With the recession’s grip tightening in early 2009, manufacturers had one dominant question for vendors of enterprise resource planning (ERP) software: What are you doing to reduce my total cost of ownership?
“In 2009, we heard many companies say, ‘I’ve invested in all these applications, but the utilization level is less than I thought, and I’m not getting all of the business benefits that were promised to me during the sales cycle,’ ” says Simon Ellis, practice director at IDC Manufacturing Insights. “They want to know how they can get the most out of their existing investments.”
As economic hard times forced manufacturers to preserve cash, many of them, particularly small- and medium-sized companies, postponed or canceled large ERP rollouts and upgrades and took a hard look at increasingly expensive annual maintenance contracts.
And, when manufacturers did go through with ERP acquisitions, they did so only after extensive, longer-than-usual review cycles. “Buyers in 2009 are very specific about the features and function they need,” says Glenn Nowak, a vice president at ERP vendor IQMS. “The days of just being able to show a couple of screen shots and sell a package are over. They want to see how the routings and bill of material structures fit in a very specific way.”