Well over one million people in Germany currently work in mechanical and plant engineering, which has always been one of the central sectors of the German economy. According to the VDMA study "Mechanical Engineering in Figures and Images 2018", the approximately 6,450 companies recently recorded a turnover of 226.2 billion euros, making a significant contribution to the country's overall economic output. However, the recent positive order trend is accompanied by numerous challenges. For example, one in four companies reports a shortage of skilled workers. Added to this is a shortage of materials, which affects one in five companies according to the VDMA. Industrial companies that want to position themselves in a future-oriented and competitive manner are looking for new ways to expand their portfolio to include data-based services, for example. In order to successfully implement projects such as these, flexible and customizable business software is required that allows production and company processes to be brought together and a uniform, always up-to-date overview of data to be created.

An integrated ERP system creates this kind of freedom and provides company managers with the holistic information they need to make data-based, well-founded decisions. The focus here is on data transparency in real time and an overview of all business-relevant processes that can be called up at any time, so that processes can be managed, controlled and, if necessary, changed in a measurably more efficient and agile manner.

The need to overhaul outdated systems and introduce digital processes and technologies is at the top of the modernization agenda for many companies in the mechanical and plant engineering sector. In this context, the experts at PAC found that 62% of manufacturing companies want to add new functions to their systems over the next two years. Mobile warehouse logistics, production and resource planning and variant management are particularly important in this context. The interaction between the various functions and task areas and the consistent rejection of isolated solutions and systems that operate separately from one another for different departments and areas are particularly important here, as constant communication and the continuous exchange of information are the be-all and end-all of efficient digital strategies and processes.

Key questions for a successful ERP implementation

To ensure that extensive IT projects such as the introduction of a new ERP system coupled with the associated data migration can be successfully implemented and investments are quickly amortized, companies should ask themselves the following questions in advance: Is the focus on increased efficiency, more agile material planning or improved delivery reliability? Or is it primarily about exchanging data in real time between the ERP and store floor systems? In addition to such functional-operational requirements, targets for reducing IT costs should also be defined in detail in the specifications. These can be easily achieved with an ERP system from the cloud thanks to streamlined software maintenance and less complex release changes.

But that's not all: strategic goals such as location networking, the inclusion of new markets or the development of new supplier partnerships should also be taken into account. Future company growth should also play a role in system selection. The implementation of a cloud-based ERP system is particularly suitable for companies with high growth rates, as it provides the necessary scalability out of the box.

Prioritize projects, estimate ROI

The implementation of a new ERP system is often part of a series of other optimization projects with which machine and plant manufacturers want to improve their future viability. However, as companies cannot invest in all plans and new systems at the same time, they must prioritize and determine exactly which order makes sense.

The expected return on investment (ROI) provides managers with important guidance and support when making this difficult decision: This can be estimated if all financial aspects of the new ERP system are compared with other investments over the period of use. An important factor in this context is the savings that can be achieved with the new software thanks to greater process efficiency. In addition to the acquisition and installation investments, possible consulting services and expenses for maintenance, operation and further development are also important here. The question of whether and to what extent individual system adaptations are necessary should also not be neglected. Here too, ERP solutions from the cloud offer various advantages, as they allow new functions to be added as required without users having to make significant investments in advance.

Once the need for customization has been determined, the next step for the project managers is to decide on a suitable architectural approach: Best-of-breed, best-of-suite or the service-oriented architecture model? SOA scores particularly well because the ERP platform interacts just as flexibly with existing on-premise systems in the production-related area as it does with IoT solutions or AI-based analysis tools from the cloud.

At the end of the implementation phase, so-called soft aspects should also be taken into account. These include, for example, accompanying change management within the company, but also the expertise and service of the available system providers.

In mechanical and plant engineering, even more than in other industries, the IT infrastructure has the potential to integrate, as economic and production-related processes can only be coordinated in real time if all departments and functions involved in a company's value creation are connected to a common platform and the corresponding data converge in one system. This aspect is also the basis for efficient, flexible and cost-centered on-demand production of small and very small batches down to batch size 1. A flexible ERP system thus becomes the control cockpit for future-oriented production sites.

Venturing down new paths, achieving long-term success

Even if the selection process for an ERP solution is a demanding task, it is worth the time and effort. Whether it's mobile maintenance, predictive maintenance, the automatic and therefore time-saving and error-minimizing processing of incoming invoices or even more varied production: These are just a few examples of processes that can be improved and accelerated with the help of modern IT. Added to this are cost minimization and optimized transparency, which enable manufacturers to adapt more quickly and flexibly to new customer and market requirements and thus achieve valuable competitive advantages.

Jörg Weinheimer, Vice President Enterprise Market at Sage and Managing Director of Sage bäurer GmbH / ag