ERP is not only for big firms that can afford SAP

ERP is not only for big firms that can afford SAP

By Zatni Arbi

JAKARTA (JP): Take a close look at the new Jaguar S-Type and
the sleek Lincoln LS. At a glance you may see more differences
than similarities. The Jag, with its retro grill, looks like a
car from 50 years ago, while the Lincoln does not hide its high-
tech characteristics.

The Jag is still very British, and the Lincoln is very
American. But both are luxury and high performance cars, and both
are made by Ford. And if you look hard enough, you'll even find
out that both cars actually share exactly the same platform.

Using the same basic frame to produce customized products is
not an entirely new paradigm, even in the world of software
development.

"I'd like to compare our System 21, the foundation of our ERP
system, as a floorpan of a car," said Alastair Middleton, JBA's
@ctive Enterprise director at a recent JBA Press Encounter event
in Singapore. "On top of this floorpan, the car manufacturer may
place different body panels and engine to suit the taste and need
of an individual buyer. Similarly, on top of our System 21, we
can add components based on the specific needs of our individual
customers."

Although Middleton's company has been very quiet in this
region, it has been gaining ground in the Asia Pacific where the
mid market Enterprise Resource Planning (ERP) business is growing
fast. According to American Manufacturing Research (AMR), JBA
International is the sixth largest ERP vendor -- and No. 1 in the
mid-market segment. In case you wonder, the mid market segment
consist of companies with a US$50million to $250 million annual
turnover.

Surely ERP means different things to different people.
However, the term, coined by the Gartner Group, generally refers
to total integration of applications in different functional
departments throughout a company. In manufacturing, for example,
an end-to-end ERP may include functions that grab the data
originating from the suppliers and the purchase data sent by the
buyers.

As I wrote in this column almost two years ago, the key aspect
of an ERP is the domino effect. When a customer enters a purchase
order, it will trigger a chain of actions in other departments,
such as the warehouse (which automatically will check
availability of parts and reorder supplies if necessary), the
finance department (which will check creditworthiness of the
customer who has just placed the order), and perhaps the human
resources department (which will check whether temps have to be
hired). The objectives of the ERP include minimizing cost,
shortening turnaround time, and maximizing profits and values.

The boom in the ERP business is the result of several factors,
including the need to shorten the time to delivery. Peter Quinn,
JBA's group market development manager, used the example of the
Ford Motor Company. In the early 1990s, it took the company
typically 60 days to deliver a car to a customer. In 1995, the
lead-time was reduced to 45 days.

These days it has come down to only 15 days, and in the future
it will have to be cut further to three days otherwise customers
will buy their new cars from General Motors or DaimlerChrysler.
Clearly, to speed up the process, the supply chain has to be very
tightly managed, and an ERP becomes the necessary tool.

With their R/3, SAP is unquestionably the biggest player in
the big enterprise market. But there is the mid market, as well,
where smaller but more nimble ERP solution providers are
blooming. Most of these smaller outfits, such as JBA and Mincom,
serve particular vertical industry segments. JBA, for example,
sees its strengths in the style, food, drink, automotive
components and electronics industries. Some ERP vendors try to
offer more generic, "one-size fits all" solutions, although
eventually they have to admit that there are industries that they
can serve well and there are others in which they simply do not
shine.

Clearly the most crucial success factor in the ERP business is
the understanding of the industry that an ERP solution provider
serves. Mincom, for example, has a very strong background in the
mining and extraction industries, and therefore it knows what the
industries specifically require. Similarly, JBA also has people
with expertise in the industries that the company focuses on.

A Business modeler

One of the most interesting products that the UK-based JBA
highlighted during the event was its @ctive Modeler. New
companies, with little or no experience on how their business
processes should be organized, will benefit a lot from this
module, which is not available in many of the other ERP offerings
for the mid market.

Using a graphical modeling tool such as the one shown in the
accompanying picture, for example, a company can define and
describe its key business processes, who is responsible for which
function, how performance improvement can be measured, which
application software can support these improvements and how that
software should be used to optimize each operation.

Users can start from scratch or use a reference model already
included in the @ctive Modeler. This reference model, the Supply
Chain Operations Reference (SCOR) model, represents the best
practice as defined by the Supply Chain Council.

Recently acquired by Canadian GEAC, JBA is one of Big Blue's
business partners. Their System 21 and all the components of
their @ctive Enterprise Series solutions are written solely on
the immensely popular IBM AS/400 platform.

Its customers in the electronics industry include big names
such as Sony, Matsushita and Fuji Xerox, and Aiwa, while in the
automotive industry there are names such as Daewoo, Suzuki and
Komatsu. In the food and drink industries, they serve customers
such as Pizza Hut and Pepsi Cola.

In the region, JBA has offices in Malaysia, Singapore,
Thailand, the Philippines and Australia. Perhaps we can send a
small note to our power elites here that, although it has a few
important customers in Indonesia already, just like so many other
multinational companies, JBA has no plan to open a representative
office in Jakarta yet for the obvious reason.

Certainly the next three days will determine whether foreign
investors such as JBA will have enough confidence in our economic
potential and political stability to invest here, otherwise we
will remain a country for which they continue to adopt a
wait-and-see approach. If the next three days do not end as we
hope, we will continue to be left behind while our neighbors in
the region keep racing ahead.