Cloud computing: SaaS ERP revs up auto parts supplier
- 10 September, 2011 03:41
When auto parts supplier Inteva Products LLC spun out from its parent company Delphi in 2008, CIO Dennis Hodges was left standing in a heap of legacy ERP equipment.
Inteva's global manufacturing facilities, engineering sites and Troy, Mich.-based headquarters were each running multiple stand-alone servers. As Hodges explains, "the servers were anywhere from five to eight years old and difficult to keep running and patched."
It was a critical juncture for the fledgling company, which creates closure, interior and roof systems. Its 8,000 workers in 18 countries depend upon data from the ERP system, so it's choice came down to becoming entrenched in a $15 million SAP in-house infrastructure project or head to the cloud.
"We didn't inherit any of our parent company's IT staff and would have to hire an entire infrastructure and application support team. We made the logical choice and chose the cloud," he says.
It's a move that Hodges says has saved Inteva 25 percent vs. the cost of an on-premise upgrade and infrastructure overhaul.
Hodges admits it was an interesting sell to corporate executives. "While moving to virtualized servers was fairly mature at that time, moving to a cloud-based ERP system was not," he says. He argued the positives, including a flat monthly fee, no need to upgrade, and always being on the newest version of the application.
Executives had concerns regarding the performance and security of software-as-a-service as well as disaster recovery plans. Hodges made it a point in his search for a service provider to home in on those two points.
His quest led him to Plex System's Plex Online Cloud ERP service, which is targeted at, among other industries, manufacturing.
While not as complex as his previous SAP installation, Plex Online does enable companies to track orders through engineering, procurement, production, shipping, accounting and other critical stages. The service also monitors and reports on project costs and offers engineering controls for parts and bills of material.
To start with the migration from the legacy ERP system, Inteva and Plex migrated Inteva's master data as well as some transactional data. They also worked together to study business processes so they could be replicated in the new service.
Inteva opted for a phased-in approach vs. a big bang, gathering feedback from each site's deployment to use on the next go-live. "Rather than integrating thousands of suppliers at once, we did small chunks so we could test and use what we learned to improve," he says.
Approaching the change in this manner minimized the impact of mistakes they made along the way. Hodges says it gave the ERP team the opportunity to say "this wasn't a smart idea" and immediately adjust course.
The Inteva/Plex team completed the migration of 14 sites within 12 months. In January, Inteva added users from its acquisition of ArvinMeritor's Body Systems business--a task made easy, according to Hodges, because of the SaaS model.
With ERP as a core application for the company, Hodges has been careful to ensure high performance, disaster recovery and security, as executives requested.
Peers warned Hodges that it would be difficult to get data in and out of a SaaS system, but he has not experienced problems. In fact, he downloads data every night for integration with other corporate applications.
Users access the system via the Web, and Hodges added bandwidth to handle the increased wide-area demand. In addition, users have regional access to the system to shorten the distance data has to travel.
Perhaps most encouraging is the two-hour disaster recovery offered with the SaaS model. Hodges concedes it would have been difficult and costly for the company to try to mimic that timeframe itself.
Hodges does have a backup to his backup plan, though. The company regularly downloads ERP data and escrows a copy of the software so in the event of a worst-case scenario for the provider, Inteva can get up and running by itself.
Adopting a SaaS-y Attitude
Hodges, who reports to the CEO, has enjoyed re-inventing the concept of IT at Inteva. For instance, instead of bulking up with network and systems administrators, the lead person on the ERP project has analytics, data warehousing and reporting expertise.
"He doesn't have to know the infrastructure, hardware and operating system. He can focus on how to leverage analysis to manage the business better and drive costs down," Hodges says.
Hodges regards the cloud as "a blank-slate opportunity" for CIOs. "It's a chance to move away from making sure that wires are plugged in to making a difference in the business," he says.
Sandra Gittlen is a freelance business and technology writer based in the greater Boston area. She can be reached at firstname.lastname@example.org.