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April 2013
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Are All Clouds the Same?

Like the puffy white clouds in the sky, cloud computing systems come in many different shapes and sizes. How do service centers select the one that’s right for their businesses?

By Tim Triplett, Editor-in-Chief

Cloud computing or software as a service is catching on rapidly in the service center sector, offering new opportunities for metals distributors and processors to improve their business systems while lowering their costs. But not all cloud setups are the same.

Cloud computing is a term that describes a subscription or fee-based approach to software, otherwise known as software as a service. Rather than purchasing and installing ERP systems on their own computers, users store their applications and data on remote servers maintained by their software vendor or a third party and access them via the Internet. This approach offers a number of advantages: It does not require a large upfront cost for hardware and software. Users no longer need their own IT staffs to maintain their own systems. They have round-the-clock access to their data, which is stored on redundant servers so it is highly secure. And as the software is upgraded, it is immediately accessible and does not have to be deployed on multiple desktops.

Leading software providers point to several factors that may differentiate one software-as-a-service approach from another:
• Does the vendor provide this service as an extension of its own in-house system, maintaining each client’s data on the vendor’s own servers, or do they use the infrastructure of a large, sophisticated third-party cloud provider?
• In either case, is the data hosted in a highly robust, secure and reliable environment, with redundant storage backups, power sources, air conditioning and Internet access points?
• Are all the features and functions of the program available in the cloud-hosted environment, like they would be if the service center had the software on its own server?
• Are the server facilities monitored for security to prevent unauthorized access?
• Does the vendor have a secondary server in a different facility that backs up every transaction in real time for an immediate switch in the event of a disaster (as opposed to a backup server that must be reloaded)?
• Is the staff managing and performing the operations well trained and professional?
•Does the vendor provide 24/7 service options?
• Does the vendor provide live, test and train environments to help service center personnel learn the system?
• Does the vendor include all upgrades of their software as part of their service or is there an additional charge?
• When the vendor issues each software upgrade, are all users required to switch on a certain date or can a service center continue to use the familiar version that is meeting its current needs?
• Does the company have documented and systematic procedures for system maintenance, technology upgrades and data backups?

“A vendor can provide the service on a shoestring, or a full suit, but people don’t necessarily ask the right questions,” says Peter Doucet, vice president of consulting at Houston-based Invera, maker of STRATIX enterprise software. “The barriers to entry are small. A tiny software company might just decide to add a few racks to their own servers to hold the customer data, and they are off and running. They do not necessarily have all the facilities you would expect from a service like this.”

Over 60 percent of Invera’s new customers opt for the ON-DEMAND version of STRATIX, Doucet says. Service centers used to be extremely reluctant to entrust their data to an outside party, but the benefits are steadily winning them over.

Of course, there will always be large companies that prefer to employ their own IT staffs and maintain their own hardware and software, vendors say. But that type of security comes with a price, and actually may not be all that secure. Unlike cloud service providers, few companies maintain data centers in different parts of the country for redundancy in the event of a natural disaster. And few have the technical expertise to thwart the most malicious hackers.

“Unless a company is constantly vigilant and continually makes investments in its own ERP system, they are far more vulnerable to unauthorized access than outside data centers that are designed specifically to provide secure and reliable data,” says Tim Wilson, sales manager for the Metalware division of Paragon Consulting Services in York, Pa.

Service centers should look for a provider that uses proven technology and has experience on the cloud. Some software vendors use their own infrastructure to store clients’ data, while others lease storage space from large, sophisticated third-party providers. Both the “small cloud” and “big cloud” approach can work well, “but be mindful of where the servers are located and who is responsible for them,” Wilson says.

Scalability is also important. As companies grow, they need to feel confident that their IT system will grow with them. Service centers using a cloud-based system are not restricted by the capacity of their own servers.

Another differentiator is accessibility. Some systems call for the bandwidth and security of a dedicated T1 line, but that restricts access to the system from only select locations. Many now offer access from anywhere, anytime, using a standard Internet connection. Use of the latest wireless tablets and smartphones to access the system offers convenience and cost savings.

“We advocate that our customers use an iPad or an iPod for their work on the shop floor. That is a less costly solution than the handheld computers that are traditionally used. They are easy to replace, very personal, and work well in the office, at the customer plant or at home,” says Gary Marzec, director of supply chain management at Northrop Grumman Information Systems, Canonsburg, Pa.

Bob Harris, marketing manager for ontrak Software, Indian Land, S.C., notes that as web-based software gains greater acceptance as a more efficient way to manage IT, it is becoming more economical. The cloud-computing trend also is forcing vendors with traditional on-premise systems to become more competitive. “Competition is helping to drive the price down. People are realizing they don’t have to buy an expensive software package and be stuck with it,” he says.

How much does software as a service cost? For a typical small company with two warehouses and 15 unique users, the cost for cloud-based ERP software ranges from roughly $6,000 to $8,000 for setup, server space, training and support, plus a monthly subscription fee of $600 to $1,000 per month, Harris says. The cost may increase as the number of users grows and future upgrades are offered. Northrop Grumman estimates that software as a service offers 40 percent savings in the total cost of ownership compared with an on-site system.

“Promoting software as a service was an uphill battle five years ago,” says Marzec at Northrop Grumman. “For people who had their systems in-house, it was a turf issue [protecting jobs]. Now it is a wave.”

The new generation of worker is rebelling against the old technology, says John Bilek, president of Enmark Systems, Inc., Ann Arbor, Mich. “Service centers are hiring an increasingly younger workforce. They are saying, ‘what is this stuff you are running on?’ The companies are getting pressure from within to upgrade.”

Still, many service centers hang on to an “if it ain’t broke why fix it” attitude. “Yes, you can run your business with older code, but not having the new technology is going to hurt you at some point,” Bilek says. Eventually, an old IT system will become a competitive disadvantage.

Recent software enhancements
• Bayern Software, Carmel, Ind., is rolling out a completely new ERP program called Capstone, to be widely available in the third quarter. The company will continue to support users of its STEEL PLUS software, but the new product has improved functionality for traditional service centers, plus functions for light manufacturing and fabrication. Capstone is being developed with the latest technologies, including Adobe AIR, .NET, Microsoft SQL Server, Microsoft SSRS and Infor’s F9. Capstone will include new features in areas such as scheduling, multi-level bills of material and warehouse-floor work distribution. It will come in two versions: traditional on-premise and cloud-based deployment via Dell e-cloud services. “Dell e-cloud will be an important part of our strategy going forward,” says Greg Bayer, Bayern president.
• Business Automation Inc., Orange, Calif., offers the Metal-Pro system, a fully integrated software solution that automates sales, inventory, production, equipment maintenance and financial information. Using a powerful relational database manager and Windows technology, Metal-Pro can operate on virtually any Unix- or Windows-based hardware platform. Designed with the inside sales force in mind, Metal-Pro offers instant access to vital information, such as pricing, inventory, order status, shipping, order/quote history and customer credit. Metal-Pro features include Customer Resource Management, quote tracking, faxing/e-mailing, unit-of-measure conversion, tag control, document imaging and management, production scheduling, advanced replenishment concepts, remnant tracking, bar coding, EDI, e-commerce, material processing, office automation, and fully integrated accounting modules. The software is now offered on the cloud as software as a service.
• Compusource Corp., La Palma, Calif., offers the Metal Center Management System, a fully integrated metal distribution and accounting management system designed to meet the specific needs of metals service centers. Recent enhancements have focused on web integration, bar coding, document management and shop floor technology. “We’ve developed ways to capture information right at the source—the workstation, saw or processing line—so the operator can use a bar code scanner and keep the keystrokes to a minimum,” says Brian David, national sales manager.
• Enmark Systems Inc. offers Eniteo, a Windows-based ERP solution designed specifically for metals service centers. Eniteo comes in a cloud version hosted by Microsoft Azure. Recent and ongoing enhancements to Eniteo include point-of-sale features for multiline service centers that offer retail sales; touch screen technology, wireless scanning and bar code printing for the shop floor; multi currency and metric measures; and new functionality specifically for flat-roll slitting operations. “From a user perspective, the shop floor system is the holy grail because of the many benefits it brings to the organization. We used to fight with a lot of service centers about moving technology out onto the shop floor, but more of them now understand the advantages of receiving material, tracking production, returning to stock and automating shipping, all with wi-fi scanning,” Bilek says.
• Invera’s recent STRATIX 9.2 release includes numerous upgrades, including its new Wireless Shop Floor, Customer Self Service and eCommerce functions. User can now access their data from almost anywhere using the latest tablet and smartphone technology. Expanded functionality also includes features specifically for companies that perform oscillate slitting and winding. For companies that include fabrication among their services, STRATIX now includes formal functions for assembly and sub-assembly processes. To help customers meet specific, unique and sometimes proprietary needs, Invera has introduced STRATIX/CSX or Customer Specified Extensions. This enables customers to add applications “inside” the standard applications, to accommodate special needs without having to modify the STRATIX software itself.
• Northrop Grumman Information Systems offers the OpenTrac suite of supply chain management solutions for the metal industries. OpenTrac Enterprise is a complete sales and manufacturing software solution designed for toll processors, service centers and producers. This web-based ERP system provides real-time, transaction managed information to multiple plant locations, suppliers, and customers, all on one system. Offered on a software-as-a-service basis, Northrop Grumman hosts the software and takes responsibility for servers, database and other support. New OpenTrac Enterprise features include a Shipment Planning module that gives users an easy way to set up, schedule and view outgoing shipments, and integration with the latest smart handheld devices including Apple, iOS and Windows.
• ontrak Software’s web-enabled program requires no dedicated lines; users can access their data anytime with just an Internet connection using the latest tablets and smartphones. Features of ontrak Metals software for service centers include: handling of multiple warehouses; tracking of lot/heat/case numbers; remnant traceability; picking tickets that show available product with rack, row and bin information; storage and retrieval of material test reports; and the ability to sell by the inch, foot, pound or piece for every line item while maintaining inventory in pounds. Information screens and detailed, up-to-the-minute summary tables give managers quick access to sales, order and account information.
• SigmaTEK Systems, Cincinnati, will begin shipping SigmaNEST Version 10 this year. SigmaNEST is an automated nesting and NC programming CAD/CAM software system supporting a wide range of equipment, including laser, oxyfuel, plasma, waterjet, punch/plasma and punch/laser combination machines. In addition to numerous enhancements, this new release features a powerful CAD/CAM nesting engine. Also from SigmaNEST is SigmaMRP, a manufacturing resource planning system that manages transactions and communication with customers and suppliers, inventory of goods and raw materials, along with departmental and outsourced processes.


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