A new study from Forterro has identified that a mid-market UK manufacturer will lose on average £41,888.30 every day that its ERP solution is down. The impact of that is that 72% of manufacturers now believe that a cloud-based or hybrid ERP solution will be the right approach in the future. Cloud based solutions, such as those offered by Forterro also offer scalability, high availability, and robust data security.
The wider impact of an ERP outage is that 53% believe that staff stop being productive, and 38% see reputational damage from the impact on customers and suppliers.
David Coste, President, North & Western Europe, Forterro, commented, “Many UK midmarket manufacturers began life as factories and workshops and while they have traditionally adopted the latest tech only when it became necessary, the stakes have now changed.
“ERP has moved beyond that, and its importance to manufacturers is illustrated by the potential fallout should it not be available. Using cloud ERP can unlock even more value for manufacturers, providing security, resilience and availability, but not everyone is utilising cloud to the best effect.”
What is in the Report
The UK Midmarket Manufacturing Report (registration required) is ten pages long and consists of commentary on the survey data points, analysis, and some data visualisations. The findings are based on a survey of 700 decision-makers from four countries, including Sweden, France, Spain, and the UK, conducted by OnePoll between June and July 2024.
The report seems to specifically focus on the response from 100 mid-market manufacturers in the UK. Another 100 mid-market UK eCommerce companies were also polled but not included. It isn’t clear how many reports Forterro will produce from this survey. However, the sample size of 100 is quite low statistically speaking.
The report’s introduction provides a background of UK mid-market manufacturing, noting the tough conditions it has endured over the last few years. It provides the context and scope of the report. The report has six sections, followed by a conclusion that summarises the findings and offers advice for the majority of manufacturers looking to adopt a cloud-based ERP solution.
The ERP Landscape for UK Mid-market Manufacturers
ERP solutions are an established technology within UK midmarket manufacturers. The respondents recognise the benefits that these systems provide. They may have been in place for a considerable time, with 21% having had them for at least 6 years and 49% for three to five years. Despite that, 82% are switching, planning to switch, or considering a switch.
The report, however, does not explain why they are considering the change. There was no qualitative element that might have explored this question more deeply.
Cloud ERP vs. On-Premise ERP
Currently, 40% of mid-market manufacturers are using cloud-based ERP solutions, 27% still use an on-premise solution, and the rest use a hybrid solution. What the analysis did not say is how many of the 21% have used software for at least 6 years. Presumably, many of these are on-premise solutions, but are they the ones considering a change?
What the study did ask, is how respondents perceive the different benefits of cloud vs on-premise ERP solutions. They were asked for the two most significant benefits. The top three were:
- High Availability (49%)
- Greater processing speed and performance (48%)
- Improved data security (44%)
ERP Challenges and Opportunities
There are barriers to the adoption of a new ERP solution. High implementation costs (45%) and security issues (37%) were the top two. Oddly, security issues are seen as both a benefit and a barrier. This demonstrates the importance of the security stance a cloud-based ERP vendor must have.
However, again, a deeper analysis of this response might have been useful to understand this dichotomy. Rather than examining the business opportunities, the report examines the compelling reasons why manufacturers are switching ERP.
These include integration capabilities (39%), rich functionality that meets technical requirements (33%) (presumably out of the box), and scalability (29%). Trumping these was that 48% want to see AI-powered functionality such as predictive maintenance and predictive logistics. Another 45% want business data intelligence add-ons.
The Current Status of UK Midmarket Manufacturing
While this section provides insight into some of the trends facing manufacturers and might have been placed higher up, it shows the challenges they face. These are similar to many other industries, with the top three being:
- Global economic and political uncertainty – 42%
- Talent retention and acquisition – 36%
- Maintaining sales pipeline – 36%
While sustainability is not a key challenge, with new regulations such as the plastic packaging tax emerging, 84% said that sustainability is a priority for their organisation. They are looking to their ERP solutions to support them. Those on legacy on-premise solutions with minimal updates are no doubt struggling with this functionality, and it might be a reason why some are considering a change.
The Importance of ERP
The headline number was derived from questions asked around this. Downtime of ERP solutions clearly has a huge impact on manufacturers. A cloud-based solution mitigates (though does not eliminate) the risk.
Future Priorities and Technology
Looking to the future the report asked about the priorities of respondents both from a business and technology perspective. Interestingly, cost reduction (46%) and security (40%) were the highest. Cyber risk has been growing in recent years, from ransomware to DDOS attacks that cripple eCommerce sites. Dragos estimates that manufacturing accounts for 65% of industrial ransomware incidents.
However, technology priorities do not mention spending on security. Instead, the top three technology priorities are:
- Making better use of insight available from data – 50%
- Ongoing Digital transformation – 42%
- IoT – 41%
Enterprise Times: What does this mean
This is a short report that provides some interesting statistics, though it lacks a qualitative element or insights from business leaders. Cloud ERP does offer a more secure, scalable, resilient, and flexible offering than legacy solutions.
Coste concluded, “Manufacturing can be a complex and challenging sector, and businesses need to do all they can to protect themselves now and in the future. Technology can be a key element in that process and cloud ERP can be fundamental for any manufacturer, helping to increase operational efficiencies and also unlocking the potential within other technologies.”
The report is worth a few minutes to download and read because of the detail in the analysis and the findings. It will be interesting to see what Forterro publishes next.
