How IT at one manufacturer drives digital transformation amid disruption.
In a June 2020 survey, Manufacturers Alliance for Productivity and Innovation (MAPI) found that as manufacturers face economic uncertainty, two-thirds of respondent CEOs are looking at transformative technologies to drive competitive advantage and growth. But achieving digital transformation during an industrial revolution requires investment funds, which can be scarce with budgets tightening and no end in sight for market turbulence. Despite the bleak economic forecasts going into 2021, manufacturers are still dedicating over a third of their investments toward smart manufacturing initiatives across talent, customer, production, and supply chain areas – 20% more than was invested in 2019.
Over half of surveyed manufacturers see value in connecting the customer ecosystem, defined as, “connect and engage with customers, enable customers to order, maintain and service products.” ESCO, manufacturer of highly engineered wear and replacement products for mining and industrial applications, followed this trend with its smart product technologies. The company envisioned a connected portfolio of digital solutions able to improve machine availability and increase process efficiency. ESCO developed smart technologies to deliver on that vision. The application required a digital catalogue, new IoT-enabled solutions, mobile apps – and the resources and time to build it.
For over one-hundred years, ESCO has been able to ride out the turbulence that the industry is known for – periods of explosive growth and deep downturns driven by the cyclicality of the commodities sector. ESCO, which is now owned by Scotland-based Weir Group, spans about 70 manufacturing plants with service and supply facilities in over 20 countries. But, when global commodities and industrial growth began to drop a few years ago, ESCO took the opportunity to reevaluate its operational spend to better fit global activities.
At the same time, Jim Williamson, ESCO’s VP of IT with 25 years of corporate IT experience, noticed severity-one issues with Oracle support languishing for up to 45 days without resolution. “I have been in the Oracle ERP space for more than 20 years, and we were not getting the level of customer service we needed. And because ESCO was heavily customized, we had to jump through too many hoops to work around our customizations when we logged service requests with Oracle,” he explained. As he examined the IT budget, Williamson found that behind personnel, the largest line item was Oracle licensing, support, and maintenance fees. The issues with Oracle went beyond budget. The IT team was so mired in Oracle operations that their relationship with the business team was suffering. When Williamson took over as VP of IT, he talked to the business teams and found that IT was seen as an inhibitor. To repair the relationship, he would need to free people, time, and money to deliver what the business needed and establish IT as an enabler.
With these factors in play, ESCO was motivated to find a better solution provider and support partner. Switching to independent, third-party support for its Oracle systems could potentially alleviate both budget and resource pressures. With mission-critical applications on the line, Williams did his due diligence. He engaged with Gartner, spoke with other third-party support clients, and analyzed every angle that the transition to third-party support could deliver value. “I love companies built around customer service,” Williamson says, describing why he eventually chose Rimini Street. By choosing independent, third-party support for its Oracle EBS 12.1.3 and Oracle Database 12.1.02, ESCO immediately saved 50% of its annual support and maintenance fees and liberated resources from self-supporting activities.
And that would’ve been enough to meet their budget challenges, but they got much more than just cost savings:
- Outperformed vendor support quality: They now have a primary support engineer, various levels of access by phone or email, and weekly conference calls with support engineers on active tickets. With ISO 9001 and consistently perfect scores on ISO 27001 certifications, Rimini Street gives ESCO the same stringent protection as defense contractors and nuclear plants – without investing budget and manpower to achieve adherence. “I have noticed that we are getting more relevant, consistent tax and regulatory updates from Rimini Street before Oracle even releases their updates, so we have been very pleased with that,” Williamson noted.
- Plugged into innovation: “The savings and quality of support from Rimini Street have enabled us to refocus our talent on new opportunities,” Williamson explained. It has been able to reallocate resources to work on building the digital catalogue, IoT-enabled solutions, and mobile apps to successfully launch suite of smart products.
Veteran team members finally have the capacity to re-skill in critical, new technologies. With the savings, ESCO funded a Salesforce implementation to improve CRM and Kinaxis to enhance its digital supply chain. With increased investments in automated processed leveraging RF and RFID devices, it’s reaping even more savings by eliminating paper and increasing productivity.
- Flipped the switch on vendor pressure: According to Williamson, “Right now, we are in a sweet spot.” Though he sees some Oracle Cloud functionality that looks promising, he doesn’t see replacing his full ERP functionality for quite some time and until there is a solid business case. And he won’t have to. Independent, third-party support allows ESCO to run its existing Oracle systems for a minimum of 15 years from the time they switched, while giving it time to carefully plan its application strategy, avoid expensive upgrades, delay unnecessary infrastructure changes, and free up funds for strategic cloud projects.
- Reconnected with business needs: After his initial evaluation of business perceptions of IT, Williamson wanted to carve out time to engage the business. With independent, third-party support, he was able to free up time to schedule monthly meetings with the business team to prioritize projects and establish a partnership. Making this time proved to be valuable in bridging the gap between IT and the business with more transparency and collaboration to deliver what the business needed.
ESCO isn’t alone. Many IT leaders in manufacturing are finding that the huge line items for Oracle support and maintenance fees aren’t delivering much value. More manufacturing CIOs are doing more with less by integrating external partners, like Rimini Street as an independent, third-party support provider, to run the present and deliver the future. Like ESCO, manufacturers can use turbulent times to trim expenses that don’t move the needle to invest in strategic projects that increase profitability and grow market share.