ERP modernization is a hot topic as many organizations look to move from the monolithic ERP systems of the past to new and flexible cloud-based composable ERP solutions. However, the process of implementing new ERP programs is far from straightforward. Some estimates put the failure rate of implementing new ERP as high as 75%. Gartner has also predicted that 30% of companies introducing composable ERP will still fail to meet their objectives.
ERP modernization has placed the challenges of integration front and center. Selecting the right integration partner can help remove the risk from your ERP modernization program.
Business agility and resilience are the new focus for ERP capabilities. Organizations now require discrete cloud-based ERP apps that supply best-of-breed solutions for specific business functions. Often referred to as composability, it breaks down ERP functionality into more focused chunks. ERP vendors have responded by delivering next-generation solutions – such as SAP• S4/HANA or OracleTM NetSuite. These vendors essentially allow organizations to choose the ERP functionality and capabilities they need.
Organizations look to complementary systems, such as CRM, supply chain and accounting systems, to round out their enterprise application portfolio. Increasingly, they have a mixture of on-premises and cloud ERP solutions from different vendors depending on their business requirements.
ERP integration is top priority
Using a collection of independently designed cloud applications instead of a single, modular ERP suite provides flexibility. However, it also makes integration between the different applications and business processes critical. That is before companies take into account new digital data formats from IoT and mobile systems.
Integrating data from multiple sources in their ERP environments has become a top priority for IT and business leaders.IDG
Recent research suggests that 91% of organizations see modernizing their ERP integration capabilities as core to their ERP modernization program. Replacing disparate legacy integration tools with a single modern integration platform reduces business risk, lowers total cost of ownership, and minimizes business disruption. In fact, almost 80% of SAP customers state managing business disruption is a key requirement of their ERP migration.
A central integration platform will help drive successful ERP modernization programs. However, many organizations also look for integration partners to bring the skills and expertise to overcome their ERP integration challenges.
The right integration partner can help:
Build agility and resilience
The drive to create agile and resilient business models requires organizations to continually expand their ERP capabilities. That also includes the complementary enterprise systems around the ERP core. As digital transformation accelerates, the average large organization can have more than 1,000 applications and systems. Today, enterprises must connect to and leverage new forms of data from their ERP and multiple other systems and applications more frequently than ever.
Simple point-to-point integrations will not work with many internal applications and external partners needing to connect and share data. The result of poor integration can translate directly into costly system downtime.
63% of companies reported ERP connectivity losses due to integration issues. The percentage jumped to 76% for organizations that did not use a centralized integration platform.IDG
Integration providers, such as OpenText that deliver services from a centralized integration platform can ease ERP challenges with any-to-any integration capabilities that allow organizations to create a modern and agile digital infrastructure. OpenText also provides self-service tools enabling business users to handle simple integration tasks directly.
Avoid program and budget overruns
Modernizing your ERP is always a major endeavour, and like every enterprise change program it is at risk from program creep and budget overrun. In addition to the high cost, ERP projects are often complex to manage, require collaboration across various stakeholders and take several years to complete. In 2022 roughly 1 in 3 organizations could not complete the ERP project within the estimated project timeline, while 7% experienced significant overruns.
A strategic focus on integration is essential from the start. Start with understanding and planning for the required levels and types of integration. Build in time for proper testing and implementation to ensure that integrations don’t adversely affect operations when the new ERP capabilities go live. An integration partner should have experience in ERP modernization within your specific industry and be highly skilled in cloud migration and hybrid ERP environments.
Improve internal and external data flows
Many ERP modernization programs involve migrating to the cloud. One of the key benefits of this transition is to move from the highly customized ERP environments of the past. This type of modernization often transfers features and logic from within the existing ERP system to smaller ERP apps or alternative enterprise applications.
Your ERP capabilities must now communicate seamlessly with CRM, HR, warehousing, supply chain, and SCM systems, to name only a few. In addition, many new digital sources, such as the Internet of Things (IoT) and other edge data, add to the deluge of information that needs to populate your ERP capabilities.
The supply chain is pivotal to sustained business success in many industries. This fuels the need for secure and effective information sharing and collaboration across buyers, suppliers, logistics providers and other parties. This entire ecosystem relies heavily on automated data exchange between the organization’s ERP and external partner systems.
44% of the transactional data in modern ERPs comes from external sources.IDG
A modern, centralized, cloud-based integration platform can support this level of internal and external connectivity while delivering a scalable platform as your business grows. While some integration providers come from a system integration background, others, like OpenText, have developed their platform based on connectivity and information sharing across global internal and external user communities.
Untangle integration spaghetti
Integration also plays a crucial role in transitioning to modern ERP systems. According to Gartner, 40 % of ERP implementations underachieve specifically due to underinvestment in integration. Companies develop a patchwork of = tools and platforms to deal with specific systems and challenges. Organizations with a mix of integration solutions suffer from inefficiencies and poor performance. They are also unable to embrace newer integration technologies, such as APIs, quickly and consistently.
Companies using a centralized integration platform tend to experience fewer connectivity issues. Yet only 33% are already using a centralized platform. Most integration partners offer a Cloud-based unified integration platform with a host of pre-built integration templates and best practices to speed implementation and improve the quality and security of your ERP integrations.
Overcome the skills deficit
For many organizations, a shortage of integration skills is one of the biggest challenges during ERP modernization. According to IDG, 86% of organizations have experienced delays with ERP integration and the main reason for these delays is the lack of integration expertise.
Securing the right integration skills is crucial for successful ERP migrations, particularly since ERP projects already suffer from a lack of skilled staff across the board. Working with an integration partner is an ideal way to plug that skills gap and ensure a successful ERP modernization program.
Select the right integration partner
Enterprises must build a future-proof integration strategy to meet current needs while allowing scalability as their requirements evolve. This calls for careful selection of integration partners and solution providers and extensive coordination across the enterprise. Your partner will help you take stock of your existing integration solutions and devise a roadmap that helps develop the required capabilities while navigating the transition of your ERP modernization program.
Additionally, you gain access to a centralized integration infrastructure with a host of related solutions. For example, OpenText™ Business Network helps companies connect any integration endpoints, whether internal applications or external trading partner systems, and intelligently and flexibly orchestrate data flows between them.
This is particularly helpful for organizations looking at migrating to a new ERP system while managing numerous integrated trading partners. Many of these trading partners have fragmented integration environments that can add additional risk to the ERP modernization program if not managed correctly.
Find out more about ERP integration and transformation services from OpenText and how they can increase the success of your ERP modernization program.