B2B integration expertise helps manage ERP migration risks
For many organizations, modernizing and consolidating their enterprise resource planning (ERP) systems is a key priority and often the central component of a broader digital transformation initiative. Some key drivers for migrating to a new ERP system include the need for supporting real-time business processes and analytics, process automation, and the overall adoption of cloud-based solutions.
ERP vendors are also actively encouraging their customers to upgrade to their latest offerings and discontinuing support for older systems. Perhaps the most significant example of this is SAP’s decision to end support for SAP ECC in 2027. SAP customers are expected to migrate to the company’s latest S/4HANA system.
Risk management is imperative for ERP migrations
Surveys of SAP customers offer critical insights into large scale ERP migrations and the key challenges around them. For example, a report by SAPinsider reveals that minimal disruption to operations is the most important requirement for organizations as they migrate to SAP S/4HANA. This was reported by 79 percent of the respondents.
Due to their multi-year timespan, the size of the investment and the critical role these systems play in business operations, it is no wonder that mitigating risks around ERP modernization projects and minimizing their impact on business performance is a key priority. Yet, according to some estimates, the failure rate for ERP system deployments can be as high as 55 to 75 percent, making them a daunting task for any IT leader.
There can be various reasons why ERP projects fail, from failing to meet the desired functionalities to blown budgets and timelines. While the overall ERP strategy and alignment with the organization’s business goals is arguably the most critical consideration for organizations, preparations and project execution also play a crucial role.
Integration plays a key role in ERP migrations
According to some views, 40 percent of ERP projects underachieve due to a lack of investment in integration. As enterprise application functionalities are fragmented into various specialized cloud applications, as opposed to being delivered via the traditional modular ERP suites, the prominent role of integration makes sense.
However, process orchestration and data synchronization across different business applications is not the only integration challenge. According to a survey by IDG, 44 percent of transactional data in ERP systems comes from external sources, such as suppliers and customers, making B2B integration a crucial part of the overall integration capabilities. With these external integrations, it’s not just the volume of data but also the diversity of requirements that’s the challenge. Few organizations have an overarching view and documentation around their B2B integrations, which can become a major issue when these connections need to be reconfigured for a new ERP system.
Integration expertise reduces ERP migration risks in three ways:
1- Requirements gathering
Particularly with B2B integration, capturing partner-specific data requirements can be painstaking and time-consuming. But this is needed as input for defining the data model for the new ERP system, which means that it needs to be done early in the ERP project. At this point, many organizations fail to leverage B2B experts for the job and instead use general ERP consultants.
In the case of large trading partner communities, this can lead to significant delays due to manual work, as well as missed opportunities around consolidating integration maps and fixing recurring errors. Bringing in B2B integration experts to work alongside ERP specialists to identify integration requirements for external systems will lead to optimal outcomes and can significantly accelerate the migration project.
2- ERP integration redeployment and testing strategy
As integrations are built or reconfigured for the new ERP system, they must be tested to ensure that data processing works as intended. Having an accurate understanding of the complete requirements is an essential component for devising a successful test strategy. Still, there are additional tactics that organizations can deploy to minimize the risk of running into surprises once the new system goes into production.
In the case of B2B integration, a good example is using copies of the real business transactions exchanged with trading partners to simulate the behavior of the new ERP system, thereby minimizing the risk of potential issues or exceptions going undetected.
3- Skills and resourcing
Since ERP migrations typically take a long time and require involvement by people from various parts of the organization and often beyond, keeping track of all the skills, tasks and activities involved can be challenging. If integration experts are not involved—or at least consulted—in the project planning stage, the defined timelines for integration work may not be realistic, and demand for specialist skills may not be anticipated correctly, leading to unforeseen delays and other issues down the road.
Having an overarching integration program management in place during the ERP migration project helps to avoid integration becoming a bottleneck for the project.
When embarking on an ERP modernization project, organizations ignore integration at their peril. On the other hand, treating integration as a strategic capability can help accelerate the ERP project and reduce the costs involved.
- Minimizing risk and disruption
- Avoiding project delay and budget overrun
- Eliminating ERP “spaghetti”
- Addressing the skills challenge