Precision toolmaker drills down on PeopleSoft costs

Profile picture for user pwainewright By Phil Wainewright November 3, 2016
Specialist manufacturer Kyocera SGS Precision Tools focuses on shopfloor innovation while turning to Rimini Street to support its back-office PeopleSoft ERP

Drilling machine in factory workshop © zhu difeng -
For all the tech industry rhetoric about the advantages of moving to the latest software in the cloud, many businesses have other priorities. A case in point is Kyocera SGS Precision Tools (KSPT), a leading manufacturer of high-performance industrial cutting tools, based in Munroe Falls, Ohio. While the company is keen to invest in cutting-edge technology elsewhere in its business, it sees no reason to replace or update an on-premise ERP system that still meets its needs perfectly well.

A longstanding PeopleSoft user, the 360-employee firm runs a full suite of manufacturing, supply chain, order management and financials on version 9.0 of the software. Customized to its needs, there's been little incentive to upgrade to newer versions. The company has not seen Oracle, which owns the brand, adding functionality that was relevant for manufacturing, says IT director Steve Cochrane:

We didn't see any further enhancements coming along that we definitely needed to have.

So in October 2013, the company opted to cut its software maintenance costs in half by ending its contract with Oracle and switching to third-party software support provider Rimini Street. Cochrane says cost was the only thing that was lost in the switch:

It cut our maintenance costs immediately.

I don't think we really miss anything. We miss bug fixes and patches but that was rarely done anyway for us.

Calling on support

In fact, although KSPT is now paying less, the quality of support has gone up noticeably, he says.

It's less work on our side when we need support. With Oracle, we would have to do a lot of back-end work, show them this, show them that, go back and forth, almost giving them the fix that needed to be applied.

With Rimini Street they easily help us. They're able to just get on the system and help walk through any issues ...

It helps that there seem to be quite a few former PeopleSoft employees on the third-party support vendor's team, he adds.

Most of the Rimini Street people I talk to have a ton of PeopleSoft experience.

KSPT has a lot of in-house expertise of its own, too, and had learned to become largely self-reliant, so doesn't always remember to call on Rimini Street's support, he adds.

I do have a really talented staff here for troubleshooting most things.

We've been so accustomed to fixing our own problems, we sometimes forget to give things to Rimini Street to resolve for us.

Archived upgrade

The company has not yet upgraded to PeopleSoft 9.2, which it was entitled to under the Oracle maintenance contract. So before that contract came to an end, it archived the new version ready to make the upgrade when convenient. Cochrane explains:

When we decided we were going to move off support, we were on 9. We knew they'd already released 9.2. We were entitled to those [updates] at any time.

We went ahead and downloaded those programs and archived them with the help of Rimini Street. When we deem it necessary we can either use parts, or we can upgrade the whole system to 9.2.

Part of the reason for delaying the upgrade had been to accommodate the acquisition of another business last year, which saw the company expand into the field of stainless steel cutting tools for use in medicine. That operation went live with PeopleSoft earlier this year, leaving the way clear to plan for the upgrade during the year.

Then in May, the company was itself acquired by Japanese multinational Kyocera. "That put a hold on everything," says Cochrane. The upgrade will probably now go ahead in 2017.

No rush to digital

Other software in use at KSPT includes Infor EAM for repairs and maintenance, and Kronos for time and attendance and payroll. Both packages will be moving to the cloud, and the company has just gone live with Office 365. But Cochrane does not expect the company's PeopleSoft instance to follow suit.

As far as moving PeopleSoft to the cloud, probably not. But we will look at additional ERP systems that are in the cloud. Oracle keeps on coming back to us, but right at this time it's not something that we're anticipating doing.

There's no rush at present because there's little evidence of any push to digitize back office processes in this sector of the manufacturing industry, says Cochrane. The company sells its products through distribution and half its orders come in by fax, the other half over EDI.

Where there is innovation, it's in product design or in materials handling, rather than in the IT systems:

A lot of the technology is in the product itself and how we make the product, not how we run the back office.

My take

The KSPT story is a salutary reminder that back-office software simply isn't an investment priority at many successful, innovative businesses — their investment dollars are better spent elsewhere.

That puts established enterprise software vendors in a quandary. Their revenues depend on their ability to persuade customers to upgrade to the latest versions. But if they can't offer new functionality that's relevant, customers will prefer to keep their old systems running as cost-effectively as possible. And that will undermine the traditional maintenance annuity revenues that the software vendors too often take for granted.