Executive summary
Many manufacturers accumulate overlapping technologies, leading to hidden costs and inefficiencies that add up for years. Application rationalization can help align tools with enterprise-wide capabilities, uncover substantial savings and improve decision-making. It drives collaboration between IT and business units to eliminate redundancies and prioritize future capabilities. Rationalization can also lay the groundwork for long-term modernization and AI-driven insights that manufacturers will need to compete in the future.
Manufacturers often amass a tangle of tech solutions. With companies laser-focused on production, they might be willing to add any solution that serves a purpose and doesn’t cause problems — but, disconnected solutions can create a technology stack that’s leaking excess costs every day.
“Manufacturing is known for piling on technologies over years,” said Grant Thornton Manufacturing Industry Head Kelly Schindler, “sometimes, through M&A.”
“One of our clients just acquired a company that has four subsidiaries and 10 ERP systems,” Schindler said. “They need to clean out their systems, because they’re costing both money and efficiency. They don't know what system to get what data from, and they have to manually interface systems to get them to talk.”
Data disconnects can have direct cost impacts. For instance, Schindler noted that many manufacturers are seeing higher supply costs from tariffs — and, even when customers would accept higher prices to help absorb those costs, most manufacturers cannot accurately reflect tariff impacts on their products. “Manufacturers typically have thousands of SKUs, and each SKU has its own bill of materials. Each item in that bill of material might have its own tariff and, as volatile as tariffs have been, identifying those costs in those thousands of SKUs is impossible for companies without technology that’s monitoring those costs and raising flags for them. So, most manufacturers are just bearing the burden of those costs, because they don't have the technology to get data that’s timely and accurate.”
Multiple disconnected technology solutions also generate multiple fees. “I’ve seen companies with six different technologies that essentially do the same thing, and they’re paying six different subscription costs for that same capability,” said Grant Thornton Technology Modernization Services Principal Tony Dinola.
Application rationalization
Hidden costs from fees and inefficiencies are significant over time, and system disconnects can also weaken decision-making. To address these issues, companies need to periodically realign and clean up their disparate systems. “We call it application rationalization,” Dinola said. “It’s a very easy place to find savings, where a company might be paying $5000 a license for one solution, but it’s also paying for a productivity suite that now includes similar functionality. If you have 1,000 solution licenses, that’s a half a million dollars in savings that you can capitalize just by rationalizing the application portfolio.”
Now, manufacturers have cash tax savings from the One Big Beautiful Bill that can help them fund technology initiatives. To conduct an application rationalization that recovers hidden costs, the first step is for a manufacturer to get an overall perspective on its enterprise needs.
Enterprise needs
Who conducts application rationalization at a manufacturer?
“It requires a facilitation of both the business and IT, to determine what capabilities the company needs from a business requirement standpoint,” Dinola said. “It’s not so much, ‘I need sales and marketing,’ but, ‘I need a tool with extract, transform and load capabilities — ETL.’ What you quickly find is that finance, operations and sales and marketing are all doing ETL, but they all bought different technologies to do the same thing.” Dinola said that technologies can automate a range of core capabilities that are shared across multiple teams.
Core automation capabilities
Robotic Process Automation (RPA)
Automates repetitive tasks by mimicking human actions, often used for tasks like data entry, system navigation, or form filling without altering underlying systems.
- Invoice Processing: Extract data from invoice and input into ERP system
- Customer Data Updates: Update customer records across multiple systems
- Employee Onboarding: Create new user accounts, provision access to systems, and send onboarding materials
Extract, Transform, Load (ETL)
Extract data from various systems, perform transformations, and load the transformed data into a target system. ETL uses a set of business rules to clean and organize raw data and prepare it.
- Data Warehouse Population: Extract data from multiple systems, transform it into a common format, and load into a data warehouse for reporting
- Customer 360 View: Aggregate customer data from CRM, support, and marketing systems for a comprehensive view of customer interactions
Low Code Application Platforms
Low code platforms enable business users to build applications with minimal hand-coding by providing drag-and-drop interfaces, pre-built components, and simple logic flows.
- Employee Self-Service Portal: Automating leave requests, expense submissions. and other HR tasks with a low-code platform
- Approval Workflows: Building a custom approval process for document submissions or financial approvals with minimal development effort.
Data Analytics and Visualization
Data analytics and visualization focus on analyzing datasets to gain insights and presenting those insights in visually compelling ways (e.g. dashboards, charts)
- Sales Performance Dashboard: Visualize sales data by region, product, and salesperson to identify trends and areas for improvement
- Customer Segmentation: Analyzing customer behavior data to create dynamic reports that segment customers based on purchasing patterns or demographics
“You need to come to an enterprise-wide alignment on the capabilities you need and what tools are aligned to those capabilities,” Dinola said. Next, the company needs to build a roadmap for migrating the old tools, processes and data to the new chosen platform.
Then, the company needs to either renegotiate or exit the contracts on the old solutions to capitalize on the subscription cost savings. “That can sometimes get left behind,” Dinola said. Companies might migrate their data and processes to gain efficiency, but without someone assigned to confirm completion and cancel the technology licenses and contracts, the company will still have to pay the solution fees.
Finally, manufacturers need to establish a framework for evaluating and prioritizing future solutions — to keep a new crop of divergent solutions from quickly springing up again.
Framework for the future
Across industries, business teams are increasingly involved in defining and driving a company’s technology strategy and future solutions. That makes it especially important to have a framework to help define, select and prioritize the use cases a company will address and the solutions it will acquire.
“Both the business and technology teams need to go through a prioritization framework and methodology,” Dinola said. “Whether you have two use cases or 200, you need a standard way to prioritize them.” It’s important to evaluate which new solutions will have the biggest benefits for the organization overall, but it’s also important to consider a solution’s likelihood of success — including whether the necessary SMEs are ready to be involved.
SMEs and prioritization
“Part of your prioritization has to be ensuring that you have the right people from the business involved up front, to help with the requirements gathering, testing and deployment throughout the timeline,” Dinola said. “I'm having conversations with a client right now that has a backlog of use cases they want to tackle, but they don't have anybody from the business available to participate in the projects. So, I've said we either need to pick different use cases where there are people available or wait until people are available for these use cases — but you can't outsource the internal knowledge.”
Phased implementation
Application rationalization doesn’t have to mean that everything fits within an ERP solution. As long as the company avoids redundant or disconnected functionality, it can implement smaller solutions with user-driven designs in phased implementations. In fact, that approach can help to ensure technology keeps driving profitability.
“It might not be a big bang project, but something you break up into smaller incremental sprints,” Dinola said. “The point is, you have to be able to articulate the requirements of the use case, and you have to do a technology match to interrogate the use case and take it through a proper implementation. We see a lot of clients fall short, where they either don't fully understand the use case or requirements they're trying to meet, or they’re trying to implement a technology that is not purpose-built for that use case.”
Dinola summarized, “Make sure you have the use case requirements well defined, have the right purpose-built technology to interrogate that use case and then go through a proper implementation methodology to ensure that you're getting the most value in shorter increments. That can be six to eight weeks — it doesn’t have to be an 18- to 24-month project.”
Future solutions will have an easier path to success if the company has completed an application rationalization effort to standardize technology — and data — for future integration.
Future capabilities
Application rationalization plays an essential role in centralizing and standardizing the data that future capabilities will require, especially for AI-driven analysis. When data is divided across disparate systems, companies miss out on the competitive advantages of AI financial analysis, forecasting, data science and other opportunities.
The business functions of finance, accounting and tax present a range of use cases for automation and/or AI. The choice of whether to use automation, AI or a combination will depend on your business requirements and the data available. AI and automation tools often work together to provide the functionality required to fit a business need. Here is a list of use cases in each area, ordered from most complex (requiring AI) down to least complex (where automation could be sufficient).
In Finance:
Cash Flow/Demand Forecasting
Strategic Assessment or Insights
Budget Allocation
Financial Reporting
Invoice Processing and Management
Vendor/Customer Data Management
In Accounting:
General Ledger Journal Entry Creation
Travel and Expense Reimbursements
Financial Period Close
Account Reconciliation
Collections
Purchase Order Reporting
In Tax:
Real Time Deliverable Insights
Regulation Monitoring
Data Analysis & Classification
PDF Data Extraction
Data Entry & Processing
Automation of Tasks
So, as you evaluate your current applications, keep long-term modernization and growth in sight. “You have to know your North Star — determine how you’re going to stay relevant, and what you are going to be offering in 5-10 years,” Schindler said. An application rationalization effort can help you recover hidden costs for today while also providing a foundation for successful solution and data integration in the future.
Contacts:
Managing Director, Technology Modernization Services
Grant Thornton Advisors LLC
Supreet Singh is a seasoned Managing Director with extensive expertise in technology strategy and management.
Houston, Texas
Industries
- Energy
- Manufacturing, Transportation & Distribution
- Banking
- Insurance
Content disclaimer
This Grant Thornton Advisors LLC content provides information and comments on current issues and developments. It is not a comprehensive analysis of the subject matter covered. It is not, and should not be construed as, accounting, legal, tax, or professional advice provided by Grant Thornton Advisors LLC. All relevant facts and circumstances, including the pertinent authoritative literature, need to be considered to arrive at conclusions that comply with matters addressed in this content.
Grant Thornton Advisors LLC and its subsidiary entities are not licensed CPA firms.
For additional information on topics covered in this content, contact a Grant Thornton Advisors LLC professional.
Trending topics
No Results Found. Please search again using different keywords and/or filters.
Share with your network
Share