by Jonathan Yaron
In the manufacturing world, electronic parts catalogs (EPC) are a critical business system because they hold the key to aftermarket revenues and profits. The strategic function of an EPC is to manage the parts and service relationship between manufacturers (OEMs), dealers and customers. A modern EPC includes complete parts information (BOM), drawings, and different types of maintenance and troubleshooting manuals. The EPC also contains a pick list that will populate a shopping center/order management system. This means that the EPC essentially connects the point-of-service to the supply of spare parts, which are maintained by an ERP system like Oracle or SAP. (Spare parts can be either mechanical or software components.) This blog post is the first in a series that will discuss the pros and the cons of deploying your EPC using a SaaS (Software as a Service) model or as an in-house enterprise software application.
When you compare a SaaS EPC to an enterprise EPC, the major considerations are: cost, time-to-market, return-on-investment (ROI), integration to OEM systems (ERP), integration to dealer management systems, IT involvement and software customization, protecting intellectual property, initial data migration and ongoing revisions/updates, and ongoing customer support to the dealers. The final topic in the series will be my recommendations for deploying an EPC strategy.
Cost, time-to-market and ROI are directly tied to the OEM business model. As a result, this is the first topic to be discussed. SaaS and enterprise applications are at opposite ends of the implementation spectrum; one is an outsource model, the other keeps things in-house. For a division-level EPC, SaaS allows a very fast deployment (a few months) and a relatively small initial investment. On the other hand, an enterprise EPC will be a significant investment and will take a longer period of time (minimum of 12 months). SaaS costs can be covered by the operational budget while an enterprise approach typically requires a CAPEX investment (with a long and tedious budget process). Over time, SaaS will cost more (5-10 years horizon) however, even in the short term the enterprise approach can have a lower total-cost-of-ownership (TCO). (It is important to compare apples-to-apples with regard to EPC functionality, integration, and recurring data update and transaction costs.)
In most cases, a SaaS EPC will only need approval from the business manager, and will not require significant IT involvement. (However, it comes at the expense of back-office integration and automation.) The SaaS approach may not require an RFP or a bidding process and can be implemented as a pilot project that grows into a larger rollout. Because there is very little IT involvement, there is no internal budget of any significance. The only involvement of IT may be the initial data migration effort and help setting the upload of ongoing data updates. (In many cases this process is controlled by the business as well).
An enterprise EPC will typically require a RFP, or at least a bidding process, with a well-defined requirement document. The enterprise approach will require a complete budget process including external budget (for outside vendors) and internal budget for project management, IT integration and hosting (including hardware and software related to enterprise apps i.e. web servers, web services, database etc).
Both SaaS and enterprise EPCs have advantages and disadvantages. Beyond cost and time-to-market, a critical aspect of success is achieving business goals for ROI and TCO.
In my next blog, I will discuss integration of the EPC pick list to OEM back office systems (including single sign-on), integration to local dealer management systems, and IT involvement and software customization.