Product category:
ERP and MRP software
News Release from: Rent-I.T. Systems | Subject: MRP systems selection
Edited by the Manufacturingtalk Editorial
Team on 28 June 2005
Should one rent or buy a manufacturing
system?
In finding and selecting a replacement, or first MRP system, there are some key factors - including predictability of implementation costs and reliability of operation says Guy Amoroso.
In finding and selecting your replacement, or first MRP system, there are some key factors that you will need to take into account Predictability of implementation costs, reliability of operation and no nasty surprises in the future quickly spring to mind but if you think it is just a simple question of do you buy your MRP system or do you rent one, then you're missing the point entirely and why 123mrp.NET was created
This article was originally published on Manufacturingtalk on 24 Jul 2007 at 8.00am (UK)
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The following is what you need to be assured of, when it comes to getting a manufacturing system, apart from knowing that the system is up to your particular job.
* What will it cost me to select a manufacturing system.
* Have I really bought everything I need.
Further reading
MRP / ERP education partnership
Rent-IT Systems has entered into a partnership with University of Sheffield whereby Rent IT will supply 200 licenses of 123mrp.NET for educational use, at no charge.
The right analysis with 123mrp.NET
Elemental Microanalysis has experienced startling business improvements since installing 123mrp.NET production management software
IT for SME is as easy as 1- 2- 3.
Free MRP Evaluation workshop at West Midlands Technology Network in Wolverhampton
* Am I really being quoted enough training and consultancy.
* Are my system upgrades really free as part of my support contract.
* How can I be sure how long it will take to get up and running.
* Is the system is based on outdated technology Let us now take a few minutes to explore each point in turn.
* What will it cost me to select a manufacturing system - The traditional way of selecting an MRP system can often take months and sometimes more, consuming huge numbers of man-days from your precious resources in endless supplier meetings, fact-finding surveys and demonstration after demonstration and so on.
This is because the whole process is confusing and a daunting challenge to say the least, mainly due to the high risk and conflicting functionality and cost/benefit claims from a multitude of would-be suppliers.
Traditional suppliers' high prices reflect, apart from anything else, the sheer high cost of doing business in the traditional way where the one client that buys also has to pay for the numerous failed efforts.
With 123mrp.NET, we offer a monthly programme of free regional Evaluation Workshops, which are both effective and efficient.
This is where we meet more than 90% of our customers for the first time and for many, this one session is all it takes to decide to use 123mrp.NET.
The 123mrp.NET Evaluation Workshop offers all manufacturing businesses, whatever their type, size or style, a unique forum with no 'smoke and mirrors', using plain jargon-free language, so that everyone can see for themselves how 123mrp.NET will benefit their company.
Our workshops cover all key aspects of the system and our implementation methods, providing the customer with a clear and concise picture of precisely what they can expect, should they decide to 'register' for using 123mrp.NET - and all this takes is about 2h.
The Evaluation Workshop can be likened to going into a shop and being able to acquire a complete manufacturing solution with confidence, knowing that your expectations will be met by a simple, uncomplicated process without any unnecessary interference from sales staff.
The quandary, in financial terms, boils down to the value you place on your time and that of your colleagues by spending all those weeks and months in the traditional systems' selection process with ultimately with no guarantee of success at the end.
Now compare that to a selection process that takes a couple of hours and hear what some customers have to say.
* "The 123mrp.NET system appeared at the point of selection to do 99% of what we wanted and even more so today" - Neil Percival managing director, Percival Aviation.
* "I had conducted a 12 month search and was literally at the point of signing a GBP 30,000 order when 123mrp.NET information landed on my desk" - Joe Gasan, managing director, Thermal Engineering.
By simply attending an Evaluation Workshop, asking all the questions you want and then getting on with it, we estimate this cost saving to be between 1-2 years free rental of 123mrp.NET, for most manufacturing companies.
* Have I really bought everything I need - Looking at the issue predictability and no nasty surprises you may think you have bought all the software and implementation services that will get the job done but there is always that nagging doubt because as we all know, many computerised system projects tend to go over budget (By the way, most 123mrp.NET implementations cost under GBP 5,000 to go live, many under GBP 3,000 see our client success stories for testimonies link to case studies).
There is a very simple fact that you need to establish about a potential supplier and that is, 'do they have account managers?' if the answer is yes, there blows the predictability of future costs because an account manager's typical sales target is to sell 150% of the value of the customers' support contract every year, to each and every customer.
The 'new business' salesman will of course take care to ensure that the proposal is under any fixed budget the customer might have (which is easily done when there is no published price list) and may therefore be under commercial pressure to be as 'economical' as possible when it comes to quoting for software, training and consultancy.
Again, you can check this point out for yourself by suggesting to the traditional system's salesman that you are not prepared to jeopardise your project by short-cutting any of their 'recommended' training and consultancy you'll then be surprised to find out how much it really does cost to implement (Listen - but do not say you are looking at 123mrp.NET - or you might not get a true recommendation, just a standard competitive response instead).
Put simply, you will need more modules, more than the proposed training and consultancy, in fact some more of everything, sooner or later because what else would be the purpose of the account manager? In contrast, with 123mrp.NET, you get all of the software - so there are no choices to make about modules.
As Brian Clarke, managing director of Cryomed Group commented, "I do not believe that spending more money on another system would have given us any more features than we already have." Robin Hawgood, partner at Jarvis Manufacturing said, "We looked at MRP systems for a year and came very close to buying one at GBP 12,000, however with all the extras and training it came out closer to GBP 25,000 - 123mrp.NET would not survive as a business model, if the product was not good." Incidentally, 123mrp.NET has somewhere between 25 to 30 modules, in comparative modular system terms.
Whilst with 123mrp.NET, you may not need to implement all the software straightaway, it is always there to cater for future eventualities, without the extra cost of buying more modules and extra implementation services.
* Am I really being quoted enough training and consultancy - a rule of thumb, much preached in the manufacturing systems industry, is that you should spend as much on training and consultancy, as you do on the actual software itself.
Well there is a very good reason for that, particularly if you're in the traditional systems' camp and that is because it is a major revenue stream.
In fact, 'services' revenues can account for up to half the annual turnover for a large number of software businesses and many even refer to themselves as 'Value Added Resellers', if you were in any doubt at all.
This can also explain why many systems are not designed and programmed in a way that minimises training and consultancy because without this valuable and underpinning source of income, many suppliers' businesses would fail.
With 123mrp.NET, there are just five training days and no consultancy needed to implement the system.
You probably think that five days of training must be some sort of 'come-on' to get you hooked and then it is all too late, except for some tears perhaps? Given that 123mrp.NET operates without binding contracts, how on earth could this be anything other the reality because customers would just walk away and we wouldn't have a business.
As Peter Jeffries, works director at Tecan put it, "I could not believe what I was being told and that support was so minimal, but that is exactly how it is." 123mrp.NET was designed right from the outset to need only minimal training and no consultancy completely at odds with traditional methods.
Our five-day training approach quite naturally puts pressure on the traditional suppliers to reduce their training and consultancy to the bare bones, so if you do fall to temptation elsewhere, then I am afraid it is back to see your ever so friendly account manager to place more orders! * Are my system upgrades really free as part of my support contract? - Looking on the bright side, the traditional system's buyer takes heart and bravely states, 'Well, at least my upgrades are free as part of my annual support contract'.
A simple riddle illustrates some of the short-comings of support contracts in practice:- Question: 'When is a free software upgrade, not a free software upgrade?' Answer: 'When it is a new module, of course.' It is commonplace for software to be developed in a way that enables a new module to be born, even if the new capability could easily (and some would say logically), be considered as an integral element of the module under development.
It just has to be a new module, almost every time.
Cliff Freestone, financial director of CSW Coldform commented on his previous system, "Although we were paying maintenance, it seemed that every time an upgrade for each separate module came along, we had to pay for it." The reason for this practice is purely commercial and designed to recoup all significant development expenditure from the sale of new modules.
Upgrades, as a direct consequent, are relegated to usually no more than bug fixes with a smattering of a little something extra, just to 'keep up appearances'.
123mrp.NET, in stark contrast, offers all software development within the rental arrangement.
It is also commonplace with traditional systems that whilst the upgraded software might be included in the support agreement, more often than not, the actual installation of the software requires 'specialist' technicians and yes, it's more chargeable labour.
123mrp.NET software includes automatic installation routines that our customers can use themselves so no need for the costly services.
* How can I be sure how long it will take to get up and running? - Many 123mrp.NET customers are running the system in next to no time.
One customer implemented a 28-user system in just 19 days from start to finish (see MCS award web page link) and six to eight weeks is typical for many of our customers.
Elsewhere, implementations of months and years are all too commonplace.
123mrp.NET customers can use the system in a very short period of time and therefore the benefits and cost savings 'kick-in' all the sooner, providing an instant payback, plus much more besides.
With a traditional system a return on investment of around two years would generally be considered respectable by many but this is poles apart from that of 123mrp.NET customers.
Mark Bastable, Group financial director of Flowplant, commented on his 123mrp.NET implementation: "We were live in one month and within four months had reduced our stock holding by GBP 250,000." * What would it mean to your company, in cash savings, if you could use the system six, nine or 12 months sooner? - Because traditional systems often take so much longer to implement, it is costing you much more again, which most people fail to include in their assessments, when it comes to doing the true cost comparison analysis.
Can you imagine if your resources that were tied up for months on end implementing a system could be used in running your factory instead, what a difference that would make to your bottom line? * Is the system is based on outdated technology? - It was not so long ago that the many buyers of 'MRP' systems would demand to know from all potential suppliers, whether their system was true Windows or not.
This was because many systems, which started life as DOS applications some years ago, were being offered with Windows front-ends and the like.
Indeed, many such systems are still on sale today, mainly because the suppliers' are unable through lack of funds and technical know-how, or too slow to react, in making the necessary financial investment in new software technology.
Every businessman now knows and appreciates that Windows was a quantum leap above DOS but if you turn the clock back some years, it was not always the case.
The realisation became apparent when high charges were being levied on customers by suppliers to upgrade to their 'Windows' version.
Let us not forget that many customers in this situation were diligently paying their annual support charges for years but all of a sudden this wasn't considered a free upgrade.
This was precisely the case at Freeman and Proctor, who were quoted over GBP 30,000 to upgrade to the latest version by their previous supplier; another customer was quoted GBP 120,000 for their 'upgrade'.
I wonder if it might be something to do with the fact that the suppliers in question had to recoup all of their development costs somehow or other.
* So what is the next quantum leap and when will it be here? - Well, the word is.NET and it is actually been here for longer than you might think.
With track record of success, 123mrp.NET is a true.NET application, securing our customers' future for at least the next ten years.
The.NET environment encompasses the very latest thinking from Microsoft for creating serious software applications.
Microsoft has invested millions of dollars in creating.NET, which is fast becoming the environment in which all business system applications are now written.
Naturally, there are many and significant advantages for 'users' of this advanced technology, principally reliability and speed of processing data but here is not the place for technical debate; this is all about making the right business decision.
For a more technical account please review the '123mrp version 5 - a true.NET application document.
Now turn the clock forward just a little and it is equally as certain that buyers of 'MRP' systems will soon be asking prospective suppliers, 'Is your system written in.NET?' You can easily find out for yourself; simply ask any system's supplier what they doing about re-developing their system in.NET - as a business-minded person, just listen very carefully to the answers or the lack of them and this will really tell you all you need to know.
* So back to the 'rent versus buy' true economic argument - now when you start to weigh up the 'pros and cons' of a traditional system, you might well feel the need to add a 'contingency fund' just in case.
But 123mrp.NET was created as a direct response to the pitfalls associated with traditional systems.
After all, we could have easily taken the well-worn traditional path too, by doing the same old thing, just like all the other manufacturing system suppliers.
However, the only way to make real progress is by critical analysis of the past and by thinking and doing what to many would seem the impossible.
We have built a successful business, based on affordability and low risk for the customer because we run a very efficient company.
Operational efficiencies are made through low cost promotion (Evaluation Workshops and five-day Training Programme), minimal support requirements, no credit control or debt and software that really works.
By eliminating all of the commercial barriers and concerns the business proposition is overwhelming.
The only real task for a prospective customer is to make sure that 123mrp.NET will do the job required of it and this is made easier still by our comprehensive range of customer success stories that support all manufacturing types, sizes and styles from diverse industry sectors.
123mrp.NET overcomes the usual pitfalls in acquiring a system and uniquely offers the following guarantee, summarised by our RiskGUARD policy: RiskGUARD means: * Low monthly payments.
* No contract or minimum commitment period.
* Ability to cancel anytime without penalty.
* All software, maintenance/support and upgrades included.
* No hidden extras or unexpected charges.
* First month's rental is provided free of charge.
Well, some of the argument boils down to the financial figures but there is far more to it as you can see, but this is where good old-fashioned commonsense comes into play you see there are some traditions worth keeping.
123mrp.NET is advanced and a truly outstanding production management system based on a sound business proposition making it a compelling alternative to traditional modular systems.
So if by chance, a traditional systems supplier tells you that after however many years you will still be paying for 123mrp.NET when you could have bought theirs, you have now got a clear understanding of the true economic argument.
* About the author - Guy Amoroso is managing director of Rent-I.T.
Systems UK.
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