A transformative view of the industry backed by a right-sized software solution can help ETO companies take engineering and production excellence to the next level.
Engineer-to-order companies create incredible value for their customers by putting specialized expertise, innovative engineering, and advanced project manufacturing operations to work. However, many ETO firms are not yet taking advantage of the best of modern business management technology. Others may invest in software that does not fit their business or provides capabilities they don’t need. Industry and technology experts at Sikich have developed an ETO-ready solution and a low-risk, rapid, and predictable approach to deploying it. In this ebook, we discuss how to achieve the right software fit with Sikich HEADSTART for ETO and what results you can generate by using it.
Engineer-to-order (ETO) companies make it their mission to perform challenging manufacturing projects to produce the industrial assets that allow other companies to be in business. They design and build machines that can make other machinery or machine components, or they manufacture machines that make certain end products from a combination of materials and components.
ETO companies prize intellectual property as a key asset. It may take the form of machine patents and innovations, specialized expertise in how to meet the needs of customers in their target market, or unique engineering and manufacturing processes and equipment required to create the machine products these customers need. ETO companies invest heavily in developing and maintaining the expert skills and production capabilities that can translate materials and components into profitable, competitive customer solutions.
In contrast, ETO firms may not always be aware of the opportunities of technological innovations and modern digital-infrastructure solutions that could help them manage their operations—especially if they have been successful and enjoy long-standing customer relationships. That can result in the juxtaposition of advanced, machine-driven or even roboticized engineering and production processes with oversight by project managers who juggle numerous spreadsheets or multiple, older software tools. Redundancies and errors are common when project managers record and retrieve information in and from multiple resources.
For them, just like for finance teams, account execs, or company leadership, it can be difficult and time-consuming to use these basic tools to assess the status of projects and see how they perform against financial forecasts and committed budgets and schedules.
In addition, many ETO companies use specialized, standalone engineering and production systems that are no longer state-of-the-art, and were customized to meet their specific requirements. Almost by definition, these require ongoing investments of labor and funds to keep them useful. For new employees, they can be baffling to learn and navigate.
Over years of business and many projects, these inefficiencies usually result in costs an ETO company might prefer to avoid. They also make it harder for project managers to have productive conversations with customers. A customer might want to ask for a quick project update, explore an idea, or have a question answered on the fly. If you need to manipulate a sheaf of spreadsheets, that can be difficult.
In addition, customers may have to update their requirements with little advance notice. The resulting change orders can boost project costs and lengthen production schedules. Skilled project managers usually can rally their resources and accommodate unexpected turns. Even so, margins can suffer and customers may not be satisfied with their vendor’s ability to work with them when change orders cause delays and drive up costs.
At a time of generational change in the workplace, you may also want to think about what you can offer the candidates and recent hires who expect to use modern technology to do their jobs and pursue their career goals. For them, empowerment can take the form of software tools that help them serve customers, be productive in their area of accountability, and take the initiative for innovation. You can motivate and enable talented people by giving them the tools and data to make this possible. By winning their loyalty as satisfied employees, you may gain a lasting competitive advantage.
Companies that invested heavily in the employee experience earned more than 4x average profit and 2x average revenue compared to those that didn’t.
Source - Jacob Morgan
When ETO companies face the limitations of basic, general-purpose software tools and processes that hail back to pre-digital times, they sometimes decide to go all out with modern technology. That’s when they may find that there aren’t many viable options when you want to find a comprehensive business management system created for ETO and configure-to-order (CTO) firms that are not large enterprises. Midmarket companies may get the idea that they have just two choices, neither of them optimal: they can update their current, fragmented software tools with more powerful and usable solutions and make process changes to become more efficient. Or, they can invest in an all-in-one enterprise resource planning (ERP) system, which may come with too many capabilities that do not fit their business.
In the first case, they may still need to address data and process gaps between specialized systems which are not integrated. In the second, they will have to make adjustments to fit standard software to their needs. That may require finding skilled consultants who can make the right modifications and ensure that these will be easy to manage for the company as software updates and business changes happen.
Faced with these choices, many ETO and CTO companies acquire software systems that provide them with more capabilities and options than they need. They may then see a small and intermittent payoff in efficiency and productivity improvements from their large investment. If the software was not engineered with the needs of actual users in mind, it’s almost certain that some project managers and other team members will not use it. They will stick to their spreadsheets or find workarounds.
Sikich is a technology and business consultancy with a deep commitment to manufacturing. We feel that ETO and CTO companies should benefit from a software solution that is a better match than either disparate, specialized applications or a large-scale ERP system with a deployment length that may not be acceptable for companies’ intent on generating tangible, quick time to benefit. However, some well-reviewed and widely adopted, standard ERP solutions could serve as a foundation for the industry software we envision. One of them is Microsoft Dynamics 365 Business Central, a modern, evolving system from one of the industry’s leaders.
Business Central is a modern ERP system that companies can implement in the private, public, or hybrid cloud as well as on-premises. Microsoft has continuously strengthened and refined it, and the Sikich practice and expertise has grown and matured along with it. Business Central comes with extensive functionality to power a business, including project management, finance, sales, services, and supply chain. It’s modular, so you can follow your priorities in deploying the capabilities you want, and you can choose whether to deploy on-premises or in the cloud. Business Central interfaces, functionality, and workflows are designed for people in real business roles. The solution provides insight and visualization tools that help them make sense of business data to answer questions and fuel decisions. The system integrates with the Microsoft 365 apps that many companies use, such as Excel, Outlook, Word, PowerPoint, and Teams. You can create and share documents or work with colleagues and customers, pulling information from Business Central into the software tool on your screen.
44% of CIOs believe complex legacy technologies to be a significant barrier in the company’s digital growth.
Source - Imaginovation
For many companies, Business Central is transformative, allowing them to focus on what they do best while becoming smarter and more agile. Following a roadmap for evolving the solution, Microsoft continues to enhance it with scheduled updates twice a year. Companies can extend Business Central by drawing on the resources for business intelligence, app development, automation, and virtual agents on the Microsoft Power Platform.
Deploying and managing HEADSTART for ETO will cost far less than acquiring, implementing, and owning several, specialized software tools. A ballpark metric would be an average cost savings of approximately one-third.
Our ETO clients don’t always see the need to allocate resources and time to document the return on investment (ROI) or the total cost of technology ownership (TCO) of their Business Central ERP, compared to what they used previously. However, Sikich consultants have interviewed them to understand their experiences and the ROI and TCO outcomes they achieve with HEADSTART for ETO. We find that deploying and managing HEADSTART for ETO will cost far less than acquiring, implementing, and owning several, specialized software tools. A ballpark metric would be an average cost savings of approximately one-third.
Through years of use by your employees, you save costs and time every day because people can do their work in just one software solution that is designed to be easy to learn and comfortable to use for real-life business roles.
Product configurators are a potentially business-critical application. ETO and CTO companies are often tempted to purchase more configuration functionality than they require, similar to how they acquire ERP software. Solution vendors offer a number of excellent configurators, and Sikich will deploy a configurator together with an ERP solution when that makes sense.
However, the software can require a large up-front investment, and scripting the logic rules for it and managing it within your ERP environment will require time and skills you either need to own or contract for. In many companies, it takes the equivalent of one full-time, skilled employee to manage the configurator software. We may be able to help you avoid those costs and complexities.
If your product is mostly standardized and repeatable but contains a subset of components that you customize for individual customers, configurator software may not be called for.
At Sikich, we have seen too many situations where companies purchased a configurator and never got around to creating the logic for it. As a result, the software languished without bringing value to the business, and sometimes users and IT practically abandoned it. If your product is mostly standardized and repeatable, but contains a subset of components that you customize for individual customers, configurator software may not be called for. Instead, HEADSTART for ETO will most likely be a good fit for you. Your team members can do their jobs and manage projects within a single solution and won’t have to learn and navigate multiple systems. However, if every one of your products is a customized combination of possible options, you may be better served with a high-end configurator.
Clients sometimes tell us that they acquired configurator software because they wanted the best possible tool to facilitate product configuration. Stakeholders and consultants may argue that a company’s needs may change and become more complex, and purchasing advanced configuration software beyond what is currently needed can be a kind of future-proofing measure. However, for most companies, these highly tentative benefits will not justify the expense and administrative overhead of a configurator system. What makes more sense for them is matching technology to the workings of the business.
A Dynamics 365 ERP environment in the cloud can flex and scale to include extended functionality on the same platform. Sikich clients have saved costs, reduced administrative workloads, and still gained the right configuration capabilities by deploying HEADSTART for ETO. Our solution can pencil out favorably even if you decide to replace your existing, overly complex configuration tools and start over. For companies that have invested in configurator software and find that it requires too much time and effort from IT managers and business users, Sikich can help achieve a turnaround that provides exactly what the organization needs.
In recent years, given the strong emphasis on high-quality customer experiences as a competitive advantage and the increasingly high expectations customers have for the companies they do business with, CRM systems have become ever more powerful and richly featured. They can support large volumes of customers, transactions, and account events. Companies also use them to run targeted marketing campaigns that may involve many thousands of contacts.
However, most ETO businesses operate quite differently. For one thing, they don’t manufacture commodity products for sale to thousands of customers. A typically individualized sales process precedes the planning and production. ETO firms often serve closely defined market segments with partly customized, high-ticket items. To be of value to them, a CRM system must have the right fit with their approach to managing accounts and serving customers.
The CRM that is part of Sikich HEADSTART for ETO gives you all the tools to manage and nurture customer relationships. You can track and store product details, contracts, communications, promises, approvals, and other elements of customer engagements. From new leads that turn into prospects who receive a quote or a proposal and turn into customers, and on to delivering services, you can manage the entire life of your accounts in Sikich HEADSTART for ETO.
CRM systems improve customer retention rates, which leads to a profit increase of 25% to 85% .
Source - Tech Times, 2020
Once created and recorded, account data lives in the solution, accessible to users across business groups. Business reporting and analytics can draw on CRM data together with any other information that resides in HEADSTART for ETO.
Thinking about standalone CRM vs. CRM capability embedded in your ERP system is very similar to considering configuration software. Sikich consultants and solution architects can help you make an informed decision. Potentially, deploying both a CRM and an ERP system can double your deployment and management costs. Conversely, replacing a barely used CRM technology with CRM as part of an ERP may greatly reduce expenses.
When companies overestimate the complexity of their processes and business conditions, they over-provision and don’t receive the benefits of their software investment. We sometimes find that organizations use barely a tenth of the functionality of their expensive CRM software, and will usually recommend switching to a solution that fits them more closely and has a better ROI.
The embedded CRM in HEADSTART for ETO gives you a 360-degree view of your customers and supports the complete account lifecycle. However, if multiple sales reps on your team discuss challenging, extensive technical details with customers, a fully-fledged CRM product may be appropriate. If you’re thinking of CRM as a business priority for a technology modernization, followed by an ERP deployment and an integration of the two, we can help you plan the entire initiative and keep it financially and operationally sound.
Employee productivity can improve when the software tools in your workplace are simple and few. With CRM as a component of your ETO business management system, people can enjoy working in a productive, unified technology environment. Newer employees can rely on the CRM component to assist customers without going through lengthy reviews of account histories or additional training. Both new hires and current employees moving into a customer-facing role may be motivated by their ability to be effective in working with customers today rather than tomorrow.
CRM SOFTWARE CAN BOOST SALES BY 29%, PRODUCTIVITY BY 34%, AND FORECAST ACCURACY BY 42%. .
Your customers, in turn, can benefit from a seamless relationship experience. No matter who they talk to on your team, they will meet people who understand their relationship with the business and who can assist them without requiring them to re-introduce themselves.
ETO and CTO companies typically build their reputation and success on excellent products and long-standing customer relationships. For many of them, turnover among customers may be minimal and competitive challenges relatively uncommon. However, your customers could potentially be at risk. When key people who practically own customer relationships leave the workforce, you need to maintain the best possible quality and continuity in your dealings with these customers, or their loyalty might suffer. Using your CRM tools, you can manage team transitions smoothly, recording all account-related documents, communications, customer details, and next actions.
Those measures also make it possible for your team to take those small, extra steps and maintain your company’s unique touch in serving customers—without causing additional costs or using significant time. They can take the initiative in offering a higher-quality part, a better cost, or an earlier service appointment if they see an opportunity. When the wear and tear on machinery or machine parts requires a timely replacement or service visit to avoid production slowdowns or interruptions, they can proactively work with customers and eliminate headaches for them. Or, if the changing availability of materials or other events force a change in a manufacturing project, your employees can immediately approach customers and mitigate delays or other unwanted consequences.
74% of CIOs improved customer relationships by using CRM.
When you use the CRM functionality in HEADSTART for ETO consistently in your customer engagements, over time you can elevate the skills of your customer-facing employees and develop a more flexible, individualized approach to sales, service, and marketing. Those improvements, in turn, can be invaluable as you plan your business and manage customer accounts to continue creating value. You may also find that HEADSTART for ETO allows planning and resource efficiencies that make it possible to offer your customers additional, profitable services in addition to machine maintenance.
As Microsoft continues to refine and extend Business Central, delivering major upgrades twice a year, Sikich evolves HEADSTART for ETO. In the Microsoft partnership, Sikich has early visibility of upcoming solution enhancements and often shares the requests and feedback of ETO companies and industrial equipment manufacturers with the Microsoft development teams.
As we build on to HEADSTART for ETO, we follow the stringent quality standards Microsoft has set for partner solutions. We perform extensive testing to verify that we meet technical criteria and indeed can help customers achieve their functional goals. We never modify or customize the original Microsoft code, but create additions and extensions to augment it.
For companies using or considering HEADSTART for ETO, the high level of discipline in the Sikich and Microsoft collaboration means that they don’t need to worry about the risks of barely tested, unproven innovations. Your production and business environment may never be as challenging as the testing that HEADSTART for ETO and Business Central undergo. You can also be confident that you will be able to use the solution in conjunction with other Microsoft technologies, such as Power Apps. Finally, just as important, HEADSTART for ETO follows a well-aligned roadmap for additional capabilities. The solution can support you far into the future of your business and the ETO industry.
Part of future-proofing an important undertaking like an ERP deployment is ensuring that the business is ready to take that step. As part of your deployment project, Sikich consultants will review your technology environment to assess its cloud-readiness and security posture and suggest adjustments to mitigate your risk and ensure a smooth implementation.
Before you deploy a solution like HEADSTART for ETO, it’s also worth your time to assess the processes in your business and make note of any opportunities for improving them. Even before you make significant technology changes, you may be able to improve the company’s health, efficiency, and productivity by reviewing its current workings and introducing practical, nondisruptive adjustments. For many clients, Sikich performs business process alignments (BPA) to review their operations in comparison to the best practices in the industry’s most successful and established organizations.
Our consultants deploy Sikich HEADSTART for ETO for you and provide the training to help everybody use it comfortably. They perform any needed integrations with other business systems and migrate data from legacy software into HEADSTART for ETO. Many Sikich clients use design software such as AutoCAD. We use a well-tested third-party software product to pull information related to your BOMs from AutoCAD into HEADSTART for ETO, and we continue to develop and standardize integrations to other CAD systems.
Our deployments incorporate the experience of hundreds of successful ERP and other complex software projects. We know how to keep the effort moving quickly toward a successful go-live. Going by what we’ve seen and heard from clients, HEADSTART for ETO deployments are less costly and roughly six months faster than those of comparable, alternative solutions. One variable in this is the extent of needed configurations, although your internal team will likely be able to take care of most of these. Deployments as well as training can happen virtually, through the cloud.
Even with modern software that incorporates findings from thousands of research hours with users in real businesses, you still need to plan how you want to pave the way for people who may be used to a certain style of working and communicating. You need everybody to be on the new software platform at the same time, without shadow IT or workarounds. It may take an outreach effort to accomplish this.
HEADSTART for ETO deployments are less costly and roughly six months faster than those of comparable, alternative solutions. Deployments as well as training can happen virtually.
Sikich helps you create a communications plan to drive rapid, confident adoption and work with the most important influencers in the company to showcase the potential payoffs of the new software system.For IT team members, it will be important to see that HEADSTART for ETO presents low demands for ongoing maintenance compared to more traditional ERP systems. Automatic updates and centralized management in the cloud greatly reduce the workload of day-to-day administration.
In this blog, we discuss industry issues and Sikich HEADSTART for ETO in the context of the many ETO companies we have known and supported over many years. Bear in mind, however, that your business does not have to be a classical ETO or CTO shop to take advantage of this ERP solution. We have seen that HEADSTART for ETO can be a great fit for a variety of companies that manufacture equipment, machines, or specialty vehicles. These may not be the complex, expensive machines that are typical for the ETO industry. But, they may involve lengthy, multilevel BOMs with a similar combination of standard and custom components. Their production may become greatly more manageable with the right project management capabilities, and they may require post-sale, revenue-generating services.
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