Upgrading QAD MFG/PRO Where Do I Start? Part I - Due Diligence

1. Upgrading QAD MFG/PROWhere Do I Start? Part I - Due Diligence Romeo Sequeira, QAD NA Technical Services Manager Jeff Neidorf, QAD Regional Services Manager March 19, 2007

2. Introduction

3. Top reasons that ERP implementations do not meet expectations According to the Standish Group, the top 5 reasons are: • Lack of end-user input • Incomplete / Changing requirements and specifications • Only 59% of software functionality utilized in the initial implementation • Lack of executive support • Inadequate technology

4. Why this happens • Concern to get software implemented as quickly as possible • Tendency to take your existing processes and try to make them work with the new software • Initial implementations were “year 2000” driven, not a high priority given to Business Process Improvement • The technology "silver bullet" approach is one that is sometimes sold by software vendors "If you try to do it with a system first, you will have an installation, not an implementation. And there is a big difference between installing software and implementing a solution."

5. What we are finding • An ERP implementation is just the beginning of your business systems improvement journey • Companies are looking for: • Continual improvement in their ERP investment • Reduction in non-value added activities • Cost effective solutions

6. TechnicalUpgradeApproach

7. What we are finding • Doing both technical upgrades and BPI at the same time is a major initiative • Much new functionality has been implemented reducing the need for existing customizations • Old versions of QAD MFG/PRO are no longer supported • Technical upgrades are much quicker • Can achieve immediate benefits by doing technical upgrade first • .NET UI • Support for latest technology from Hardware vendor, Progress and QAD • Reduce customizations

8. What we are finding (continued) • Domain Advantages • Reduce number of databases • Centralize data center • Train the users on new technology • Create efficiencies to enable users • Reduce customization using Customization Q-Scan process

9. Pre-requisite to Technical Upgrade • Technical Q-Scan • Hardware and network sizing recommendation • Deployment architecture recommendation • Customization Q-Scan • Detailed analysis of current customizations • Custom programs usage analysis to prioritize and reduce customization • Domain Workshop • Database and domain architecture • Data synchronization model

10. Approach • Install QAD MFG/PRO eB2.1 • Convert existing database and merge multiple databases if required • Upgrade priority custom programs identified in customization Q-Scan • GTM • Conduct System and User Acceptance Testing • Go-live Support • Tools • Domain code conversion tool • Domain merge • Site renaming tool

11. Sample Domain Architecture

12. Business ProcessConsultingOpportunities

13. What Business Process Consulting IS NOT • Blatant attempt to sell software Software is an important tool but you must lead with process change • Duplication of current processes in using QAD MFG/PRO Customers are looking for real change With a quantifiable ROI Customers want strong recommendations from our consultants • Patting the customer on the back and telling them they are doing a good job Ditto • Ideas with no organization Prioritize based on business benefit and effort Look for “low hanging fruit” Customers are looking for detailed timelines, costs, benefits

14. Customer Value of Business Process Implementation • Maximize Results • Focus on the Business Solution / tangible benefits • Process Tasks • Roles Involved • Process Deliverables • Prioritize based on business benefit • Focus on and Drive Out Process Inefficiencies • Focus on Role Skills Needed (Change Mgmt) • Opportunity to Focus on Targeted Operational Metrics • Supports Issues for Organizational Improvements Note: Customer “buy in” is critical

15. Benefits of an ERP implementation /optimization( Benchmarking Partners Study) • Top 5 tangible benefits to implementing / optimizing ERP • Inventory reduction • Personnel reduction • Productivity improvement • Order management improvement • Financial close cycle reduction • Top 6 intangible benefits • Information visibility • New and improved business processes • Customer responsiveness • Integration • Standardization • Flexibility (The challenge is to quantify benefits to either a revenue increase or cost reduction)

16. Business ProcessConsulting& QScan

17. Business process improvement opportunities Multiple Versions of Programs Interfaces Redundancy in Programming Effort Obsolete Code Technical and customization evaluation Opportunity for new MFG/PRO Modules Phase 1: Refining the Scope The Q-Scan Detailed Scope Refines the Engagement Focus Goals: Agree on key processes, People involved, Schedule, Responsibilities.

18. Working-method Questionnaires Kick-off meeting Interviews Reporting Wrap-up meeting Checks on MFG/PRO

19. Q-Scan Functional Business Processes Proposal for Improvement MFG/PRO Q-Scan Functional

20. Q-Scan – Functional Scan • Divided into 5 individual scans: • Distribution and Logistics • Manufacturing • Purchasing • Planning • Finance • Goals: • Gain insight into the current usage of MFG/PRO’s functionality and areas for improvement • Gain insight into how MFG/PRO supports the current business processes and how improvements can be made • Gain insight into how the business processes will develop and if MFG/PRO in the current status will support these developments

21. Q-Scan - Functional Scan • Deliverables: • Concise description of the business processes • Where and how to optimize the use of QAD applications, taking into account latest developments • Constraints analysis • A migration path to standard release of QAD MFG/PRO

22. MFG/PRO Q-Scan Technical Performance Report Environment Report Data Integrity Report Technical Q-Scan is a QAD applications- related Quality Audit of the Infrastructure

23. Q-Scan – Technical Scan • Goal: • Perform technical audits on system configuration, monitor system performance, back-up and recovery procedures, etc. • Future technical environment based growing business needs • (Re)-Organize the technical infrastructure • Determine bottlenecks which cause business risks • Deliverables: • Description of system infrastructure, setup • Report on performance measurement and database analysis • Proposal for tuning and optimization

24. Q-Scan – Technical Scan • Environment check • System model • CPU’s • Internal Memory • Discs • Network • Operating System • Application Layout • Home / working directories • Performance check • CPU’s • Internal memory • Disk layout • Network • Operating System (kernel) • Database performance • Log files • Directory maintenance (working and home)

25. Q-Scan – Customizations - migration • Objectives: • Insight into customizations relative to the newer versions of the QAD-applications -> is customization still necessary when you migrate to a higher version? • Analyze necessary steps to migrate the customizations to the newer release • Analyze and evaluate the best way to migrate to a higher version -> re-implementation or 1:1 – migration of the customizations

26. Possible results • Focus on relation between MFG/PRO and current/near future business processes • Improvement-areas in settings/usage of MFG/PRO • Improvement-areas in business processes • Improvement-areas in combination of those two • System-performance • Use or non-use of customizations • Path to migration • Comparison with best-in-class on key performance indicator

27. What we will not report • Future developments in markets / organizations • Competence of departments or individual staff members • Organizational issues/improvements unless directly related to the performance of QAD MFG/PRO

28. Case Study

29. QScan Process • Identify Pain Points • Develop Recommendations • Establish Metrics • Quantify Benefits

30. Inventory Control – Pain Points, Issues • High Inventory Levels for New Parts • No visibility of WIP Stock • Difficult to explain floor stock expenses on P&L • Parts in the warehouse not being used • Inventory counts not always accurate line shut down • Receipts take too long due to PO record locking • Warehouses – parts not identified properly

31. Inventory Control – Recommendations • QAD MFG/PRO Changes: • Introduce Lean Concepts • Change the way Material Flow is organized in MFG/PRO • Develop Inventory Analysis Reports • Inventory Turns • Excess and Obsolete • Transaction Report • Improve inventory accuracy • Implement Cycle Count/Inventory Control process: • ABC Classification designation • Extend the use of RF for all inventory movement transactions

32. Inventory Control – Benefits • Better Control over New Parts Inventory  potential cost savings (actual inventory = $30million) • Reduce Line stoppages • Reduce expediting costs (freight) • Storing Parts: • Lower cost for warehousing space • Lower cost for handling stock (transport, labeling, pickup and putaway) • More efficient stock handling in the warehouse (bar coding)

33. Inventory Control – Benefits

34. Questions and Answers Thank You