas that aren't served, they are much smaller than before. Broadband accessibility is a major goal.
Manufacturers might upgrade their internet to make it more compatible with the cloud. However, there are other reasons. They might upgrade their internet to be able to support remote engineering teams and large file transfers with customers. Cloud-based solutions are possible regardless of how slow the internet is.
Training and implementation of ERP are ongoing
Before the Great Recession, almost all ERP projects were done in the same way. They concentrated on customizing and adapting the software to the business. They believed that customization was easier than change management.
This might be a good idea for large businesses, but it is not always practical for small businesses. They may not have as many professionals and may not be following industry best practices. This can lead to huge cost overruns and failed projects, as well as unhappy teams.
However, the model has changed and customers now want as much "outside the box" as possible. It took some time for small business ERP resellers (and their staff) to adapt to this new approach. It took time for their staff and project managers to get over the "make the ERP work for the customer" mindset.
Good ERP vendors are adaptable. These small projects, usually under $100,000, can be done remotely. They focus on best practices and avoid customization. This approach makes ERP adoption easier for companies buying it.
Although cloud ERP is still relatively new in the SMB manufacturing sector, I see it growing rapidly based on my observations from the industry. Small businesses can take advantage of market changes such as better broadband, new ERP technology, and more tailored implementation methods. The buyers have changed too, with younger managers becoming more comfortable with cloud technology and recognizing the benefits of remote working through Covid-19.
This trend is expected to continue. This market will grow, which is good for everyone. Technology improves. Companies gain more experience and new skills. Software developers become more skilled at deploying it. It's a vicious circle.