2006-05-31T12:39:00.000+08:00

One of my friend who is a manufacturer come to ask me : "One provider offers me ERP, another one saying its ERP come with CRM, then another one said ERP is obsoletes, now people are using SCM. I am so confused, what are the differences ? "

I asked him what are his core business processes and what are the major problems they are facing and what are the objectives they are trying to achieve for using the software.

My friend is a manufacturer of chemical product. He told me that his main concern is to make sure his production schedule is accurate, the materials stocks and the finished goods information is up-to-dated. His sales is doing excellent, but the production and the stock is a mess.

I told him : " Well, actually what you need is a ERP that strong in production module, which include : Material requirement planing (MRP), Master Production Planning (MPP) , Inventory control (IC) , Bill of Material (BOM) , Shop Floor Control (SFC) and other related production module."

I also advise him , make sure the BOM has multiple levels and have the option to substitute the materials with other compatible material ( it is normal in chemical industry), and one more important issued needed to confirm with the provider : Make sure the production module is linking properly to the Accounting module, especially in the calculation of the production cost, cost per unit, material cost etc....

From the above example, it is quite common in the Malaysia that there are many manufacturers confused on what they want when purchasing ERP software. Many manufactures think that more features are better, but in fact, more features mean more confusion. And worse, some features are not utilized at all and the manufactures are bound to pay it as a bundle ERP software.

If a manufacturer is doing well in the sales, and its customers are not many, then for what the manufacturer needs to go for CRM ? if the manufacturer's is not one of the appointed and authorized OEM of its customer, then what for go for SCM ?

Remember, ERP is not as simple as A-B-C, there are many hidden costs when implementing ERP. I still remember a manufacturer who has less than 20 workers come to ask me what is the best ERP for his manufacturing environment, and he is never use computer software before. I ask him go and get an accounting + inventory software to manage and get used to the software first before go for ERP. :-)

2005-08-30T18:00:00.000+08:00

SAP , Peoplesoft , Oracle.....
Navision, Skala.......
Globasoft, Karensoft......

When talking about ERP software, most Malaysian with some ERP knowledge will come across the above ERP provider. The first 3 company, we normally position them as "tier 1", then the next 2 is "tier 2" and the last 2 is "tier 3" ( of course there are many providers in market for tier 1, 2 and 3, the above named companies are just an example)

What does it mean ?

well , tier 1 , 2 and 3 is the service scope and different market segmentation they serve. For "tier 1" provider, they normally target on Multi Nationals Corporation (MNC) with the budget of millions dollars, and "tier 2" provider target on listed companies and large organization with the budget of less than a million, and "tier 3" provider target on Small and Medium Industries (SMI) with the budget of less than RM 200,000.

Does it mean that SMI can only find "tier 3" for their ERP solution ?

Wrong.

If you aware of the trends in Business and I.T, This rule has been changed because some big players like SAP also starting to tap in to SMI market and introduce the ERP solution that less than RM 200,000.

This could be a good news to SMI because with that budget they can buy a stable, proven and reputable ERP software.

Then, what happen to "tier 2 " and "tier 3" providers ?

I am regret to know some tier 2 providers are still unaware of the business trends, they are still concern on finding big corporation with the budget of RM 300,000 to RM 800,000. When I was talking to such providers, they normally say " SMI ? They got budget or not ? If got more that RM 300,000 then could be considered........"

They don't know the other side is saying : " Tier 2 provider? They can lower the price or not ? If they can lower the price to below RM 200,000, then I will be glad to find one" - from the SMI

Obviously, closing a deal with the budget of RM 300,000 to RM 800,000 is much more profitable compare to closing a deal with the budget of RM 200,000. Most Tier 2 providers will give many reasons why they do not go to below RM 200,000 ...... For example, company image, less profit, high overhead etc.....

then , consider what SAP does, is SAP so stupid to sell its light version of ERP for less than RM 150, 000 ?

If the answer is Yes, then why SAP is still the Top ERP provider in the world and capture the most market share ?

If the answer is No, then who is stupid ? The "tier 2 provider ?"

We are always talking about "long-term business partnership". It sounds good. But when it come to practice, many tier 2 providers just concern on short term profit, and ignore long term benefits.

Just imagine, these SMI will keep growing, one day, they may become MNC and listed companies as well, if you are smart enough, target to the right SMI with the potential to grow big , lower the ERP software price for them to use, when they grow, they will ask for more from your ERP software - and eventually, throughout the period, your ERP software price selling to those SMI will sure exceed RM 300,000 and above.

and one more important reward - they trust you.

For tier 3 provider, they are targeting on SMI with the budget lower than RM 200,000 - sometimes could be RM 100,000 . Anywhere , with that price, the SMI also cannot expect too much on features or customization, and could be some bugs in that system. Finding a good tier 3 provider could be a challenge, especially, if you come across the ERP failure under the SMIDEC e-manufacturing grant (now has been changed to loan) , you will know what I mean.

However, there are still many good tier 3 ERP provider in the market, the only thing is the SMI need to be careful on selecting the right ERP provider. If you want to know how to wisely select ERP provider, then leave a message to me.

James Tan
Malaysia Professional Web Design Company

ERP software and ERP market for SMI in Malaysia