abas: Flexible and agile ERP empowers smart manufacturing for SME

Founded in 1980 in Germany, the well-known management software company abas is one of the ERP software pioneers.Many German hidden champions choose abas technology to support their flexible businesses. After 38 years of successful development, abas is now looking for more growth from international market, including China. On April 21st 2018, I had an interview with the new abas CEO Mr. Baris Ergun at their Shanghai Office. Baris talked about abas new development and shared his view on smart manufacturing and his confidence on Chinese market. Mr. Marc Hirtz, abas VP Global Sales, Mr. Geethal Fernando, abas Dir Sales - APAC, and Mr. Forrest Yang, abas ChinaGeneral Manager also joined the interview.

abas CEO Mr. Baris Ergun

Pei Huang: What’s your view about the technological trend of management software?
Baris Ergun:
Management Software is about to change. It is not anymore the rock solid installation, which has to stay stable for decades. In some cases, management software (ERP) had designed business structure and organizational structure in the past. The current dynamic on international markets and trend leads to the fact, that management software need to be open, agile and much more change driven. In addition to that it has to deliver also deep industry specific best practice knowledge. On the one hand, software needs to support internal organization and operation (process excellence),on the other hand it has to enable our customer/user to be part of a manufacturing environment. We believe that successful companies need to have and maintain both internal and external interfaces. Supplier and customer portal is only the first step, followed by machine to machine communication and block chain technologies.

Pei: Please share the growing status of abas. What’s new for abas? What’s new in China?
abas have continuously grown for the last 35+ years and we have delivered well over 3600 projects, small to large. In the last couple of years, international growth has outpaced our domestic growth, mainly through new sales, delivery and service partnerships. We are experts in manufacturing and Industry 4.0 which is a great match with China’s “Manufacturing 2025” strategy. I have just read the 2017 Bluebook about this impressive initiative and am overwhelmed by the opportunity for abas in China. I am convinced abas will contribute a lot to this – to me, the Chinese manufacturing sector and abas represent a perfect fit.

Pei: What’s the strategy of abas to evolve? What will be the key engine of growth?
We will extend our offering and delivery model to support our strategy. In everything we do, we aim to enable our customers to create operational excellence and production efficiency in an ever-changing environment. For our customers to remain flexible, agile and able to leverage latest technologies, our delivery model will differentiate from on-premise to hybrid and fully cloud based. In addition, we are currently exploring subscription based pricing models in order to allow customers to transfer CAPEX into OPEX and again remain flexible.
Next, we will launch the abas Marketplace in September 2018, where Independent Solution Developers will offer their Add-On Applications to the abas ERP technology stack. The first wave of those Solution Development Partners are currently being trained and the response has been very promising so far. These abas Apps may solve very sophisticated horizontal needs or enhance the abas platform for a better fit to certain industry specific requirements. Not only will this increase the overall attractiveness of the abas suite, but the Marketplace also represents a major source of recurring revenue for both abas and our Solution Development Partners.
Finally, from a regional perspective, our international business in countries like China, India, Australia, the United States, Poland, Turkey and many more will continue to contribute significantly to the growth rate of the abas group. We are also exploring new market opportunities in countries where abas is not currently operating, so I’m sure we will speak about new markets for abas in the future.

Pei: Is there any plan to extend the abas solution to relevant areas? For example MES, APS and IOT solution?
Traditionally, ERP and MES covered different layers of a company’s planning challenge. ERP solutions traditionally are responsible for the order processing, material, purchase and production capacity planning on a higher level. As the name suggests, Manufacturing Execution Systems have been focusing on the optimization of production operations down to the individual machine and worker, where the real-time utilization of a machine and the very sequence of certain production orders matter and have to be optimized for maximum output and best on-time delivery. At abas, we never were huge fans of this separated view. For us, ERP provides the foundation to manage a business end-to-end, while Advanced Production Schedulingfor example has been a key component of the abas suite of products for quite a while. In order to enhance the real-time character of those advanced planning tools, we have added a connectivity layer for any production facility, whether operated by a human or semi-automatedto shorten feedback loops back into the core abas ERP & APS system. abas BPM adds even more sophisticated automation in the form of business rules and event triggered execution.
In the field of IoT, we are not only exploring opportunities together with our customers, many of which are top-notch German manufacturing companies, but are also collaborating with leading engineering universities such as RWTH Aachen, and KIT Karlsruhe in order to validate more innovative use cases for Industry 4.0.

Pei: What’s your view about the comment about Chinese Manufacturing 2025 and Smart manufacturing plan?
Baris: China 2025 is a very ambitious goal. Your goals are similar to Industry 4.0 in Germany. It is all about digital transformation in the companies and also transformation of the existing infrastructure. It is a huge investment into the infrastructure and communication network. It has to be built in many areas from scratch. Which by the way could be an advantage in China. In comparison to Germany, where the German government is trying to refurbish and redesign existing infrastructure like high speed internet, China may will be able to build an optimized network from the beginning. Another challenge is the enablement of manufacturing companies. You need to educate and showcase advantage of process optimization, productivity increase, right utilizations of resources rather than the endless use of manpower. Chinas only chance to get and be number one in future will be the quality leadership.And this basically, “China 2025” is to make Made in China equal Made in Germany.Although it will need a lot of planning and organization, we all have confidence and also already evidence that China is able to do an ambitious planning and procession. China is growing talents in combination with the investment power in China, the plan is well promising. abas volunteers to be part of the success story in future.

Pei: Smart Manufacturing is a very hot topic in China now. How can abas help your customers tobuild a smart factory and smart enterprise?
abas is a technology company that offers so much more than just ERP solutions. As said before, Smart Manufacturing is all about predictability, flexibility, agility, and end-to-end control of business processes along the entire value chain. For this to achieve, manufacturing companies need to connect all of their assets, machines & robots, sensors, people, data, transport & warehouse equipment and so on. Our next generation technology stack will foster this connectivity, and allow machines and workers to engage seamlessly for the best possible output. IOT, and its application in manufacturing called “Industry 4.0” requires connectivity, exchange and processing of large amounts of data as well as automated business process management capabilities - abas has been investing in all of these areas and continuous to invest. Some solutions like abas BPM and abas Connect will be launched in 2018 and our product roadmap is full of innovation for 2019 and the years beyond.

Pei: How about the cloud offering of abas?
abas is currently working on several cloud products and solutions. Some are already in test and beta environment like our WebGui, the Workflow Engine, Docs (document storage). The ERP environment is a challenging one if it comes to cloud. Many of our customers don’t want to give information and data “away” to a cloud solution. On the other side, we know, as soon as we start using big data analytics and prediction, artificial intelligence or modern analytics you can’t avoid to work with interfaces and suppliers, which deliver a certain service.I don’t think it makes sense for the customer from us to have that technology in-house, because it is a huge capacity he would need to have built themselves. Especially in the US we currently see a huge demand on hosting and SaaS services, whereby the German speaking environment is still a bit reluctant. But as always, the trend in a global connected industry will not make an exception in this case… We know demand will also change in German speaking countries and also in China (especially connected with the digital revolution – China 2025). We will continue to deliver our software solution on-premise, due to the fact and necessity that production will need a permanent and not disrupted connection to the ERP. Nevertheless we build our services around cloud. The combination of cloud technologies, services and on-premise, we call it hybrid. We believe that we are on the right track. With the help of our cloud based products we will decrease TCO for our customers, but we will also improve usability and productivity. In July this year, we will launch asubscription model worldwide.

Pei: What’s your view about the main industrial verticals which abas is focusing?
Baris: Our strength is production and planning. abas as the software vendor is concentrated to deliver the best practice approach in a more standardized industry specific software for 5 verticals. Those are “Custom Manufacturing”, “Industrial Machinery”, “Electronics”, “Automotive” and “Fabrication Assembly”. Having said this, our software and our approach is open for many other industries. The technical possibility to get industry specific solutions connected to our ERP is something, which is already been considered by many our Partners. abas for example is delivering an industry specific solution for paper packing and wrapping. Which is definitely a niche, but a unique solution, which no one else can deliver.

Pei: Please summarize your Chinese strategy.
We are convinced that China will continue to show strong economic growth for decades. However, this growth no longer has anything to do with the growth of a "low-wage country". We assume that expertise and perfect production will lead to the production of high quality products. China has both domestic and foreign demand. Together with our Chinese partners, we want to contribute to the success story of China, especially in the manufacturing sector. We cannot tell you WHICH products to build, but HOW to optimize your value added processes. In that, we will partner with consulting companies and firms that have industry-specific know how about business processes and lean production, in order to deliver the benefits of the abas technology suite in the best possible manner. We are ready to make our leading technology and know-how available and are looking forward to a great future.

Pei: Based on a research report from Boston Research, the cost of Chinese manufacturing is only 4% lower than the US and much higher than South Asian countries. What’s your comment about this result? Please give your advice for Chinese manufacturing to transform.
This data point clearly is a validation for our strategy. Manufacturing companies need to focus on innovation, quality and agility rather than cost leadership only and they can do so with the integrated yet open abas product suite. My advice is, to explore the opportunities together with abas and learn from best-in-class manufacturing companies.

Photo: abas senior executives and Dr. Pei Huang

From left to right: Mr. Geethal Fernando, abas APAC Partner Manager; Mr. Marc Hirtz abas CSO, Dr. Pei Huang, e-works CEO, Mr. Baris Ergun, abas CEO, Mr. Forrest Yang, abas China GM

One of abas large customer,vacuum equipment industry hidden champion SCHMALZ said, “for 25 years, without having abas as an ERP supplier worldwide, we would have been never been able to support our growth worldwide”. The idea of growing with customers also brings abas as highly as 92% of customer loyalty. e-works German delegations has visited abas Headquarters for four times and have visited some of their hidden champion customers, including SCHMALZ, getting to know abas corporate culture and their focus, expertise and pragmatic spirits. I hope abas can create more Chinese hidden champions in the progress of promoting smart manufacturing.

For Chinese version report, please click here.

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