Why Manufacturers Are Snubbing Custom Business Tools

This may come as a shock to some enterprise and financial services providers out there, but today, businesses aren’t really interested in hypercustomized business applications and solutions. That’s not to say, however, that a one-size-fits-all tool will actually work for businesses across verticals.

According to Infor‘s Mark Humphlett, senior director of industry and product marketing, and Suresh Jayaraman, director of global cloud delivery, providing business applications, like procure-to-pay solutions, should be built custom to an industry — not necessarily to a particular corporation.

“We’ve seen a big, fundamental shift in the industry the last few years in that customers don’t want heavy customization,” Humphlett said in an interview with PYMNTS. “They don’t want to take years to implement a solution.”

In decades past, the executives explained, enterprise service providers would have to start from ground zero when developing business applications, whether they be inventory management, quote-to-cash, procure-to-pay or the like.

“Over the past 10, 20 or 30 years in the business application space, you have big systems integrators that want to take months coming up with a design spec for a customer and could spend years building out a very specific thing and bringing in every last request of that customer,” Humphlett said. “The thing that happens is you have a very customized implementation that you can’t upgrade.”

Considering the speed at which technology evolves today, it’s critical that businesses be able to upgrade their business applications — whether it’s to take advantage of bug fixes, new features or an overall more robust version of that tool.

Infor‘s solution to this is to develop Implementation Accelerators specific to particular industries, like food and beverage, health care or, most recently, the manufacturing space.

The executives explained that an accelerated implementation service nixes the nitpicky process of months of customization — all to be thrown to the wayside the minute a business application upgrade is available — and instead uses the collective best industry practices to develop a solution that fits the majority of firms, according to Infor.

“We’re effectively taking 20–30 years of industry best practices for a manufacturing company,” Humphlett said of the firm’s latest rollout of its manufacturing-focused Implementation Accelerator. He added that, for about 95 percent of businesses in a given industry, best practices for business processes like eProcurement will be the same company to company.

Today, the executives said, manufacturing companies need business applications that support high levels of product sourcing or new product development. Manufacturers also need request-for-quotation (RFQ) support, vendor performance capabilities and requisition management.

Manufacturers’ demand to stay up-to-date on the technologies that provide these solutions will probably rise, too.

Across the globe, manufacturers will spend an estimated $323 billion on third-party IT tools, according to analysis from IDC. At the same time, the industry is struggling to do more with less; employment in the vertical is on a steady decline in the U.S. as jobs shift overseas or are replaced by automated solutions.

Earlier this month, however, reports found an upswing in manufacturing productivity, with manufacturing employees producing 47 percent more than they were 20 years ago, according to reports.

“Technology is one of the reasons for this resurgence,” wrote Darrell M. West, vice president and director of governance studies at the Brookings Institution, in an article last week.

Analysts are pointing to a more competitive manufacturing industry across the globe, so industry players will need to deploy best practices to stay competitive, Humphlett stated. But for smaller companies especially, that’s hardly the norm.

“Small manufacturers today are still running operations on Excel spreadsheets and databases and doing things very manually,” the executive said. “They don’t necessarily have standard best practices — maybe they do things different from week to week, depending on who does it.”

Manufacturers must ensure that their business processes have best practices instilled within them, both executives added. Otherwise, their performance will suffer.

According to Humphlett, going from manual business processes to a solution with best practices built into it could mean the difference between 90 percent and 97 percent inventory accuracy — or going from spending one week to reconcile accounts and close the books to just a few days.

“There are a large number of performance metrics and financial metrics, and being able to use a business application with industry best practices really improves the bottom line for an organization,” Humphlett argued. “Those can be cash flow, inventory, operating margin, on-time shipments — all of those different performance indicators are improved utilizing these best practices.”