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Microsoft Dynamics NAV is business management application for mid-sized businesses that support financial management, supply chain management, manufacturing, business intelligence, project management, human resource management, and service management. Key manufacturing capabilities within the application include order promising, exceptions handling, supply planning, demand forecasting, capacity requirements planning, and warehouse and inventory management.

Microsoft Dynamics NAV delivers additional incremental usability and integration capabilities include :

  • Personalized role centers for 21 key job functions
  • New business intelligence and analytics capabilities
  • Web Services to enable partners and customers to integrate Microsoft Dynamics NAV with other applications

In ERP deployments including Microsoft Dynamics NAV, it is found that integration and flexibility enable Microsoft Dynamics NAV customers to rapidly deploy the solution and achieve ROI from increased visibility across the business, increased productivity and reduced costs.

The Challenge

Visibility is a key challenge for many businesses today, and in the midmarket, many manufacturers who haven’t invested in an integrated ERP application find themselves with limited access to the information they need to make good business decisions. Different employees need access to different data to do their jobs, and without a centralized source of information they often have to juggle between applications, develop and manually generate reports, or rely on IT to deliver the information they need. While traditional ERP systems have been too expensive and risky to deploy for small and mid-size manufacturers, Microsoft Dynamics NAV was designed to be quick to deploy, easy to customize, and flexible to change over time as business needs change. Additionally, integration of Microsoft Dynamics NAV with Microsoft Office Excel and Windows Office Share Point Server makes it easy for users to access and share the information they need without manual workarounds.

Key Benefits

Many companies deploying Microsoft Dynamics NAV find the application helps them to grow their business by driving improved visibility and agility, increased user productivity, improved customer relationship management, improved inventory management, and reduced IT costs.

  • Improves visibility and agility
  • Increases productivity
  • Improves customer relationship management
  • Improves inventory management
  • Reduces IT cost

By David A. Kelly

Before you take the leap into a new enterprise resource planning system, it’s wise to look closely at your current systems and information technology (IT) environment, business needs, and vendor options. Here are issues to consider for your ERP assessment.

In Summary

  • With more options and better pricing from vendors, it’s often easier now to purchase systems to meet evolving business requirements versus developing your own.
  • Evaluate your current systems to see if they will support emerging Web and mobile technologies, and make sure you understand your vendor’s technology road map.
  • Evaluate the skills of your IT people carefully, particularly in terms of their ability to support a new architecture. Can you outsource or hire to fill the gaps?

Sometimes it’s easy to know when its time to upgrade or change your back-office systems—because your employees are telling you, loud and clear. If they’re screaming for new functionality or are working around the present system, if they can’t easily manipulate or combine data from existing business systems, or if they can’t get the right data to use at the right time, it’s probably time for your ERP assessment and to consider a new enterprise resource planning (ERP) solution.

Why it’s a good time to Upgrade

Consider these three important trends driving enterprise software investment and signaling that this may be the right time for you to upgrade your systems :

  • Changing business requirements resulting from new government regulations, security concerns, and other issues are having an impact on companies of all sizes.
  • The breadth and depth of commercial solutions have grown dramatically not only to meet changing business requirements but also to fit the smallest of niche industry applications.
  • Vendors are lowering prices and expanding packaging and licensing options for buyers because of growing competitive pressures and new business models such as software as a service (SaaS).

Making the Decision

The fundamental starting point for an ERP evaluation is to do some type of return on investment (ROI) study to identify what benefits might be obtained from moving to a new solution. Of course, even with a solid business case, migration is no simple matter. It takes a thorough understanding of a range of factors, from the skill sets of people in your IT department to how to time the deployment with other business activities (for example, if your company is about to merge with another or add branch offices, you would want to avoid adding a major system implementation to the mix). Managing people is critical too. “Companies may have a certain skill set in-house that they need to retain, and that may drive the selection or decision process,” says Arnesen. It’s a good idea to understand the market availability of specific skill sets before making a decision because, for example, widely adopted technologies and platforms from major vendors will have a much broader base of support and expertise than more nascent or niche platforms.

Budget is, of course, another top consideration. Increasingly, vendors (including Microsoft) are offering attractive financing alternatives to traditional big-ticket ERP investments. “With leasing, you can spread out the payments over three to five years, which can make a compelling difference to the business case for investing in a new solution,” says Dharmasiri and it’s only a matter of time before software-as-a-service (SaaS) options become more prevalent, which may mean downloading and renting applications from the Web at a much lower price than owning a license. However, SaaS does have some drawbacks, such as minimal customization, so you should make sure to explore it within the constraints of your business requirements.

While ERP migrations or upgrades are always a major change to the business and its processes, new solutions can provide significant payback. “Many companies continue to have islands of information that make it difficult to get a single view of their customer or business,” Dharmasiri says. In contrast, the right ERP system, deployed at the right time and with the right implementation partner can help you achieve that holistic perspective on your business—which can mean the difference between being a market follower or a market leader.

David Caruso,
Principal, David Caruso & Associates, Inc.

Manufacturers in today’s global markets are experiencing dramatically reduced margins coupled with rising customer expectations. Being a successful supply chain partner for your customers demands up-to-the-minute information visibility. You need information on everything from supply chain inventories, to production planning and shop-floor scheduling, to the increasingly robust set of data collected on customer demographics and order preferences. The ability of manufacturers to collect, analyze, and share this information has become a basic operating requirement for global supply chain operations.

An integrated enterprise resource planning (ERP) system can help manufacturers achieve the efficient and effective use of their manufacturing assets and provide customers with the visibility they need. In addition, an ERP system can provide a powerful opportunity for many manufacturers to gain critical insight and competitive advantage by taking them beyond simply managing internal business processes. You can find valuable information at the edge of the company—along those boundaries and interaction points that occur between the manufacturer and its customers and suppliers.Savvy manufacturers have recognized the benefits of investing in integrated ERP systems, realizing that it enables them to fulfill their mission: to provide a platform that enables effective response to the changing supply chain with reduced long-term information technology (IT) costs.

Here are four ways an integrated ERP system can help improve supply chain performance. After reading this article, contact Microsoft to learn how an ERP system might work for your organization.

Develop better customer Insight and Interaction

To build long-term relationships with customers today, you need to listen to and understand them. This requires that you maintain a holistic view of those customers. You can obtain such a broad-spectrum view from a variety of data sources, including your supply chain systems; sales and marketing; customer service and field service systems; internal database information; and knowledge gathered from unstructured interaction with customers.

This integrated view—which an ERP system helps provide—can enable manufacturers to look beyond tactical order fulfillment and gain a better understanding of customer wishes for customized products and services—which can help the company differentiate its offerings and increase profits. It can also lead to insight and answers to questions such as: What are the buying patterns? Are we driving larger orders to customers? What does our pipeline look like? Are we seeing demand increases or downturns that we must react to?

Achieve global visibility in a Demand-Driven Supply Chain

It’s critical in an age of tight cost management that manufacturers optimize inventory investment and continue to provide excellent customer service. To do so, manufacturers need to know where inventory is throughout the entire supply chain—which is information an ERP system can help to provide. Knowing when and where inventory is needed enables manufacturers to develop the best plan for production and resupply in critical customer relationships—building only what is required for shipments.

Beyond having the right data for internal operations, manufacturers must also be able to provide customers with visibility into inventory and product availability. In a demand-driven world, real-time intelligence—not nightly batch updates—is required to make timely and effective decisions. This now means systems must be open to the new ways of working—including mobile and radio frequency identification (RFID) technologies and support for tracing and other regulatory compliance requirements. The right ERP system can help meet your needs in all these areas.

Lean manufacturing, Global Sourcing and Supplier Integration

Managing to the lowest possible manufactured cost is essential. This means applying lean manufacturing practices and connecting to the best suppliers on a global basis. Today, lean operations are driving an increase in speed and response time for all supply chain participants. Unfortunately for most manufacturers, the new lean business processes are not supported by their legacy systems and must be implemented as manual processes, which can defeat the information visibility crucial to state-of–the-art supply chains.

Locating the best suppliers requires a comprehensive supplier database that enables a manufacturer to recognize where new opportunities for lower costs exist such as suppliers in emerging countries. This means that manufacturers must have real-time connections to suppliers to respond to changing production demands. Once identified, these new suppliers must be brought on board quickly and cost effectively with the ability to share and respond to real time demand and production data, including new product designs and critical engineering changes. The current generation of integrated ERP systems includes the processes and capabilities to help ensure lean operation, including the need for real-time production data exchange with suppliers.

Managing for Higher Performance

Executives know that measurement and performance are inextricably linked. Whole new metrics, key performance indicators (KPIs), and benchmarks can give advance warning of problems managers may face in their operations. The real power of these metrics comes when managers can quickly access real-time data that reflects the global domain of their operations. Done well, performance analytics can make manufacturers significantly more agile—an important consideration in today’s very lean supply chains. However, measuring performance is often far too difficult in the world of disparate legacy systems, the result being that most companies do not currently have a standardized and automated performance analysis capability to manage for higher performance.

Integrated ERP systems today include business analytics that enable executives to standardize metrics across the organization and monitor production and profitability. In fact, ERP systems can provide actionable information to employees at all levels of the organization and make it accessible through their familiar desktop tools, bringing speed and quality to their decision making. By integrating data, standardizing processes, and opening up visibility to the global supply chain, an integrated ERP system can offer manufacturers a fast path to reduced cost structures, increased speed, and improved transparency that can improve customer satisfaction and company profitability. The bottom line: Today’s ERP systems have become an operating platform that can scale and deal with the global competition that is in every manufacturer’s future.

Author – David Caruso

David Caruso is the founder and Principal of David Caruso & Associates, Inc, a consulting firm specializing in manufacturing, supply chain, and technology strategy. Before starting his own firm, David was senior vice president and director of research at AMR Research, and he has held several senior management positions in the ERP and supply chain software community. David has more than 30 years of industry experience, and he focuses his current research on analyzing the business value of IT and the effective use of technology to support the profitable growth of his clients

Abstract

This white paper discusses the 6 Key Decision Drivers that you should consider as you evaluate ERP software products. These 6 criteria are :

  • Functionality
  • Technology
  • Software Vendor
  • Implementation Vendor
  • Support & Maintenance
  • Total Cost of Ownership

Introduction

You know that when you change the tire on your car you must follow a logical method in order to make sure the new tire is properly attached. First you loosely tighten one lug nut, then tighten the opposite lug nut, continuing until all the lug nuts are loosely attached. You then follow the same pattern to tighten each lug nut in turn until they all fit snugly on the wheel. The six key decision drivers are like the lug nuts on a wheel in that you must continually ask questions as you investigate software.

Software Functionality

Software functionality is the set of decision criteria that most people think about when they embark on a software evaluation process. The software must meet your basic functional requirements in order to be a useful tool for your business. Ideally, the software should provide you with more than a basic functional fit, it should provide a strategic advantage to drive efficiency and expand your business.

Software Technology

The most important thing to remember as you evaluate technology is that you are not buying technology for its own sake. You are buying a tool that you can use to support the business functions of your company and give you a competitive advantage. Therefore, although technology is a strong consideration in the evaluation of ERP software, the functional needs of your company should drive the selection process.

Software Vendor

The software vendor is the company that develops software product and functionality and will continue to develop it in the future. Because the technology business environment is constantly changing, evaluation of the software vendor is as crucial as the evaluation of the functionality. You should not merely look at the vendor’s current strength as a company, you should look at how the vendor plans to develop its software going forward. Because you will pay annual maintenance for several years, you want the vendor to create new functionality and technology that will continue to be useful to your company.

Implementation Vendor

The most overlooked, yet often the most important, aspect of the ERP software selection process is selection of the implementation partner. The right implementation partner can bring experience, industry knowledge, best practices, and technical capabilities to the table that will have a big impact on the success of your project. It is important to understand that you have implementation options available to you. You should exercise your right to select an implementation partner on your own terms.

Support and Maintenance

The main thing to keep in mind with regard to maintenance and support is that you are not implementing a static system. You should regard your ERP software as a key component of your organization just as you would a machine on the shop floor that requires care, maintenance, and upgrading. As the software vendor improves its technology and functionality, you should be able to take advantage of those enhancements. You will then be able to maximize your investment and use the system to gain a strategic advantage.

Total Cost of Ownership

In general, companies spend more money on software than they should because they buy more software than they need. By focusing on what you need and understanding the total cost of ownership of your software options, you make sure you pay the right amount for your software. The challenge with evaluating the total cost of ownership of a software solution is that not all costs can be known before you begin implementation. Also, there is usually some discounting of the software license during the sales process that may obscure the total cost. The key is to look at cost from a long term perspective—usually five years—to help you get past the initial “sweet deal” discounting process and focus on what the real costs will be.

Conclusion

When we share or teach the principles presented in this article, we represent them as puzzle pieces which must be fitted together to complete a whole picture. If one of the pieces is missing, or if a piece is not connected to the others in the right manner, the resulting picture is incomplete. So it is when selecting software. None of the decision drivers can stand alone nor can anyone decision driver identify an accurate solution unless the other decision drivers are considered as part of the whole. It is not that the solution becomes more perfect, rather it becomes more obvious that you have made the right decision. Software selection is every bit a process of elimination as it is of inclusion. Knowing what was not selected and why has tremendous value in post-decision reviews. We encourage clients to keep a list of the products that were eliminated along with the reasons for exclusion.

Know from the outset that the final solution is not going to be perfect; in fact, you will trade away some attractive features in order to preserve the core gains you must achieve in the new system. It is easy to become bogged down in details or to get caught up in “analysis paralysis,” so identify the key issues first to eliminate most of the packages and then climb into the details as the process continues. Knowing what the core gains need to be and keeping them in focus throughout the process is critical to keeping the team pointed in the right direction. Our experience is that if you consider all six decision drivers, you will come up with a solution that will propel your company in the direction you want it to go.

Microsoft Dynamics NAV helps mid-sized manufacturers increase visibility and productivity, driving higher margins, increased profitability, and, ultimately, business growth.

Microsoft Dynamics NAV is business management application for mid-sized businesses that support financial management, supply chain management, manufacturing, business intelligence, project management, human resource management, and service management. Key manufacturing capabilities within the application include order promising, exceptions handling, supply planning, demand forecasting, capacity requirements planning, and warehouse and inventory management.

Microsoft Dynamics NAV delivers additional incremental Usability and Integration Capabilities include :

  • Personalized role centers for 21 key job functions.
  • New business intelligence and analytics capabilities.
  • Web Services to enable partners and customers to integrate Microsoft Dynamics NAV with other applications.

In ERP deployments including Microsoft Dynamics NAV, it is found that integration and flexibility enable Microsoft Dynamics NAV customers to rapidly deploy the solution and achieve ROI from increased visibility across the business, increased productivity and reduced costs.

The Challenge

Visibility is a key challenge for many businesses today, and in the midmarket, many manufacturers who haven’t invested in an integrated ERP application find themselves with limited access to the information they need to make good business decisions. Different employees need access to different data to do their jobs, and without a centralized source of information they often have to juggle between applications, develop and manually generate reports, or rely on IT to deliver the information they need. While traditional ERP systems have been too expensive and risky to deploy for small and mid-size manufacturers, Microsoft Dynamics NAV was designed to be quick to deploy, easy to customize, and flexible to change over time as business needs change. Additionally, integration of Microsoft Dynamics NAV with Microsoft Office Excel and Windows Office Share Point Server makes it easy for users to access and share the information they need without manual workarounds. Once they can access the information and collaborate around it, users can spend less time gathering and analyzing data and more time making decisions that positively impact the business.

Key Benefits

Many companies deploying Microsoft Dynamics NAV find the application helps them to grow their business by driving improved visibility and agility, increased user productivity, improved customer relationship management, improved inventory management, and reduced IT costs.

Improves Visibility and Agility

Having a central source of data, enabling users to have their own role-based views of information, and providing access to real-time data and user-friendly analytical and reporting tools gives manufacturers deploying Microsoft Dynamics NAV greater visibility into their business and greater ability to make informed decisions. In fact, it is found that greater visibility and access to information for decision making was a key motivator for many Microsoft Dynamics NAV purchasers.

This greater Visibility and Agility generally results in two key return areas :

  • Increased staff productivity related to reporting. Staff spends less time searching for, compiling, and analyzing data and information and can focus on growing the business.
  • Direct cost savings. With greater visibility into spending across the supply chain, manufacturers can identify where they can eliminate or reduce costs. For some Microsoft Dynamics NAV customers, this meant reduction in freight and shipping costs; for others, more than a five percent reduction in overall cost of goods manufactured was realized.

A reduction in freight and shipping costs was a common benefit Microsoft Dynamics NAV customers achieved through greater visibility into order and shipping cycles.

Greater agility was another often-cited benefit of Microsoft Dynamics NAV users, who found that greater visibility and the ability to analyze information in the system enabled them to make better, faster decisions about products, processes, and partners. This can be particularly important for manufacturers that must show their ability to manage product recalls: one user, for example, reduced recall time from 48 hours to five minutes.

Increases Productivity

Increased visibility goes hand in hand with increasing productivity, as users spend less time seeking and analyzing data and less time manually entering and reconciling data into different systems. In addition, Microsoft has invested to make Microsoft Dynamics NAV easier and more intuitive to use with role-based views, role-tailored home pages, and connection with the Microsoft Office system and Microsoft Office Share Point Server, driving greater productivity.

Manufacturers moving from disparate systems can expect to increase Microsoft Dynamics NAV user productivity by up to 20 percent.

A common Source of Information reduces the Amount of Time spent manually Re-keying or Verifying information between systems :

  • One manufacturer moving from accounting system software to Microsoft Dynamics NAV found, “It saves us across all our different departments 10 to 20 hours per week. We’re saving as much as a week per month over what we would be doing if we didn’t have it.”
  • Another said, “We didn’t really have a lot of data before. It would be all hand compiled reports and some pivot tables for reporting that had to be aggregated so there wasn’t much detail. Microsoft Dynamics NAV allows us to capture data in a very granular and detailed way.”
  • Another said, “When we started with Microsoft Dynamics NAV we were fewer than Rs.200 Crore [in revenues] and we’re in the Rs.400 Crore range now and we haven’t increased our staff. We could double and still keep administrative staff flat.”

In some cases, Microsoft Dynamics NAV customers were able to grow revenues by more than double without a corresponding increase in administrative staff.

Improves Customer Relationship Management

Microsoft Dynamics NAV enables manufacturers to make processes more flexible and agile so they can rapidly respond to new initiatives and customer requests. Greater visibility into operations enables manufacturers to increase the accuracy of promised orders, quickly respond to customer questions about order status and delivery, and handle changes and exceptions.

Companies typically find they can increase both sales and customer service productivity with Microsoft Dynamics NAV :

  • In customer service alone, our order volume has grown from 75 a day to around 120 on average and we’ve only added one person [to a staff of five] to support that additional volume.
  • Before, orders were entered manually. That could take a week and a half. Now point of sales is tied into ERP so there’s no need for human intervention.

Improves Inventory Management

The main thing to keep in mind with regard to maintenance and support is that you are not implementing a static system. You should regard your ERP software as a key component of your organization just as you would a machine on the shop floor that requires care, maintenance, and upgrading. As the software vendor improves its technology and functionality, you should be able to take advantage of those enhancements. You will then be able to maximize your investment and use the system to gain a strategic advantage.

 This often results in a combination of reduced shrinkage as well as reduced cost of goods sold :

  • We used to do inventory count once a year, and now we do several counts daily
  • Our bills of materials (BOMs) are all online and available to our operators, and if an error is found in a BOM, it can be fixed very quickly. There’s not a lot of paper shuffling back and forth. We were tracking a 5 percent per year reduction in our cost of goods sold and we’ve done that.

Reduces IT Cost

Many manufacturers adopting Microsoft Dynamics NAV are moving from a combination of point solutions, manual processes, and spreadsheets.

 They are often able to take Advantage of the Integrated and Flexible Nature of Microsoft Dynamics NAV to reduce IT costs in two key areas :

  • Connection with the Microsoft Office system, CRM, and other systems reduces the time needed to support the manual re-entry of data into systems.
  • Companies moving from another application were able to re-deploy hardware, eliminate license maintenance fees, and re-devote IT support resources to other projects.

Companies also find the robust reporting capabilities and intuitive nature of the application enables IT to spend less time building reports and training users.

Conclusion

In an economic environment where many small and mid-sized enterprises are struggling, Manufacturing companies found many Microsoft Dynamics NAV customers were able to support significant growth by streamlining order entry and customer management; reducing the manual data entry burden for IT, finance, and accounting; and automating other processes that used to require significant staff time. Beyond automation of basic tasks, Microsoft Dynamics NAV also enables customers to have greater visibility into inventory and the supply chain, to improve customer service and quote accuracy while accelerating transactions. Manufacturers without a centralized ERP application that deploy Microsoft Dynamics NAV are likely to rapidly achieve a positive ROI from productivity and cost savings alone. Properly deployed, Microsoft Dynamics NAV can deliver payback in fewer than 12 months.

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