August 2019

LOOKING FOR A NEW ERP FOR MANUFACTURING? SPOTLIGHT ON ALITHYA AND MICROSOFT

A recent Mint Jutras report asked the question, Is 2019 (Finally) the Time to Purchase a New ERP for Manufacturing? In that report we found 29% of manufacturers planning a purchase in either 2019 or 2020 and another 33% still undecided. If you are one of the many small manufacturers still “making do” with something less than a full Enterprise Resource Planning (ERP) solution, or a mid-size to large enterprise crippled by an old solution based on outdated technology, perhaps you are looking now, or considering doing so. If not, maybe you should be.

Looking for a new ERP solution is not something you do every day, and a lot has changed in recent years. Whereas features and functionality once drove most decisions, basic and even not so basic features and functions are table stakes today. While an 80% fit used to be acceptable, today’s flexible and technology-enabled solutions should get you much closer to 100% than ever before, without the need for invasive customization.

Yet while features and functions are indeed important, there are also other factors to consider, including ease of use, integration capabilities, deployment options and pace of innovation. We live in a period of rapid change and disruption, which can have a cascading impact on business application requirements, making agility – the ability to easily innovate, evolve and change – equally, if not more important than current functionality. For that you need the right approach to innovation and the right architecture and platform to support it.

In your search, you will encounter many options. Alithya Group may not be a company you have heard of. But you have certainly heard of Microsoft. Alithya is one of the largest resellers of Microsoft Dynamics 365, and has also been named to its Inner Circle, the top 1% of Microsoft Dynamics partners. Complementing Microsoft Dynamics 365, Alithya also offers industry-specific tools like ChemXpress, FoodXpress, Discrete Xpress and EDGE for Operations, all available on the Microsoft Azure cloud. These solutions leverage Alithya’s deep industry knowledge and include industry-specific deployment templates to get you up and running quickly.

Within the Microsoft community Fullscope might be a more familiar name, particularly in manufacturing circles. In November 2018 Alithya acquired Fullscope, adding a wealth of knowledge and expertise in both manufacturing and the Dynamics family of products to its portfolio. Here we put the spotlight on Alithya and its Microsoft-based solutions in terms of the most important factors to consider in evaluating ERP today.

About Alithya Founded in 1992, Alithya Group Inc. employs approximately 2,000 professionals in Canada, the United States and Europe, delivering on its four pillars of expertise in strategy services, Microsoft and Oracle technologies and custom enterprise solutions.

This report focuses on its Fullscope/Microsoft division. Fullscope, a Microsoft partner, became part of the Alithya Group in November of 2018. Alithya's Microsoft practice covers a wide array of capabilities including Dynamics, Azure, business analytics, digital solutions, advanced analytics, application development and architecture. The combined companies have delivered Microsoft ERP, CRM, BI and digital solutions to over 1,200 clients.

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UNDERLYING ARCHITECTURE In our previous report we asserted that advanced technology is what sets today’s modern ERP solutions apart from legacy solutions. While some of these technologies like Blockchain, virtual assistants (chatbots), 3D printing, predictive and cognitive analytics, beacons and drones supplement the features and functions of applications like ERP, others are more foundational. Right at the top of the list of foundational technologies is the underlying architecture. It is the architecture that determines how easy (or hard) it is to develop features and functions. It is the architecture that determines ease of use. And it is also the architecture that either facilitates or limits agility and innovation.

The underlying architecture determines how a solution is constructed. Before diving further, let’s get a refresher on the basic definition of ERP. Mint Jutras defines ERP as an integrated suite of modules that provides the operational and transactional system of record of your business. This is a rudimentary definition, covering the basics of required functionality. Most ERP solutions today, including Alithya’s, do much more. This definition also allows us some flexibility, because even the most basic needs will vary based on the type of business and sometimes the industry in which you operate. All businesses require the basics like general ledger, accounts payable, accounts receivable and purchasing. Manufacturers will require more robust inventory and logistical capabilities and must also manage production. Industries like chemicals and food require specialized functionality.

In the past, a suite was always a monolithic structure. It was likely comprised of modules (e.g. general ledger, accounts payable, inventory management, purchasing, order management, etc.) and certainly some were optional, but none of these could stand alone. All modules shared a common database, and all were developed using the same tools and technology. The good news: they all moved forward in lock step. This eliminated data redundancy and any need for separate integration efforts, but it made the monolithic structure very rigid.

In today’s global, digital economy, where the pace of change is accelerating, rigid, monolithic structures are the dinosaurs of the enterprise software world. But unlike the dinosaur, they are far from extinct. They live on in legacy solutions – those same solutions you are most likely (hopefully?) looking to replace with one built on a modern architecture and a strong platform.

Today’s modern, technology-enabled ERP solutions replace the monolithic structure with a component-based architecture. With a component-based architecture, you gain the ability to add new features and functions without disrupting the core application, sometimes even with low-code or no code.

How does this work? Component-based architectures are the same as (or perhaps similar to) the microservices architectures we described in our

In today’s global, digital economy, where the pace of change is accelerating, rigid, monolithic structures are the dinosaurs of the enterprise software world. But unlike the dinosaur, they are far from extinct. They live on in legacy solutions.

Definition of ERP Mint Jutras defines ERP as an integrated suite of modules that provides the operational and transactional system of record of your business. This is a rudimentary definition, covering the basics of required functionality. Most ERP solutions today do much more.

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previous report. For those nontechnical readers, think of them as constructing a solution from a set of Lego building blocks. Each Lego block (component) is made of the same kind of material and is attached (connected) to the other Lego blocks the same way. In many ways they are interchangeable. But by choosing different colors and sizes, and connecting them with a different design, you can make a structure that is very unique. And once constructed, if you want to change it, decoupling some of the blocks and replacing them doesn’t destroy the parts that are not affected. There is far less disruption introduced than if you had constructed it with a hammer, timber and nails (program code).

Microsoft Dynamics 365 combines an ERP suite of modules (general ledger, accounts payable, inventory management, purchasing, order management, etc.) with a wide array of additional components spanning CRM, Sales, Field Service, Marketing, and integrated Analytics with PowerBI, a data visualization and business intelligence (BI) tool. The stack also offers rich options for integration to enterprise data warehouse solutions and external systems, artificial intelligence (AI), machine learning and the Internet of Things (IoT).

Microsoft Dynamics 365 is componentized. As you can see, it is a combination of ERP modules and extensions. What’s the difference? A module typically does not stand alone. You might group the finance modules together to stand together on their own, but you wouldn’t just implement accounts payable. For example, Dynamics 365 for Finance and Operations contains a full suite of core financial management modules. It is sold and marketed on a stand-alone basis, as well as being part of the larger suite.

The extensions are built to stand alone but can also be seamlessly integrated. And you certainly derive more value in implementing them together with ERP. CRM is the perfect example. It is a separate application, integrated with ERP, but it has its own customer master file, which must be synchronized with the customer data in ERP. Dynamics 365 does however use a common data service and Microsoft is working towards ERP and CRM sharing the same data. But for now, the integration appears quite seamless to the end user.

Ailthya’s EDGE for Operations solution is another example of an extension. EDGE for Operations is designed as an add-on for regulated industries including pharmaceutical, medical device, food and beverage, and commodity, industrial, specialty, agricultural and chemical manufacturers. These industries must satisfy specific quality and regulatory compliance requirements. EDGE for Operations supports compliance documents and specifications and provides a closed-loop process for managing non-conformities or defects. It tracks details and standardizes, streamlines and centralizes the investigative process.

This specialized functionality for regulated industries provides us the perfect segue into fit and functionality.

Alithya was recently named a finalist in the 2019 Microsoft Dynamics 365 for Finance and Operations Partner of the Year Award.

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FIT AND FUNCTIONALITY: GOING THE LAST MILE For decades features and functions drove most ERP selections. This year our 2019 Mint Jutras Enterprise Solution study found this criterion dropped to second place behind user experience (more on that later). However, make no mistake, it is even more crucial than ever. In fact, it is time to start breaking the 80/20 rule. Where did this 80/20 rule of software come from? With many of the early versions of ERP, software vendors tried hard to be all things to all businesses. With few exceptions, most early solution providers cast a wide net. Unwilling to turn any potential business away without a try, they came to market with very broad solutions. By trying to please everyone, they never had a complete solution for anyone. The 80/20 rule prevailed. Nobody expected a solution to satisfy all their needs (an 80% fit was often the goal), resulting in invasive (and sometimes expensive) customizations that built barriers to further innovation. It also resulted in a proliferation of disparate systems that may or may not (still) be integrated today. But a “one size fits all” solution is not the most effective approach to meeting the needs of a wide range of businesses. No software vendor can be successful in trying to be all things to all businesses. But it is still possible to get “last mile” functionality today with a strong platform and a component-based architecture that makes ERP more “extensible.” In the context of ERP: to make it easier for the vendor (and possibly its partners with deep domain expertise) to add specialized features and functions to a solid code base, with minimal disruption. This is really the (not so) secret sauce behind any solution provider’s ability to deliver “last mile” functionality, not just for major industries like manufacturing, but also for verticals like food and chemicals. And this is where Microsoft relies heavily on its partners, like Alithya, for that last mile. Indeed, the functionality available in Dynamics 365 that supports process manufacturing (e.g. chemicals and food and beverage) was originally created by Fullscope. In the beginning, this was sold (by Fullscope) as an add-on to Microsoft Dynamics AX, the predecessor to Dynamics 365. But then Microsoft purchased the rights to this software from Fullscope and embedded it within its standard offering.

Dynamics 365, on its own, is a general-purpose ERP solution with a broad reach. Alithya can of course deliver this horizontal solution, but it can also deliver a solution that is tailored specifically for one of three possible verticals by adding one of its Xpress Solutions: chemicals, discrete goods and food and beverage.

Data Source In this report Mint Jutras references data collected from its 2019 Enterprise Solution Study. This year the study collected responses from 464 participants, from companies of all sizes from very small to very large, representing a wide range of industries. In this report we reference the data collected from 227 manufacturers.

Typical Chemical Manufacturing Needs

ü Formula focused ü Batch order

management ü Batch/lot management ü Quality management ü Co-/by-product

processing ü Restricted and

regulated products ü PSDS/MSDS ü Regulatory reporting ü Trade promotions ü Rebates and

deductions ü Commodity &

attribute-based pricing ü Potency management ü More…

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FIT: MORE THAN JUST FEATURES AND FUNCTIONS

However, while features are very important, functionality is only one piece of the overall “fit.” Why do you think different customers running identical solutions can have such a varied degree of success? “Fit” is also a measure of how well the solution is integrated into your business and its processes. It is for this reason that Alithya places so much emphasis on formalizing the combined knowledge of decades of experience in select verticals - on the floor in the chemical plant, at the protein processor, on the shop floor or in the lab.

The code base is the same for all three of its Xpress solutions, but Alithya also builds specific expertise into its business process models. Through these preconfigured packages, Alithya is able to formally share its collective experience with its customers. In fact, the Alithya team has built more than 3,000 of these business process models to guide customers through implementation and then extract more value from the (standard) software. And of course, it also offers EDGE for Operations as an extension that also leaves the core “clean” of customizations. Think of the added value here as a result of configuration rather than invasive customization that builds barriers to future innovation. Anyone can implement a product. Xpress templates help you do it better.

The three preconfigured Xpress solutions are:

ü ChemXpress: The chemical manufacturing industry has specific needs, including the need to manage batches and lots, potency, quality, co/by-product processing, customer rebates, trade promotions, compliance tracking, attribute-based pricing and more. ChemXpress streamlines those processes and leverages historical data from core ERP for quick reporting.

ü DiscreteXpress: Tailored for discrete industries, DiscreteXpress is a tested and proven manufacturing industry template, based on leading industry scenarios. It includes a pre-configured infrastructure, toolset and sample data to help you manage production orders, support lean manufacturing processes, forecast sales, configure products and more.

ü FoodXpress: Requirements for food and beverage manufacturers can be exacting and onerous. FoodXpress integrates more than 1,000 defined processes, data sets and parameters to help you manage batches and lots, co/by-product and catchweight processing, trade promotions, customer rebates and more.

INTEGRATE, EXTEND, CUSTOMIZE

We encourage those in search of a new system to look for the most complete solution possible, but we also recognize how rare it is for any company to only run a single enterprise application.

Typical Discrete Manufacturing Needs

ü BOM setup ü Production order

management ü Lean manufacturing

(KANBAN) ü Sub-contracting ü Inter-company trading ü Quality management ü Sales forecasting ü Supplementary item

processing ü Product dimensions ü Serial number

management ü Product configurator ü Engineering change

orders ü More…

Typical Food Manufacturing Needs

ü Formula focused ü Batch order

management ü Batch/lot expiration

dating ü Batch/lot attribute

processing ü Batch/lot traceability ü Batch/lot balancing ü Batch/lot merge ü Quality management ü Co-/by-product

processing ü Compliance tracking ü Catchweight

processing ü Trade promotions ü Rebates and

deductions ü More…

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And therefore, integration capabilities should also be considered. Alithya, together with Microsoft, delivers Application Programming Interfaces (APIs) as a convenient and easy way to connect applications. They are sort of gateways that minimize the code needed for integration.

The Microsoft Dynamics 365 family of products also includes PowerApps, a low-code/no code App creator, which is part of the Power Platform. Instead of costly, invasive customizations that can build barriers into further innovation:

“Build apps fast with a point-and-click approach to app design. Choose from a large selection of templates or start from a blank canvas. Easily connect your app to data and use Excel-like expressions to easily add logic. Publish your app to the web, iOS, Android, and Windows 10. It’s that easy.”

Mint Jutras strongly discourages customizations, but sometimes these are necessary in order to preserve your differentiation in your market. However, if you are considering customization simply to preserve the status quo (i.e. “We’ve always done it this way”), our advice is, don’t do it. And if you do need to customize, do it through extensions and not invasive code. App builders like PowerApps that require low or no code are the best approach. And with Alithya and Microsoft, it is ultimately do-able.

OTHER CONSIDERATIONS We mentioned several other important considerations in our introduction: user experience, deployment options and pace of innovation. These are all somewhat connected to each other.

USER EXPERIENCE

While many software vendors talk about “beautiful software” today, beauty is in the eye of the beholder and therefore rather subjective. And so is the overall user experience. In the context of software selection criteria, we define the user experience in terms of easy, intuitive navigation, visual appearance and personalization. Beyond personal preference, the software that is the easiest to use is the software that looks and feels most familiar. The pervasiveness of Microsoft Office products these days gives Microsoft a leg up here. But the only way to really evaluate the user experience is to use it. You really need to put your own hands on the software. People that do demos for a living can make anything look easy. And therefore, we would encourage anyone evaluating software to actually touch it.

This doesn’t necessarily mean an in-house pilot project where you try before you buy. Just sit down at a keyboard and try to navigate with minimal guidance. Also ask which devices are supported. Can you access all or selected functions from a mobile device? Microsoft Dynamics 365 is browser-based and mobile optimized right out of the box, so it can be accessed from anywhere.

The software that is the easiest to use is the software that looks and feels most familiar. The pervasiveness of Microsoft Office products these days gives Microsoft a leg up here.

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CLOUD AND SAAS

Whether you run a solution on your own premises or in a private or public cloud, the ability to access anytime, from anywhere is a significant advantage and cloud-enablement opens the door for the kind of connectivity you need as a full and active participant in the digital economy. Mint Jutras is of the firm belief that while cloud does indeed bring value to many, if not all organizations, SaaS brings even more value. We outlined the difference between cloud and SaaS in our prior report and also include it in the sidebar to the left.

In that report we also defined three different deployment options: SaaS, hosted and on-premise. Alithya’s solution is available in the equivalent of all three options. It is available as a multi-tenant (public) cloud solution on Microsoft Azure, which means there is a single instance of the software, shared by all customers (tenants). But customers can also opt to have their own private instance, which is the equivalent of a hosted environment. Yes, it is fully cloud-enabled, but the client has more freedom to customize and also more discretionary input into when new releases are applied. And the solution is also available to be run on premise.

PACE OF INNOVATION

Which leads us to the final criterion, pace of innovation. Either cloud option (public or private) will relieve you, the customer, of the burden of applying upgrades. Microsoft and Alithya perform the heavy lifting. And just a reminder, when asked to select the top three challenges in achieving maximum value from ERP, “cost and disruption of upgrades prevent us from innovating” was at the very top of the list, selected by 41% of manufacturers. If you run in a private cloud you will have more flexibility in timing, but the pace will likely be slower than in the public cloud. If you choose to run on your own premises, you assume the responsibility for and the burden of the upgrades. But ultimately the choice of deployment is yours.

WHAT CAN YOU EXPECT? In our previous report we compared expected and actual time to achieving the first “go live” milestone. The average expected time for all manufacturers was 7.95 months and the average actual just a bit higher at 8.19. We also found SaaS deployments trimming more than an additional month off those results. So how do Microsoft Dynamics deployments compare? Quite favorably. The Dynamics deployments significantly beat the average (Figure 1).

Note: We had 62 respondents from all different Microsoft Dynamics ERP products. We combine all of them to get a sample size worthy of reporting. But we did make note of how the Dynamics AX and Dynamics 365 (combined) compared, and these results were even more favorable.

Cloud versus SaaS

Cloud refers to access to computing, software, storage of data over a network (generally the Internet.) You may purchase a license for the software and install it on your own computers or those owned and managed by another company, but your access is through the Internet and therefore through the “cloud,” whether private or public.

SaaS is exactly what is implied by what the acronym stands for: Software as a Service. Software is delivered only as a service. It is not delivered on a CD or other media to be loaded on your own (or another’s) computer. It is accessed over the Internet and is generally paid for on a subscription basis.

Using these definitions, we can confidently say all SaaS is cloud computing, but not all cloud computing is SaaS.

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Figure 1: Time to Reaching First “Go Live” Milestone

Source: Mint Jutras 2019 Enterprise Solution Study

Some implementations go “big bang” with all functions going live at once. Others may approach it more incrementally. For smaller companies or those being divested from a larger corporation (on a tight timeline), it might represent their complete implementation. For large multi-nationals with many different legal entities and/or operating locations, it might represent a single division. While not perfect, we choose this metric for two reasons. First, it is less variable than a full implementation. Secondly, because this is when you are most likely to see specific, quantifiable results – which brings us to the question of ROI.

In our survey we defined the timeline for ROI to be the time it took to recoup 100% of the initial cost of ERP through cost savings or added revenue. A full 90% of companies surveyed projected a timeline for ROI and 83% had already achieved it. The average time to recoup these costs was 1.67 years (about 20 months), but the average for Dynamics users was 1.04 years. So, if you are looking at a first-time implementation or a replacement, and choose to go with Alithya, you would do well to set a goal for recouping your costs within a year.

CONCLUSION AND RECOMMENDATIONS As we noted in our previous report, any decision to implement a new ERP is a big decision, which requires careful thought and justification. Investment in the software that runs your business is a significant investment, but there should be some significant returns on that investment, and it need not necessarily require a lot of capital. If you choose Alithya, you will have a choice of deployment options. If you choose to go with a SaaS deployment, you will have the option of accounting for it as an operating expense (OpEx) versus a capital expenditure (CapEx).

If you are a manufacturer, you have very specific requirements. Look for a solution that is designed and developed to meet your specific needs. The manufacture of discrete goods is very different from the manufacture of chemicals or food and beverage. Look for a solution provider that understands

7.956.26

7.378.19

4.97

7.61

0

3

6

9

Manufacturing Dynamics All Other

Expected Actual

The average time to recoup these costs was 1.67 years (just about 20 months) but the average time for Dynamics implementations was 1.04 years.

In the early days of ERP, implementations typically took nine to twelve months before any type of “go live” event. Today we find the reality closer to the seven to ten-month range. But implementations of Microsoft Dynamics ERP solutions beat that average.

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the difference and understands your business. Any solution you select should meet those needs. Don’t look for an 80% solution that you must customize; look for a 100% fit. You might not achieve 100% but look to fill any gaps with extensions and not invasive code changes.

If you manufacture discrete goods, chemicals or food and beverage, or products closely related to them, you will find Alithya to have that knowledge and expertise. And you will find its Xpress Solutions leveraging that knowledge through its pre-defined business process models.

We live in a period of rapid change and the risk of disruption is very real. While fit and functionality is critical, agility – the ability to easily innovate, evolve and change – is equally important. Alithya enjoys a distinct advantage in having the backing of technology giant Microsoft, which continues to invest heavily in the underlying platform and core functionality.

Do your due diligence and examine fit and function, as well as user experience. But the underlying technology is equally important. Don’t be afraid to admit to not having the necessary expertise to evaluate the technology. Consider getting help from certified experts.

And while you’re looking for help… Recognize this is not the type of project you want to take lightly, and unless you are an ERP consultant, it’s not something you do every day. Don’t be afraid to admit to not having the necessary experience to plan it and do it right. Consider getting help from partners like Alithya to help you define goals, set an aggressive (but achievable) schedule, and stay on track.

About the author: Cindy Jutras is a widely recognized expert in analyzing the impact of enterprise applications on business performance. Utilizing over 40 years of corporate experience and specific expertise in manufacturing, supply chain, customer service and business performance management, Cindy has spent the past 13+ years benchmarking the performance of software solutions in the context of the business benefits of technology. In 2011 Cindy founded Mint Jutras (www.mintjutras.com), specializing in analyzing and communicating the business value enterprise applications bring to the enterprise.