Erp Mid Market Benchmark 2007

The 2007 ERP in the Mid-Market
Benchmark Report:
Serving the Needs of 1.2 Million Businesses

September 2007

Benchmark Report
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2007 Aberdeen Group, Inc. Telephone: 617 723 7890
www.aberdeen.com
Executive Summary
Growth is top of mind as mid-size companies develop Enterprise Resource
Planning (ERP) strategies. Yet growth cannot come at the expense of
customer service. As mid-size companies grow, they must learn to operate
in a distributed environment and often experience a proliferation of ERP
and other enterprise applications. This report explores feedback provided
by over 650 mid-size companies, and aims to serve as a roadmap to those in
the manufacturing and distribution community who desire to reduce costs,
improve accuracy of inventory and schedules, and develop customer
responsiveness through successful ERP implementations.
Best-in-Class Performance
Aberdeen used five key performance indicators (KPIs) to distinguish Best-in-
Class companies from Industry Average (norm) and Laggard organizations.
While the implementation of ERP produced a reduction in costs and
improvements in scheduling and inventory accuracy across all companies,
Best-in-Class companies achieved significantly better results, including:
21% reduction in levels of inventory, with 97% inventory accuracy
95% manufacturing schedule compliance, and 96% on-time and
complete shipments
An average of 3.6 days to close a month
Competitive Maturity Assessment
Survey results show that mid-size firms enjoying Best-in-Class performance
shared several common characteristics:
Top performers are 41% more likely to be running their ERP vendors
latest release and are 45% less likely to be running significantly outdated
releases (two or more releases behind the current release).
Best-in-Class companies are 80% more likely to calculate Return on
Investment (ROI) upon completion of ERP projects.
Industry leaders are 67% more likely to notify decision-makers in real
time as exceptions occur in order to enable an immediate reaction.
As a result of these characteristics, Best-in-Class companies are 61% more
likely to have full visibility of all business processes from quote to cash.
Required Actions
In addition to the specific recommendations in Chapter Three of this
report, to achieve Best-in-Class performance, companies must:
Develop specific key performance goals; establish a base level of
performance and measure it often.
Do not let implementation lag significantly behind their ERP vendors
most current release.
Standardize the ERP implementation across the enterprise.
The most important
benefits we achieved from
ERP are: a common
information platform, the
same information across
the country, the right
information availability at
the right time to the right
people irrespective of
demographic positions, and
the capture of information
at its point of origin.
~ IT Manager, Mid-size
Automotive Manufacturer
From any standpoint you
want to measure it
financial, ROI, operational,
and perceptual, our ERP
implementation has
worked to help us meet
our business needs. The
time we were spending to
analyze our business and
our customers business
has dropped by two thirds
because it is accurate,
integrated and
consolidated.
~ Douglas Greenstein,
CFO, Ditan Corporation
(Logistics Service Provider,
160 employees)
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Table of Contents
Executive Summary....................................................................................................... 2
Best-in-Class Performance......................................................................... 2
Competitive Maturity Assessment........................................................... 2
Required Actions ......................................................................................... 2
Chapter One: Benchmarking the Best-in-Class ..................................................... 4
Aberdeen Analysis ....................................................................................... 4
Maturity Class Framework ........................................................................ 5
Best-in-Class PACE Model......................................................................... 5
Chapter Two: Benchmarking Requirements for Success .................................... 8
Competitive Assessment............................................................................ 9
Organizational Capabilities and Technology Enablers .......................10
ERP Usage ............................................................................................... 11
Chapter Three: Required Actions .........................................................................15
For all Mid-Size Companies ..................................................................... 15
Laggard Steps to Success.......................................................................... 16
Industry Norm Steps to Success ............................................................ 16
Best-in-Class Steps to Success................................................................ 16
Appendix A: Research Methodology.....................................................................18
Appendix B: Related Aberdeen Research............................................................20
Figures
Figure 1: Business Drivers Impacting ERP Strategies................................ 4
Figure 2: ERP Across the Distributed Enterprise...................................... 6
Figure 3: ERP Utilization Across the Mid-Market ...................................12
Figure 4: Best-in-Class are Better Equipped to Handle Exceptions....14
Figure 5: Implementation Status.................................................................. 15
Figure 6: The Reasons for Delaying Upgrades.........................................17
Tables
Table 1: Companies with Top Performance are Best-in-Class .............. 5
Table 2: The Best-in-Class PACE Framework ........................................... 6
Table 3: What Gets Measured Gets Managed........................................... 7
Table 4: Competitive Framework................................................................. 9
Table 5: ERP Module Adoption Rates........................................................12
Table 6: The PACE Framework .................................................................. 19
Table 7: The Maturity Framework.............................................................. 19
Table 8: Relationship Between PACE and the Competitive
Framework....................................................................................................... 19

Benchmark Report
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Chapter One:
Benchmarking the Best-in-Class
Aberdeen Analysis
ERP strategies of mid-size companies are driven by a variety of factors, the
most common of which are anticipated growth and customer service. The
need to improve customer service and response times weighs in heavily as
growth occurs. These factors combine to make visibility to business
processes across functions and departments the top priority for 57% of
companies that have yet to reach the $1 billion mark. As a result, Best-in-
Class mid-size companies standardize enterprise-wide procedures for order
management, procurement, production planning and execution, cash
collection, and financial reconciliation as they grow and develop into multi-
national enterprises. This also extends to the standardization of the ERP
implementation across a potentially distributed enterprise.
Aberdeens most recent survey of over 650 mid-size companies found that
the pressure to improve customer service and response times was the top
business driver of Best-in-Class mid-size companies (44%). However,
expectations of growth was the dominant business driver impacting those
not Best-in-Class (48%). These two pressures actually work in concert as
Best-in-Class companies view customer service as a competitive
differentiator to fuel growth (Figure 1).
Figure 1: Business Drivers Impacting ERP Strategies
30%
39%
48%
38%
31%
29%
39%
44%
0% 10% 20% 30% 40% 50% 60%
Interoperability issues across multiple
manufacturing locations
Must reduce costs
Our own growth expectations
Must improve customer service and
response time
BIC
All Others

Source: Aberdeen Group September, 2007
The strategic actions of Best-in-Class companies seeking to address issues of
standardization, automation, and transparency serve as a guide to those
who aspire to this level of performance. Such strategic actions include:
Provide visibility into business processes across functions and
departments (57%)
Standardize and accelerate manufacturing processes (52%)
Fast Facts
Notable performance
achievements:
Best-in-Class companies
produce 10 times
more reduction in
inventory levels than
Laggards and 17%
better inventory
accuracy
Even with lower
inventories, Best-in-
Class companies can
deliver better customer
service with 96%
complete and on-time
shipments
Aberdeen defines
company size as follows
Small companies: Under
$50 million
Mid-size companies:
Between $50 million
and $1 billion
Large companies: Over
$1 billion
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Standardize and accelerate non-manufacturing processes including order
management, service, finance and administration (50%)
Maturity Class Framework
Aberdeen used five Key Performance Indicators (KPIs) to distinguish Best-
in-Class mid-size companies from Industry Average and Laggard
organizations in the same sector (Table 1). While the benefits from any ERP
implementation should be measured against a companys specific goals and
objectives, these KPIs were selected for their universal relevance in
manufacturing and distribution operations across any industry as well as the
ability of ERP to impact performance. Other KPIs were also measured,
including reduction in manufacturing and administrative costs and
improvements in scheduling and delivery.
Table 1: Companies with Top Performance are Best-in-Class
Definition of
Maturity Class
Mean Class Performance
Best-in-Class:
Top 20% of aggregate
performance scorers
21% reduction in inventory levels
97% inventory accuracy
3.6 days to close a month
95% manufacturing schedule compliance
96% complete and on-time shipments
Industry Average:
Middle 50% of aggregate
performance scorers
11% decrease in inventory levels
Laggard:
Bottom 30% of aggregate
performance scorers
2% decrease in inventory levels
Source: Aberdeen Group, September 2007
Best-in-Class PACE Model
To achieve these significant benefits from an ERP solution, a combination of
strategic actions, organizational capabilities, and enabling technologies are
required (Table 2).

Competitive Framework Key
The Aberdeen Competitive
Framework defines enterprises as
falling into one of the three
following levels of practice and
performance:
Best-in-Class (20%) practices
that are the best currently being
employed and are significantly
superior to the industry norm
Industry norm (50%) practices
that represent the average or
norm
Laggards (30%) practices that
are significantly behind the
average of the industry
We view customer service
as a primary differentiator
between us and our
competitors. This is what
fuels our growth. Both are
equally important, but we
need the first to produce
the second."
~ COO, Mid-size
Electronics Manufacturer
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Table 2: The Best-in-Class PACE Framework
Pressures Actions Capabilities Enablers
Balance
stakeholders
expectations
of growth
with
customer
demand for
improved
service and
response
time
Standardize and
accelerate
manufacturing and
non-manufacturing
processes (order
management,
finance,
administrative
functions)
Provide visibility
into business
processes across
functions and
departments
Standardized enterprise-wide procedures
for order management, production
planning and execution, followed by cash
collection, automated financial
reconciliation, and performance analytics
Standardized implementation of ERP
across the (possibly distributed)
enterprise
Manufacturing operations are integrated
and coordinated with customer service,
logistics, and delivery organizations
ROI is estimated up front to cost justify
projects and calculated at project
completion
Integrated ERP: Integrated
order entry, procurement,
production, and financial
management applications
Business intelligence /
analytic tools
Corporate performance
management applications
Business process
management / workflow
Alerts and triggers (event
management)
Workflow automation tools
Increased global competition combined with rising costs place continued
pressure on mid-size companies to optimize resources, meet tighter
delivery schedules for products and services, and improve overall
responsiveness. As mid-size companies grow, they are increasingly likely to
operate in a distributed environment (Figure 2). Sixty-five percent (65%) of
all mid-size companies operate with two or more manufacturing locations
and 16% of them have ten or more. This is in stark contrast to small
companies 60% of which operate from a single facility. This expansion
continues as mid-size companies grow. As environments become more
distributed, standardized implementation across the enterprise becomes
more important, even as ERP packages may proliferate.
Figure 2: ERP Across the Distributed Enterprise

Average # of manufacturing locations
8.3
19.2
8.0 7.7
5.2
3.7
3.0
1.8
0.0
5.0
10.0
15.0
20.0
25.0
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Average # of ERP packages across the
enterprise
3.0
4.1
2.6
2.3
1.8
1.6 1.6
1.2
0.0
0.5
1.0
1.5
2.0
2.5
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Benchmark Report
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Aberdeens 2007 ERP in Manufacturing Benchmark Report also looked at
upgrade and replacement strategies within 12 months, 24 months, and 36
months and noted that 9%, 14%, and 25% of mid-size companies are
planning to replace ERP at one or more locations in those respective time
periods. The proliferation of ERP (Figure 2) contributes significantly to these
replacement strategies, causing integration issues (43%) which create the
desire to consolidate or rationalize multiple ERPs (40%). However,
other factors driving replacements include:
The need for more functionality than what is available in their current
release (46%)
Outdated and clumsy user interfaces (39%)
The need for global standardized solutions with international capabilities
(37%)
Aberdeen Insights Strategy
All too often companies measure ERP success by how long it took to
implement and / or the price of the software and services. Aberdeen
believes the true measure of success lies in the business benefits gained
from implementation. Our survey captured three categories of cost savings
which can be attributed to ERP implementation: reduction in inventory,
manufacturing operational costs, and administrative costs (Table 3).
Table 3: What Gets Measured Gets Managed
Metric Best-in-Class Average
Laggard
21.1% 10.8% 2.3%
Reduction in
inventory costs
2% do not
measure
12% do not
measure
33% do not
measure
16.8% 8.0% 6.5%
Reduction in
manufacturing
operational costs
4% do not
measure
16% do not
measure
30% do not
measure
16.3% 9.0% 9.5%
Reduction of
administrative costs
5% do not
measure
14% do not
measure
24% do not
measure
Not only are Best-in-Class more likely to measure these cost reductions,
they are 76% more likely than Laggards to estimate ROI in order to cost
justify projects and are 135% more likely to calculate ROI upon project
completion.

Up to now, we've used a
number of disparate legacy
systems across several
different regions, none of
which talk to each other.
This has meant decision
makers within our business
have had a limited ability
to share information and
carry out central sourcing,
which can potentially
impact our margins. To
meet our continuing
expansion goals, we need a
lot more transparency and
integration of information
across the business. To
achieve this, we've chosen
to partner with [a single
ERP vendor] and
implement its enterprise
resource planning
solutions.
~ CFO, Mid-Size Sporting
Equipment Manufacturer
Benchmark Report
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Chapter Two:
Benchmarking Requirements for Success
The selection and implementation of ERP is a major undertaking for any
company. The level of standardization of business processes, as well as the
standardization of ERP implementation across the enterprise can have a
significant impact on the benefits achieved for these efforts.
Case Study: Pioneer Surgical Technology
Take the case of Pioneer Surgical Technology, a medical devices
manufacturer which began in the field of orthopedics and has since
specialized in spinal implants. The company is 200 employees strong and
growing. It has experienced 50% growth, recently acquiring a US based
subsidiary and is now expanding into Europe.
Prior to implementing its current ERP system Pioneer faced several
challenges, including the inability to put together an effective production
plan based on sales forecasts. They were looking for a system that could
answer the question, do we have the needed capacity? and that would
help them put together a workable production schedule. We always faced
the potential issue of product shortages. Our implementation of ERP has
helped us minimize these shortages through better planning. Our analysis
of capacity issues today takes us a few minutes whereas it used to take
weeks when we did it with spreadsheets, says Dean Stetson, Information
Systems Manager.
Pioneer replaced manual processes and a legacy application which had
limited integration between production and finance. In the past we
needed extra inventory to cover those potential product shortages. Weve
seen a positive impact on inventory levels and have automated much of the
order fulfillment process. This starts with pre-populating the order entry
screen and eliminates manual steps. We are able to track shipments and
invoices overnight. As we grow we wont need to hire an army to keep up
with the orders.
In evaluating ERP vendors, the company considered the following:
Strength and financial viability of the ERP vendors
Fit for medical device manufacturing
Fit for their specific company
Technology underpinnings
Cost
Estimated implementation time
Ability to easily customize
Flexibility and ease of use
Fast Facts
75% of Best-in-Class
manufacturers have
standardized enterprise wide
processes to support the
quote to cash cycle
Best-in-Class use 37% more
functionality overall and
spend 20% more of their
time using enterprise
applications during the day
Best-in-Class are 92% more
likely to employ workflow
technologies for more
streamlined business
processes and are 1.6 times
more likely to implement
event management to
manage exceptions
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Competitive Assessment
The aggregated performance of surveyed mid-size companies determined
whether they ranked as Best-in-Class, Industry Average, or Laggard. In
addition to having common performance levels, each class also shared
characteristics in five key categories: (1) process (the ability to standardize
business processes and ERP implementation); (2) organization (collaboration
across departments and line of business ownership); (3) knowledge
management (providing visibility); (4) technology (scope of ERP
implementation); and (5) performance measurement (the ability to reap a
return on IT investments). These characteristics serve as a guideline for best
practices and correlate directly with Best-in-Class performance across the
key metrics (Table 4).
Table 4: Competitive Framework

Best-in-Class Average Laggards
Standardized enterprise wide procedures for order
management, procurement, production planning and
execution, cash collection, and financial reconciliation
75% 60% 44%
Standardized implementation of ERP across a potentially
distributed enterprise
Process
65% 50% 47%
Manufacturing operations are integrated and coordinated
with service, logistics, and delivery organizations
64% 54% 41%
Line of business ultimately owns the success of the
implementation
Organization
58% 48% 31%
From summary data, decision-makers can drill down to
specific transactions
47% 36% 31%
Real time visibility into all processes from order to cash
Knowledge
42% 30% 17%
ERP usage
Technology
average of 11.8
modules
implemented
1

75% of
functionality
available
deployed
37% weighted
average of ERP
usage
2

average of 10.5
modules
implemented
1

72% of
functionality
available
deployed
31% weighted
average of ERP
usage
2

average of 9.4
modules
implemented
1

69% of
functionality
available
deployed
27% weighted
average of ERP
usage
2

We have eliminated
manual steps in processing
orders. As we grow, we
wont need to hire an
army to keep up with
order volume.
~ Dean Stetson,
Information System
Manager, Pioneer Surgical
Technology
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Best-in-Class Average Laggards
Decision makers are notified in anticipation of exceptions and
respond proactively
43% 29% 26%
Decision makers are notified in real time as exceptions occur
and can react immediately
Performance
35% 23% 17%
1. The number of modules is based on a set of 24 generic ERP modules
2. Calculated as average number of modules/24 multiplied by the percent of functionality used
Organizational Capabilities and Technology Enablers
While ERP is generally viewed as a necessary infrastructure for all but the
very smallest of companies, it is also a strategic weapon in streamlining and
automating business processes while providing visibility to those processes
throughout the enterprise. Best-in-Class companies are 20% more likely
than Industry Average performers and 41% more likely than Laggards to
standardize enterprise wide procedures for order management,
procurement, production planning and execution, cash collection, and
financial reconciliation. Certainly a key element of both standardization of
business processes, as well as real-time visibility is the standardization of
ERP implementations, especially as mid-size companies grow, adding more
locations.
While better performers are more likely to standardize implementations,
35% of Best-in-Class have not. Companies that grow by acquisition are
most likely to experience a proliferation of non-standard ERP
implementations, but those that grow organically are not immune. Multiple
instances of ERP and independent implementations are not uncommon,
particularly as companies set up shop off shore.
Aberdeen research on The Role of ERP in Globalization, in February 2007,
found multiple instances of ERP in 56% of global companies. The vast
majority (97%) of mid-size companies consider themselves global. Forty
two percent (42%) of mid-size companies have more than 25% of their
manufacturing and distribution operations outside of the country in which
they are headquartered.
While this research also found operating from a single instance of ERP
appears to be strongly favored, this is not a requirement for a standardized
implementation. Even when confronted with disparate ERP implementations,
best performing companies will adhere to standard product, customer, and
account identification conventions, as well as standardized business
processes that will support internal company collaboration and
consolidation. This may be supported from a centralized or decentralized IT
installation, each of which can present its own flavor of challenges.
Our ERP global solution has
helped MEI streamline our
business processes across five
countries, enabling better
visibility and a reduction in
inventory as well as quicker,
cleaner access to key data.
~ Tash Kassam, Vice President,
Operations, MEI
We feel there are significant
benefits we are going to reap.
ROI is expected to be in the
18% to 20% range, just in terms
of improved business
processes. We also feel there
will be a customer service
impact. We will be able to
reach more customers and
business partners in a real-time
manner. We expect to reduce
cost and we expect revenue
growth as a result of being
more responsive.
~ VP of Information
Technology, Manufacturer of
Ventilation Equipment (1,500
employees)
Benchmark Report
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Growth and globalization create more organizational pressure for
manufacturing operations to be integrated and well coordinated with
service, logistics, and delivery organizations. The role of the Chief
Information Officer (CIO) is changing as well. CIOs of Best-in-Class
companies blend an understanding of business processes with technical
expertise, although Best-in-Class companies are 35% more likely to
ultimately assign ownership of the success of the ERP implementation to line
of business professionals and not IT.
The objective is to provide decision-makers with real-time visibility into all
business processes, yet more than half of the Best-in-Class (58%) have yet
to reach this goal. While Best-in-Class decision-makers are 48% and 65%
more likely than Industry Average and Laggard companies (respectively) to
be notified in anticipation of exceptions, again more than half (57%) are still
unable to respond proactively and 65% are unable to react immediately.
This leaves a tremendous opportunity for improvement, particularly with
regards to enabling exception management.
Case Study: TUMI
Tumi is a $350 million manufacturer of luxury travel, business and lifestyle
accessories. Perhaps best known for its luggage, the company also provides
business cases and handbags, to wallets, writing instruments, and watches.
As it grew, Tumi faced the challenge of channel expansion into Europe and
the Asia Pacific region. Its aging legacy systems could not provide the real
time visibility into revenue forecasts and demand for its consumer
products. They needed a centralized, unified view of data and an easy to
use solution to facilitate collaboration between channels.
It was out of sheer necessity that we needed to look for alternative
solutions, says Jim Walsh, Vice President of Information Technology who
was brought on board to move Tumi off its legacy applications and
leverage the power of an integrated ERP solution. He made full use of his
ERP providers methodologies and best practices. Its not that I didnt lose
any sleep, but I was able to leverage the experience of [my ERP vendor].
As a result of Tumis replacement of legacy applications, it was able to:
Reduce inventory levels by 30%
Reduce warehouse space requirements by 38%
Improve its month-end close process by 5 days
Reduce Days Sales Outstanding (DSO) by 44%
Maintain customer service, warehouse, and credit headcount while
increasing sales by 100%
ERP Usage
Aberdeens 2007 ERP in Manufacturing Benchmark survey explored the
extent of ERP utilization. Findings showed the average mid-size company
As we grew we realized
the limitations of our
current system. We
replaced many applications
with a single integrated
system and now we do
more with less.
~ CFO, $300 Million
Manufacturer of Industrial
Equipment
Benchmark Report
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used 10.7 out of 24 generic ERP modules and approximately 72% of the
functionality available in those modules for a weighted average use of 32.1%
of ERP functionality. Figure 3 depicts how these numbers varied throughout
the mid-market.
Figure 3: ERP Utilization Across the Mid-Market
# of modules implemented
10.6
10.8
10.5
10.9
10.2
10.4
10.6
10.8
11.0
$50m to
$100m
$100m to
$250m
$250m to
$500m
$500m to
$1b
Percent functionality used
74.6%
72.0%
68.7%
72.1%
65.0%
70.0%
75.0%
80.0%
$50m to
$100m
$100m to
$250m
$250m to
$500m
$500m to
$1b
weighted average
32.4%
32.7%
30.0%
32.8%
28.0%
30.0%
32.0%
34.0%
$50m to
$100m
$100m to
$250m
$250m to
$500m
$500m to
$1b

While one might expect there would be a linear relationship between size
of company and ERP utilization, anticipating companies would expand usage
as they grow, usage actually dips as companies enter the $250 to $500
million range. Table 4 depicts the percentage of respondents using each of
the modules in the four sub-segments of mid-size.
Table 5: ERP Module Adoption Rates
Technology Solution
Area
$50 million to
$100 million
$100 million to
$250 million
$250 million to
$500 million
$500 million to
$1 billion
General Ledger 95% 91% 94% 96%
Accounts Payable 95% 95% 93% 97%
Accounts Receivable 93% 93% 91% 93%
Fixed Assets 33% 42% 44% 49%
MRP (Material Requirements
Planning)
84% 83% 82% 81%
CRP (Capacity Requirements
Planning)
20% 20% 23% 20%
DRP (Distribution
Requirements Planning)
14% 20% 23% 31%
MPS (Master Production
Scheduling)
38% 48% 39% 47%
Forecasting and Demand
Planning
42% 49% 44% 53%
Human Capital Management 12% 14% 12% 8%
Order Management 80% 89% 82% 83%
Benchmark Report
Page 13

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Technology Solution
Area
$50 million to
$100 million
$100 million to
$250 million
$250 million to
$500 million
$500 million to
$1 billion
Project Management 22% 21% 19% 13%
Shop Floor Control 59% 55% 50% 61%
Purchasing 91% 93% 88% 92%
Inventory Control 89% 94% 84% 92%
After Market Service (Field
Service / Depot Repair)
19% 15% 17% 13%
Engineering Change
Management
34% 28% 32% 27%
Enterprise Asset Management
(EAM)
7% 9% 6% 12%
Supplier
Collaboration/scheduling
11% 17% 14% 19%
Event Management 10% 7% 7% 3%
Workflow Technologies 16% 13% 17% 16%
Sales and Marketing 43% 43% 38% 42%
Product Configuration 26% 23% 22% 17%
Payroll 22% 21% 28% 23%
Of course, some ERP vendors do not offer this full breadth of functionality
and some companies do not require all modules. Project management,
product configuration, and distribution requirements planning are good
examples of modules where 100% penetration should not be expected.
However, if ERP is implemented and the general ledger module is not being
used, chances are general ledger is being done either by a corporate system
or a stand-alone best of breed application. For core functionality required
by any business (those modules shown in bold letters) core financial
applications, purchasing, order management, inventory control and payroll
no mid-size company is able to function without automating these functions
to some extent. Where these ERP modules are not used, with perhaps the
exception of payroll (which can easily be outsourced) we see an opportunity
for automation, application integration, or rationalization.

To support our business
processes, we needed the
full gamut of functionality
out of the box and all
seamlessly integrated
together. We also planned
to continue to grow quickly
and needed a platform that
could scale with us.
~ Dan Moore, IT Director,
ERP Systems, SUMCO USA
Benchmark Report
Page 14

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Aberdeen Insights Exception Management
Aberdeen findings indicate there is significant potential for improvement in
exception management. While Best-in-Class companies have demonstrated better
performance in terms of cost reductions, inventory accuracy, and both internal and
customer-facing schedule compliance, 57% are still unable to respond proactively
and 65% are unable to react immediately. Low adoption rates of the technology
tools which support these capabilities further support this deficiency.
Two of the ERP modules included in Aberdeens ERP utilization metric specifically
support exception handling workflow automation and event management. In
addition, adoption and planned adoption rates were captured for extensions that
sit beyond the modules of ERP, yet make use of data captured by ERP for daily and
long term decision-making. These include Business Intelligence (BI) and Business
Process Management (BPM) tools, as well as Corporate Performance Management
(CPM) application suites.
Figure 4: Best-in-Class are Better Equipped to Handle Exceptions
13%
23%
32%
21%
18%
5%
12%
6%
11%
29%
0%
5%
10%
15%
20%
25%
30%
35%
Event
Management
Workflow
Technologies
Business
Intelligence
tools
CPM
applications
Business
Process
Management
BIC
All Others

We see the highest penetration of analytical business intelligence tools and also the
least differential between Best-in-Class and All Others. These tools can range from
simple report writers to Online Analytical Processing (OLAP) tools which employ
a multidimensional data model, allowing for complex analytical and ad-hoc queries.
While Best-in-Class are slightly more likely to employ these tools, they do not
seem to be the source for true differentiation.
The lowest adoption rate is in event management, also known as triggers and
alerts. Automated event management supports the definition of specific events
that need monitoring within a data source including an ERP database. If the event
occurs, or does not occur within a specified time frame it can trigger multiple
responses, ranging from automating the creation of a workflow activity, to sending
an email, text message, or generating reports.
Benchmark Report
Page 15

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Chapter Three:
Required Actions
Whether a company is trying to move its performance in ERP usage from
Laggard to Industry Average, or Industry Average to Best-in-Class, the
following actions will help spur the necessary performance improvements:
For all Mid-Size Companies
Do not let your maintenance dollars go to waste. While it may be
acceptable to skip a release or run one release behind the most
currently available, do not let your implementation lag significantly,
leaving functionality and technology improvements largely unused.
Figure 5: Implementation Status
24%
35%
26%
15%
21%
33%
21%
25%
31%
44%
11%
14%
0%
5%
10%
15%
20%
25%
30%
35%
40%
45%
50%
Implemented
on latest
release
One Release
behind
Two releases
behind
Three or more
releases
behind
Laggard
Average
BIC

Standardize ERP implementations wherever possible. As mid-size companies
grow, implementations of ERP have the potential of proliferating. This
may be unavoidable if growth is through acquisition, but can be
controlled when growth is organic. Even when confronted with
disparate ERP implementations, best performing companies will adhere
to standard product, customer, and account identification conventions,
as well as standardized business processes that will support internal
company collaboration and consolidation.
Where multiple ERPs have been acquired, you will ultimately be faced
with a decision to rationalize ERPs or not. Consolidation efforts have an
enormous potential for saving time and money, but there is a price to
pay in terms of software and services, costs as well as business
disruption in order to reach this goal. Ultimately those projects which
have a dual purpose of reducing costs and standardizing business
processes achieve the most success.

Fast Facts
To achieve Best-in-Class
status:
Develop specific key
performance goals;
establish a base level of
performance and
measure often
Do not let your
implementation lag
significantly behind your
ERP vendors most
current release
Standardize ERP
implementation across
the enterprise
We have grown through
acquisition and now have
several different ERP
systems. Ideally we would
like to be in one system
but it will be a multi-year
process.
~ IT Staff, Mid-size Valve
Manufacturer
Benchmark Report
Page 16

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Laggard Steps to Success
Establish goals and metrics for measuring the business benefits of ERP
measure, measure, measure. Over a third of Laggards do not measure
one or more KPIs that are instrumental in determining the business
benefits and progress related to ERP implementation. KPIs provide a
logical starting point for these goals inventory and cost reductions,
inventory accuracy and schedule and delivery compliance, as well as
efficient month end closing processes.
Assign ownership of ERP implementations to line of business professionals.
While IT plays a key role in software selection, initial implementation,
and the on-going care and nurturing of an ERP implementation, the goal
should be to achieve measurable business benefits such as cost
reductions and schedule improvements. Those line of business
professionals most directly responsible for these metrics must take
ownership of the ultimate success of the project, both initially and
throughout the life of the implementation.
Use ERP as a vehicle to standardize and automate business processes. As
mid-size companies grow, this will be an important step in providing an
automated system of record from which to produce operational and
financial audit trails and an enterprise wide system of record. Build
beyond the basic functionality of general ledger, accounts payable,
accounts receivable, order management, purchasing, and inventory
control. Standardize and automate both internal manufacturing
processes as well as customer-facing procedures.
Industry Norm Steps to Success
Estimate ROI prior to embarking on major projects. Best-in-Class mid-size
companies are 40% more likely to estimate ROI on ERP projects in
order to cost justify investment than Industry Average companies. This
should be considered for all major projects, not just capital purchases
including upgrades to new releases, implementing new modules or
features, customizing applications, or aligning business processes to
software capabilities. Be sure to establish a base level of performance
from which to gauge improvement. Performance can be monetary (as in
hard cost savings) or softer savings (such as the redeployment of
headcount internally).
Calculate the ROI for completed projects. Best-in-Class mid-size companies
are 68% more likely than the Industry Average to calculate the actual
ROI after project completion. What gets measured gets managed: the
simple process of scrutinizing the business benefit and value will lead to
tangible results. Given on-going pressures to reduce costs, this process
of proving the value of ERP paves the way for continued investment.
Best-in-Class Steps to Success
Take advantage of workflow technologies to streamline business flows. While
Best-in-Class companies are significantly more likely to currently employ
User acceptance and
training are key. Rest
assured the ERP system
will work. You must
ensure the user
community is fully trained.
Understanding how
everything works is a
recipe for success.
~ Jim Walsh, VP of
Information Technology,
Tumi
Benchmark Report
Page 17

www.aberdeen.com
these technologies, only 23% actually do. As a result only 42% have real
time visibility into all processes from quote to cash and only 43% are
notified in anticipation of exceptions in order to respond proactively.
Workflow automation is particularly effective in helping to streamline
and automate business processes (particularly those which span multiple
departments or divisions) and detect when exceptions occur.
Implement event management technologies to facilitate management by
exception. Only 13% of Best-in-Class companies have implemented these
tools. ERP databases are a repository for much of the data that must be
monitored in order to proactively manage exceptions and react
immediately to red flags. As events occur, these technologies trigger
responses ranging from automatically creating a workflow activity, to
sending an email, text message or generating reports. As the amount of
data collected continues to expand, it becomes increasingly important
to prioritize and present critical data on a need-to-know basis.
Aberdeen Insights Why Delay Upgrades?
Only 25% of mid-size companies surveyed are implemented on their ERP
vendors latest release. What keeps companies from upgrading?
Figure 6: The Reasons for Delaying Upgrades
46%
37%
54%
38%
42%
35%
37%
40%
43%
54%
0% 10% 20% 30% 40% 50% 60%
Upgrade process is too long and hard - we
skip one or more but eventually catch up
Uncertainty over quality of new release
Customizations make upgrading cost
prohibitive
Not enough new features to build a solid
business case
Current release satisfies our needs
BIC
All Others
Best-in-Class companies are more likely to have implemented ERP in such a
way that it satisfies their business needs and are also more likely to build a
business case for an upgrade. While the Best-in-Class are only 5% less likely
to customize, these customizations are 35% less likely to make upgrade
costs prohibitive. Clearly not all customizations or methods of implementing
customizations are the same.

Make sure you
communicate to senior
management throughout
the evaluation so they feel
involved when it is time to
make a decision. Then
project staffing is critical.
You need good technology
skills, and people who can
work well in the
environment. Change
management skills are also
critical. Do not allow
scope creep to happen.
~ Eric Bloom, VP of
Information Technology,
Endo Pharmaceuticals
Benchmark Report
Page 18

www.aberdeen.com
Appendix A:
Research Methodology
In June 2007, Aberdeen Group examined the use of ERP in the
manufacturing industry. The experiences and intentions of more than 1700+
enterprises in a diverse set of manufacturing enterprises were gathered.
Over 650 of these survey participants were mid-size companies. Responding
executives completed an online survey that included questions designed to
determine how integrated ERP can be used to gain the following benefits:
Standardize, streamline and automate manual processes
Provide visibility to data and business process status
Consolidate and comply with financial reporting requirements
Better control inventory and manufacturing schedules
Aberdeen supplemented this online survey effort with telephone interviews
with select survey respondents. The study aimed to identify emerging best
practices for ERP usage in mid-size companies and provide a framework by
which readers could assess their own management capabilities. Responding
mid-size enterprises included the following:
Job title: Senior management, including CEO, COO, and president
(5%), CIO (10%), CFO (5%), vice president (6%), director (17%),
manager (38%), staff, consultant, and other (23%).
Job function: IT (47%), logistics and supply chain (15%), manufacturing
(9%), sales and marketing (4%), finance (7%), business process
management (8%), and other (10%).
Industry: The research sample included respondents primarily from
manufacturing and distribution industries: high technology (13%),
industrial equipment manufacturing (24%), process-related industries
(18%), automotive (15%), consumer product goods, including food and
beverage (17%), metals and metal products (11%), aerospace and
defense (8%), among others with lower overall percentages.
(Companies were allowed to select more than one industry.)
Geography: The majority of respondents (70%) were from North
America. Remaining respondents were from Europe, Middle East, and
Africa (17%), Asia-Pacific (11%), and South / Central America (2%).
Company size: All responses for this report were from mid-size
enterprises (annual revenues between $50 million and $1 billion); 34%
of respondents were from businesses with annual revenues of $50
million to $100 million, 31% from $100 million to $250 million, 19%
from $250 million to $500 million and 16% from $500 million to $1
billion.
Solution providers recognized as sponsors of this report were solicited after
the fact and had no substantive influence on the direction of The 2007 ERP
in Mid-Market Benchmark Report. Their sponsorship has made it possible for
Aberdeen Group to make these findings available to readers at no charge.
Benchmark Report
Page 19

www.aberdeen.com
Table 6: The PACE Framework
PACE Key
Aberdeen applies a methodology to benchmark research that evaluates the business pressures, actions, capabilities, and enablers
(PACE) that indicate corporate behavior in specific business processes. These terms are defined as follows:
Pressures external forces that impact an organizations market position, competitiveness, or business operations (e.g., economic,
political and regulatory, technology, changing customer preferences, competitive)
Actions the strategic approaches that an organization takes in response to industry pressures (e.g., align the corporate business
model to leverage industry opportunities, such as product/service strategy, target markets, financial strategy, go-to-market, and sales
strategy)
Capabilities the business process competencies required to execute corporate strategy (e.g., skilled people, brand, market
positioning, viable products/services, ecosystem partners, financing)
Enablers the key functionality of technology solutions required to support the organizations enabling business practices (e.g.,
development platform, applications, network connectivity, user interface, training and support, partner interfaces, data cleansing, and
management)
Table 7: The Maturity Framework
Maturity Framework Key
The Aberdeen Maturity Framework defines enterprises as falling into one of the following three levels of practices and performance:
Best-in-Class (20%) Manufacturing and ERP practices that are the best currently being employed and significantly superior to the
industry norm, and result in the top industry performance.
Industry norm (50%) Manufacturing and ERP practices that represent the average or norm, and result in average industry
performance.
Laggards (30%) Manufacturing and ERP practices that are significantly behind the average of the industry, and result in below
average performance
In the following categories:
Process What is the scope of process standardization? What is the efficiency and effectiveness of this process?
Organization How is your company currently organized to manage and optimize this particular process?
Knowledge What visibility do you have into key data and intelligence required to manage this process?
Technology What level of automation have you used to support this process? How is this automation integrated and aligned?
Performance What do you measure? How frequently? Whats your actual performance?
Table 8: Relationship Between PACE and the Competitive Framework
PACE and Competitive Framework How They Interact
Aberdeen research indicates that companies that identify the most impactful pressures and take the most transformational and effective
actions are most likely to achieve superior performance. The level of competitive performance that a company achieves is strongly
determined by the PACE choices that they make and how well they execute.
Benchmark Report
Page 20

www.aberdeen.com
Appendix B:
Related Aberdeen Research
Related Aberdeen research that forms a companion or reference to this
report includes:
The 2007 ERP in Manufacturing Benchmark Report
ERP: The Last Bastion of Resistance to Software as a Service
When Replacing ERP Size Matters
Taking the ERP Plunge for the First Time
The Total Cost of ERP Functionality
The Total Cost of Ownership in Mid-Size Companies
The 2006 ERP in Manufacturing Benchmark Report
Information on these and any other Aberdeen publications can be found at
www.Aberdeen.com.

Author: Cindy Jutras, Vice President and Group Director, Cindy.Jutras@Aberdeen.com
Founded in 1988, Aberdeen Group is the technology- driven research destination of choice for the global business
executive. Aberdeen Group has over 100,000 research members in over 36 countries around the world that both
participate in and direct the most comprehensive technology-driven value chain research in the market. Through its
continued fact-based research, benchmarking, and actionable analysis, Aberdeen Group offers global business and
technology executives a unique mix of actionable research, KPIs, tools, and services.
This document is the result of research performed by Aberdeen Group. Aberdeen Group believes its findings are
objective and represent the best analysis available at the time of publication. Unless otherwise noted, the entire
contents of this publication are copyrighted by Aberdeen Group, Inc. and may not be reproduced, stored in a retrieval
system, or transmitted in any form or by any means without prior written consent by Aberdeen Group, Inc.

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