While artificial intelligence (AI) is a relatively new technology, it has already demonstrated its disruptive potential and created a buzz in the software market. In fact, according to Gartner, as much as 80% of emerging technologies will have artificial intelligence as a key component by 2021.

Artificial Intelligence Within ERP Systems

AI allows ERP vendors to improve ERP systems using machine learning and natural-language interfaces. The AI in ERP systems provides actionable data insights enabling companies to improve their operational efficiency.

A good example of an AI-driven ERP solution is SAP Leonardo, which includes a number of microservices integrated with a cloud platform. Oracle also has introduced a number of AI-based tools for its ERP solutions, including digital assistants, advanced access and financial controls, and smart supply management.

Another example of an AI ERP solution is Coleman AI from Infor. You can ask this bot to suggest the next offer for a certain customer, create a requisition for a particular item and help you with many other tasks.

9 Ways AI Improves ERP Software

1. Advanced Analytics

AI’s ability to work with massive amounts of data enables real-time, accurate data insights. For example, AI can analyze the buying behavior of different categories of customers, enabling you to tailor your products or services to the needs of a certain audience.

2. Warehouse Management

Artificial intelligence can test countless demand forecasting models with precision, adjusting to different types of variables, including changes in demand, supply chain disruptions and new product introductions.

For instance, BMW uses learning algorithms to track an item from the manufacturing stage until the moment it’s sold, monitoring 31 assembly lines in different countries.

3. Forecasting

AI-driven solutions can process historical data and make predictions for the future. These tools identify seasonal patterns in your business, offering suggestions on whether you should decrease or increase production.

Not only does AI reduce the costs of forecasting, but it also makes forecasting much more accurate. You can significantly reduce the risk of underproduction or overproduction, when you manufacture the right amount of inventory.

4. Financial Management

AI can automate quarterly and monthly processes and closing operations by verifying reports for accuracy and comparing account balances between independent systems.

For example, AI can categorize invoice data into different accounts and discern the difference between a phone purchase and a monthly phone bill.

5. Interdepartmental Processes

Connecting sales, inventory and accounting is not an easy task. However, AI is not afraid of massive amounts and various types of data, making it the perfect solution for creating a centralized platform.

6. Customer Service

If your company does field service, AI can use information about performance evaluations and employee qualifications to schedule service calls and assist with planning.

7. Production Processes

When integrated with an ERP system, AI can detect inefficient processes and suggest a solution that will cut costs.

AI also can identify processes that use too much energy. It enables predictive diagnostics, minimizing the waste of resources.

8. Human Resources

Another advantage of AI-enabled ERP software is that it can be proactive. For example, it can detect what employees need a raise. In addition, it can analyze data on the skills and experience of applicants, expediating the recruiting process.

9. Sales Automation

Chatbots powered by AI not only help customers but also conduct the whole sales triangle. Now, bots can cope with segmentation and provide responses in real time.

Should You Select an ERP System With AI Capabilities?

While ERP systems have always been able to integrate various functions within an organization, AI takes this integration to the next level. It does this by analyzing large amounts of data, making predictions and suggesting next steps.

Panorama’s ERP consultants can help your company select an AI-enabled ERP system that increases your operational efficiency and improves your customer experience.

About the Author
Ester Brierley is a competent QA Engineer in a software outsourcing company. Also, she is a virtual assistant and a seasoned content creator for College-Writers, and knows the secret for balancing freelancing and her full-time job.

Note: The inclusion of guest posts on the Panorama website does not imply endorsement of any specific product or service. Panorama is, and always will remain, completely independent and vendor-neutral.

What’s one of the most important questions to ask before beginning ERP implementation?

Is our data clean?

If your answer is no, you’re not alone. Most companies have data spread across multiple platforms and formatted in various ways. Our advice to these companies is to cleanse and import data before implementation to ensure their ERP software delivers accurate, real-time data. Proactive data migration also ensures minimal downtime at go-live and reduces the duration of operational disruption.

However, ERP data migration is easier said than done. Most ERP vendors do not take responsibility for data migration or cleansing because it’s extremely costly. Therefore, your ERP project team must take on this responsibility.

Contents

1. 5 Ways Data Issues can Cause ERP Failure

2. 11 Data Migration Tips

3. Conclusion

5 Ways Data Issues can Cause ERP Failure

The perfect analogy to describe what an ERP system’s function is for a business is the heart to a human body. If the ERP system is the heart, then data is the blood moving from one part of the business to another – all flowing from and returning to the ERP system.

When data issues exist in your system, there are several ways this can cause ERP failure. Like the importance of blood in the human body, data cleanliness and integrity are essential for a successful ERP project.

Unfortunately, many ERP vendors exclude data migration from their deliverables. As such, it’s not surprising that 41% of respondents in our 2019 ERP Report reported that data issues caused their ERP project to run over-schedule. We also have seen data issues contribute to budget overruns.

So, how do data issues slow down an ERP implementation and propagate unexpected costs?

1. Your Integrations can Fail

If your business operations rely on partner data, such as shipping information, gift card balances or currency exchange rates, you probably have a few integrations to your enterprise resource planning system. When the data being passed back and forth between your ERP solution and a third party is unclean, it can cause your integrations to fail.

For example, let’s say your shipping methods are “Next Day” and “Standard Ground.” However, your shipping carrier has methods called “Next Day Air” and “Next Day Air Freight.” If your ERP system’s data is too specific (or in this example, not specific enough), the carrier might send back data that your system cannot accept. This will cause any records attempting to be created to error out. Your integration might attempt once more to create the failed records, and the cycle repeats itself. This can cause system performance to decrease and can slow down your ERP implementation process making it run over-schedule. Even though you’ve already gone live, the project recovery process still counts toward your total implementation duration.

We help companies avoid integration issues by preparing them for data conversion before implementation. This preparation involves developing a data strategy, defining the scope of data conversion and determining a data conversion approach.

2. ERP System Performance can Slow

Whether it’s from integrations attempting to repeatedly create records or from batch jobs running and erroring out, bad data can take a toll on your ERP system’s resources. This system lag can be amplified if your transaction volume is large, like during peak times in your business operations.

For example, data issues can cause a batch job to error out. Let’s say that your business runs both its master planning operations and point-of-sales operations through the enterprise system. Master planning is a system-intensive process as it accounts for many different variables like current sales, future orders and current stocking levels. For your point-of-sales operations, your registers and the ERP system need to communicate via a series of batch jobs to push the data back and forth.

If some of your future orders don’t have dates on them, the master planning job can error out. Your ERP system will continue to run the job, allocating more resources to it to balance the load. If your point-of-sales batch jobs start running at the same time, there will be minimal resources allotted to those jobs. As a result, cashiers may experience slower response times or no response at all.

Returning to the analogy of ERP software as the heart of business operations and data as the blood, when a person has a blood clot or blockage, the heart must pump even harder and expend more energy to deliver blood to the body. Sometimes, this can be fatal to a human body (or to a business).

3. Your Customer Satisfaction can Take a Hit

When your system has data issues, your customers notice. This is a data issue that has several prime examples. Consider a returning customer shopping online on your e-commerce site. She wants to buy running shoes to break in for a 5k she is running at the end of the month. She can’t remember what size in your brand fits her, so she looks up her order history to see what size she ordered in the past. Using her name and email she attempts to recall her profile, but the ERP system has duplicate records for her.

Let’s say the customer remembers her size and is ready to order. She checks the inventory levels that your site displays because a quick delivery is a key factor in her buying decision. The product seems to be in stock, so she makes the purchase.

However, it turns out the inventory levels displayed on your site were incorrect because of bad data in your system – your customer will not get her order for another two weeks. If you put yourself in her shoes, would you be a repeat customer?

Once a customer loses trust in your system’s data integrity, it’s nearly impossible to get it back. Consumers today rely on social media and review sites to determine where to spend their money. Disgruntled customers are more than happy to share their unpleasant encounters with the world, preventing you from gaining new customers without even interacting with them.

Improving the customer experience is an important business benefit for many companies. However, some companies do not cleanse their customer-facing data before migration. We recommend discussing data with all departments, so you can understand the various data sources and entry procedures.

If your business hopes to improve the customer experience, you should outline this goal before ERP selection so you can align every component of the project around this goal, especially the data component. Our ERP implementation methodology focuses on organizational alignment as this ensures the ERP software (and its data) support the organization’s goals.

4. Your System can Become Corrupted

Invalid data can cause your ERP system to become corrupted. Whether the data is invalid from a user error or from an automated system update, bad data can wreak havoc on your ERP system and cause functionality to behave unexpectedly.

For example, let’s say your business captures physical dimensions for products in various units of measure. You sell milk in liters and cheese in kilograms. Your ERP system has two item groups – one for liquids and another for solids. If your products are mistakenly assigned to the wrong item group, your cheese could be sold in liters, costing you money by charging much less than the quantity provided is worth.

This single mistake of assigning the wrong item group can cause a chain of downstream issues. When goods are shipped, the system may prompt the user to capture the weight in liters. As a result, all customer- and vendor-facing documentation may display orders for cheese in liters, making it confusing and even a little embarrassing to correct your ERP system’s data mistake.

5. Business Users can Make Bad Decisions

Arguably, the biggest failure that data issues can cause is allowing users to make key business decisions based on bad data. When users believe the system is correct, they don’t hesitate to order ten dozen more corrugated boxes because the warehouse inventory says they have zero on hand.

With bad data being the foundation of user decisions, inventory can be depleted or inflated. The same check to a vendor could be cut twice or not at all, causing your account standing to be damaged. Customers on an “opted out” list could be accidentally emailed by your marketing department and your company could be the target of a lawsuit. While some of these examples sound dramatic, they can be a reality if your ERP system is receiving or pumping out bad data.

Along these lines, once your business users distrust the data in the system, they will forever second guess your ERP system’s accuracy. For example, if a human resources manager denies a pay increase request for an employee because the data in the system says there is no budget, the employee might leave the company. If the human resource manager finds out later that the budget was incorrect, he or she might lose trust in the system’s data integrity.

In some companies, users distrust the data so much that they do their own data validation before making a decision, like exporting data into Excel and doing their own data massaging. This extra step of data validation outside of the system can cause inefficiencies in business processes and lead to low benefits realization.

Our ERP consulting services focus on change management during the data migration process. Designating process owners and data owners not only increases system buy-in, but it improves data integrity as these “owners” are accountable for ensuring data cleanliness and reliability.

11 Data Migration Tips

1. Assign Responsibility for Data Cleansing

There is a general misconception that the IT team can handle all the data cleaning. While there is data cleansing software, these packages can only help identify potential areas to be cleansed.

Someone still needs to know, for example, out of two different address records for a company, which one is correct. Also, someone knowledgeable needs to verify that a closing balance is in fact correct.

In most cases, the person who should cleanse these records is not in the IT department but is within the specific department that owns these records. These are called data owners, and they are critical for establishing standards and guidelines to maintain quality data.

IT staff should assist data owners by identifying the data flow, integration points where the data is being updated and what data sources exist.

Examples of Data Needing Cleansing

• Duplicate customer or supplier accounts
• Master data that isn’t classified with a common taxonomy
• Blank description fields for products
• Old product codes no longer in use
• Data for a customer that has gone out of business
• Critical data in Excel that is not in your system of record

2. Remove Duplicate Data

Duplicate items can be identified in two main ways: 1) Direct duplicates include two or more items possessing the same manufacturer name, part number and description. 2) Fit-form-function duplicates include two or more items that possess different manufacturer names and part numbers but have the same fit, form and function.

3. Don’t Migrate All Your Data

Companies continue to persist in the idea that they can migrate all the data from the legacy system over to new ERP software, and the software will somehow magically scrub and standardize it. That’s just not the case.

If you’re moving to a new house, would you put trash and clutter in the moving truck? Probably not, so when you’re moving to a new ERP system, you don’t need to bring over every single piece of data. Some of this data is unclean, unnecessary or pure junk.

The more useless data you bring over, the harder time you will have finding the data you really need, which can delay go-live.

Companies tend to hoard data, believing that someone, somewhere down the line just might need that one nugget of information. An ERP project is a great opportunity to clean house.

4. Determine What Data to Migrate

This can depend on what industry you’re in and your forecasting needs. Determining what data is important should be a collaborate effort that involves all departments.

5. Determine Resource Requirements

You will need developers to convert data and data owners to review and cleanse data. In addition, you may need executives to review certain types of data. Most likely, this will include data elements that relate to the core of the organization’s culture. These may be items your organization has avoided because they seem too hard to address.

Other resources you may need include resources for change management and business process management as you likely will need to train employees on how to input, manage and analyze data once the new system is implemented.

6. Consider Industry Regulations

Different industries have different regulatory requirements. For example, some regulations restrict the ability to change and/or export certain kinds of data records, such as HIPAA with electronic medical records.

You should carefully consider your method of data cleansing (e.g., in-system vs. Excel) if your company has industry-specific regulatory requirements.

7. Consider the Data Complexities of Global Projects

In global ERP projects, you’ll encounter different systems speaking a variety of ERP languages layered on top of cultural and language differences. It is vital to identify these complexities early and communicate to your project team where you see the need for executive decisions. This will eliminate slow periods in the data conversion, allowing developers to stay engaged.

If your project is global, you also will need a signed document from the executive steering committee stating who is responsible for data at the global, regional and country level for both master and transactional data.

8. Define Taxonomies and Attributes

Most ERP systems use some sort of taxonomy to classify items. Master records must be classified correctly, completely and to a level of detail that makes the record easy to identify for search and reporting functions.

While it is not necessary to choose one particular taxonomy, it is necessary to have a taxonomy that supports your company’s business initiatives. Therefore, you should ensure your ERP consultant has experience with taxonomy selection and deployment.

Item record attributes play a similar important role. Attributes define the item and are important for successful parametric searches. Incomplete or incorrect attributes prevent items from being found, resulting in proliferation of parts and bloated inventories.

To ensure a successful ERP data migration project, we recommend extracting, normalizing and completing item attributes beforehand. Because of the sheer volume of attributes to be extracted and enriched, an automated approach is the only practical way to execute this.

9. Develop New Processes

Once the initial data cleansing is complete, you will have more data to cleanse – unless you ensure employees adopt new processes that enable data accuracy. Even though these processes may be designed for legacy systems that will soon be retired, these processes are still worth developing. Consider the fact that most ERP projects last years. Can you endure two more years of dirty data?

We recommend that companies redesign their business processes and train employees both for the future state and this interim state. Both business process reengineering and organizational change management play a critical role in maintaining data cleanliness.

10. Test Before Migrating

Discover if you’re on the right track with your data by moving data to test environments. This will be time consuming and typically requires the development of unique code. Don’t make the mistake of leaving it until the last minute.

11. Use Your Data to Make Business Decisions

With your data migrated, your new processes established and your employees on board, you can almost breathe a sigh of relief – but not quite yet. Now, you must figure out what to do with your data insights.

Companies that have their eye on realizing business benefits from their ERP systems tend to address this issue early with change management and business process management. Knowing that an ERP software solution will enable increased data visibility, forward-thinking companies take advantage of this benefit by establishing data analysis processes. These companies also spend time training employees on these new processes.

Conclusion

Data migration is not usually a priority at the beginning of an ERP project. Instead, the focus is often on planning and design, while data migration is a muddled topic that people tend to avoid.

When companies avoid or delay data migration, their new system will provide unreliable data leading to technical challenges, customer dissatisfaction, low system usage and low benefits realization.

While data migration and cleansing may add cost to an already expensive ERP project, the effort will pay for itself almost immediately through the identification of excess inventory, reduced equipment downtime and improved data insights.

Panorama’s ERP consultants can help your organization develop a data migration strategy that ensures your ERP software provides reliable data to all stakeholders from the minute it goes-live until it’s retired.

When your organization decides to implement a new ERP system, it can be an exciting time for employees. There is hope on the horizon that the tedious workarounds or functional gaps within the current system will be replaced with a better and more advanced system.

It’s likely that your employees started making wish lists as soon as you announced the ERP project. These wish lists will continue to grow until someone (likely project management) reminds the team of the project constraints.

Anyone experienced in organizational change management will tell you that excitement around a new ERP implementation is a key success factor in user adoption. While turning away employees’ wish lists due to budget or time limitations may dampen the excitement, you also must control project scope.

So, how do you implement a new ERP solution while ensuring both project feasibility and employee engagement? The answer is prioritization of ERP requirements before ERP selection.

Prioritizing ERP software requirements may sound like a simple task, but when all parts of the business believe their functional requirements are the most important, you may find yourself in a stalemate. Luckily, there are several strategies you can use to help your team reach a consensus and ensure a successful ERP project:

1. Clarify the Project Goals and Scope

You may be familiar with the “project management triangle” or “triple constraint” where scope, time and cost are depicted on each corner of a triangle with quality in the center. Usually, before an ERP project has begun, all three of these constraints are already decided. While time and cost are easy to quantify as the project progresses, scope can run amok – especially when it comes to meeting business requirements.

It’s because of this scope ambiguity that project kick-offs are important. With all team members (business users, analysts, ERP consultants, stakeholders, etc.) present, you should clearly define the business objective of the project and identify items that are definitely out of scope.

The goal of your project could be as simple as moving off your legacy system due to end of support or as complex as overhauling your e-commerce experience to modernize your customer service. Whatever your goal, make certain that all team members understand it, as this will minimize the amount of non-critical business requirements that arise during ERP requirements gathering.

2. Define Baseline Business Processes

Identifying the business processes that will be impacted by the ERP project helps you define project scope. In addition to identifying these processes, your team should document them as they exist in the current system. This will help establish a list of minimum requirements needed to keep the business operating.

When documenting business processes, the ERP project team should focus on business needs and not confuse current system limitations with what is truly needed. This is not the time to define future state processes but just to listen to employees’ needs.

3. Improve Your Processes

If you need to increase efficiency, break down silos or achieve another important business benefit, then business process reengineering is your new best friend. We recommend conducting business process reengineering before considering standard ERP functionality. Why before? It’s because functional areas that bring competitive advantage – such as customer service or supply chain management – should not be standardized.

Once you’ve improved the processes that differentiate your company from competitors, you can begin looking at ERP functionality. This will help you determine how to improve processes that may need to be standardized. These might be processes related to finance or human resources.

While differentiated processes should not be standardized, this is not to say that standardized processes can’t bring competitive advantage. In fact, ERP vendors spend countless dollars and hours refining system capabilities to meet the most frequently asked for features to appeal to the widest customer base. Taking advantage of a process recommended for your industry can help you to stay competitive.

4. Perform a Fit Gap Analysis

Now that you’re looking at ERP functionality, you can perform a fit gap analysis. This helps you identify where a new system fits your company’s requirements and where it doesn’t. Basically, for each requirement gathered, you should determine if each ERP system on your long list can meet the requirement natively (fit) or requires a modification (gap).

Requirements that are considered “fits” and can easily be configured are usually no-brainers when it comes to priority. Fit requirements that involve some additional effort, like a data conversion for example, can also be prioritized as these are usually easy wins for the project team.

Gap requirements, however, should be put lower on the priority list. Having a long list of gaps makes prioritization challenging, so you may want to weed through the erp requirements list to determine if the system can support these requirements in a different way than anticipated.

If there are any remaining gaps, you can justify these gaps by conducting a cost analysis. Here are some questions to keep in mind when justifying gaps:

• What is the business impact if this requirement is not met?
  • Additional labor requirements?
  • Dollars lost?
  • Customer satisfaction impact?
  • Compliance issues?
• Will this impact the project timeline?
  • How many hours are required?
  • Does the project have the appropriate resources to complete the work?

Based on this analysis, a cost can be associated with each gap requirement to determine if it can remain as a lower priority.

5. Classify Business Requirements

Now that all valid requirements are on the table and the gaps have been justified, the project team can classify each requirement into one of three categories: must have, value added and nice to have.

Must-have

Any requirement that falls into this bucket is mission critical. Classifying a requirement as a must-have, signifies that the business cannot operate without it.

The dollar amount determined during the cost analysis of this requirement should be subtracted from the project budget since it is assumed this requirement will be met. Continue to subtract from the overall budget as requirements fall into this category as seeing the dollar amount decrease will help the team keep perspective as to which requirements are really a priority.

Value-added

Value-added requirements are not mission critical. However, requirements that fall into this category could greatly enhance the business.

For example, let’s say your project mission is to simply replace the legacy system with new ERP software. As such, you are not designing new business processes that don’t already exist in the current system. If the current system does not have the ability to send customers an email when their online order has shipped, then this requirement is not technically within the project scope and is not a must-have requirement.

Considering that email confirmations are pretty standard in the e-commerce industry, meeting this requirement could add a lot of value to your company if you operate within this industry. That’s why this is an example of a value-added requirement.

Nice-to-have

Requirements that are classified as nice-to-have are often addressed in a later phase of the project. These types of requirements are those that are neither mission critical nor add a great amount of value to the business.

For example, a business user might want the ability to request a report that identifies the amount of late deliveries per vendor. While this data is readily available in the system, the user wants a report that provides a summary view. This would be considered a nice-to-have requirement.

When classifying requirements, we recommend keeping the project budget, timeline and scope top of mind. Also, it’s important to ensure collaboration among all departments and stakeholders, so you have a well-rounded perspective on what the business should prioritize.

What ERP System Fits Your Company Best?

The only way to answer this question is to prioritize your business requirements. This calls for organizational alignment around project goals, a clearly defined scope and, more often than not, process improvement.

Panorama’s ERP consultants are experts in business process reengineering and software selection. We can help your company find an ERP software solution that meets your highest priority requirements as well as several value-added and nice-to-have requirements.  

If your company is beginning ERP selection, you’re probably thinking a lot about cost. How much does system A cost compared to others? Does this fit within our budget? As important as these questions are, they miss the bigger picture – the total cost of ownership. In other words, how much will the implementation cost in addition to the cost of the technology itself?

A company’s unrealistic expectations regarding total cost of ownership is often the first domino to fall in an ERP failure. This leads to failure because companies end up cutting corners on activities that are critical success factors.

Inaccurately estimating ERP project costs is more common than you might think. In fact, ERP vendors typically outline a one-dimensional estimate of implementation costs. These estimates often fail to include hidden expenses, like internal resources, external consultants and hardware upgrades.

Further, a software vendor will usually estimate implementation costs to be a 1:1 ratio between software licenses and technical implementation costs. This technical implementation cost is woefully low for most companies.

So, why do vendors make such low estimates? Sometimes, sales reps are trying to lowball their estimates to get the deal closed. Other times, sales reps do not truly know the costs required to make an implementation successful.

Contents

1. Common ERP Project Costs

2. How to Scope Your ERP Project

3. How to Control Costs

Common ERP Project Costs

Below are some common project costs, beyond the cost of the software itself. We recommend carefully quantifying these costs before investing in ERP software.

While these are not all the costs associated with an ERP project, they are the ones that are most likely to be overlooked during the budgeting and planning process.

1. Change Management

Many companies assume that the ERP vendor or systems integrator will handle this, but many don’t. Those that do, still require involvement from your internal employees.

Training, for example, is one component of organization change management that requires internal resources. Vendors and systems integrators will typically train the internal core team on how to use the “vanilla” software, but rarely customize the training to reflect the company’s unique software configurations and customizations.

As a result, your internal ERP project team must take charge of training activities. Not only should they customize training materials for software configurations, but they also should customize them for employees’ unique business processes.

In addition, there are a host of other change management activities that the internal ERP project team should be responsible for, including communication planning, business readiness assessments and focus groups, to name a few.

2. Business Process Management

Enterprise resource planning software presents an opportunity to standardize your operations across multiple locations and redesign processes that need improvement. This requires internal time and resources.

Don’t assume that the software will provide all the answers on how to run your business. Instead, recruit an internal team to help design your future state.

3. Resources for Backfilling

This might include contract or other employees you hire to manage the day-to-day activities of project team members who are no longer able to commit to their usual jobs.

4. Hardware and Infrastructure Upgrades

It is rare that an organization can implement a modern ERP system without a modern IT infrastructure to support it. Servers, databases, bandwidth, PCs and other components of an organization’s IT infrastructure often need to be upgraded to support the new enterprise system.

In addition, IT staff often need to be augmented with additional resources, training or outside consulting to support the new environment.

These costs are significant. Many companies implement cloud based solutions to save money on resources and infrastructure.

5. Longer Than Planned Implementation Duration

Given the amount of resources, time and money dedicated to an ERP project, even the slightest delays will affect the budget. To avoid delays, be sure your project plan includes overlooked activities, like requirements gathering, system design, testing, data conversion and interface development.

How to Scope Your ERP Project

Your project scope directly influences your project budget. While many organizations scope their project based on number of modules or number of users, we recommend considering other factors, such as the scope of change required to achieve business goals and your employees’ level of change readiness.

Here are three tips to keep in mind when scoping your ERP project:

1. Account for the complexities of your business.

Is your business relatively simple, or is your business a complex set of business processes supporting a diverse line of products? Be sure to get an independent view of your organization’s complexity when planning your ERP implementation. In other words, seek input from someone besides the person selling you the software.

Many complex businesses need a full ERP software solution that addresses all of their functional areas (human resources, supply chain management, etc.). Less complex companies may be looking for a point solution to address one specific area, like customer relationship management.

2. Focus on people and processes.

Technical activities are rarely the cause of project scoping issues. Instead, the primary causes are related to business process reengineering and change management activities. For example, failing to improve your business processes before selection can lead to unexpected costs during implementation.

3. Benchmark against other organizations.

We have all heard the anecdotal stories about what to expect from ERP projects. However, these isolated examples are rarely indicative of what the average project looks like. We recommend looking at broad sampling of organizations similar to yours to gain an understanding of what your project costs may be.

For example, our 2019 ERP Report reveals that SMBs use an average of seven full-time internal resources, and large enterprises use an average of 24 full-time internal resources. This does not necessarily mean that these people were committed 100% to the project. While some organizations may have had seven people spending half their time on the project, other organizations may have had 14 people spending a quarter of their time on the project.  

How to Control Costs

There is a fine line between cutting costs to save money and undermining the success of an EPR project. Cuts to ERP budgets that look good on paper can have disastrous consequences in the long-term.

Here are a few tips to help you control project costs without cutting essential activities:

1. Set realistic expectations.

More often than not, ERP vendors and their system integrators mismanage expectations on what total costs will look like. This makes it difficult for your company to set realistic expectations. As a result, you may end up presenting an inaccurate business case to executives.

When you realize your mistake, you may find that executives aren’t willing to increase the budget. While you may still encounter executive resistance if you have realistic expectations upfront, this is much less painful than losing your job because you set unrealistic expectations that resulted in a botched implementation.

Our ERP selection methodology helps clients develop a realistic business case. A business case should be used for more than just convincing executives to approve the project. It should also be used to prevent budget overruns.

2. Detail each of the cost components.

Setting realistic expectations requires an understanding of all essential project costs. This includes the obvious costs as well as the hidden costs: hardware upgrades, maintenance, internal resources, external consulting support, customization and a host of other budgetary items that companies often overlook or underestimate.

If you’re not sure what costs to include, we recommend developing a project plan. When we help clients develop project plans, they typically avoid incurring unexpected costs.

Once you have identified all the major cost components, you can then benchmark these line items to actual costs for companies similar to yours. Our 2019 ERP Report can be a good starting point for setting realistic benchmarks.

3. Respect the “untouchables” of your ERP budget.

There are certain, critical elements of an ERP project that should never be considered for the chopping block. One example is organizational change management. On paper, it may appear that you could save millions of dollars by removing all change management activities from your project plan. However, this doesn’t reflect the financial impact of employee resistance, project delays and other common risks of neglecting change management.

On the flip side, you will want to identify the areas that you can remove from your budget if necessary. For example, customization is one area that many companies decide not to spend too much money on, and this usually has few, if any, consequences.

As a general rule, if you want your project to be successful, then your budget should reflect a heavier focus on the business aspects of the project rather than the technical aspects.

4. Take your time during ERP selection.

Too many companies rush into ERP as if the world is going to end without it, and they don’t take the time to clearly lay out their business requirements. We recommend involving employees in requirements gathering sessions to ensure your potential ERP solution can support the most important processes from each functional area.

One of our recent clients saw significant cost savings during implementation by investing in a thorough selection process. The CFO of the organization commented that the investment in selection did not increase the total project budget because money that would have been spent later in the project was simply spent earlier.

5. Negotiate with ERP vendors.

Did you know vendors may give you a discount if you negotiate with them? It’s true!

However, this is easier said than done, so most companies that want to negotiate their ERP software contract, hire an expert. When we help clients negotiate with vendors, we provide a total cost of ownership analysis that helps clients compare software contracts. In addition, we typically conduct three to four rounds of negotiation to reduce licensing fees and implementation costs.

How Much Does ERP Implementation Cost?

If you want an accurate estimate for your project, be sure to accurately scope your project and account for some of the most overlooked costs. Panorama’s ERP consultants can help you set realistic expectations that won’t scare executives nor get you fired for causing budget overruns.

ERP projects can be lengthy. Depending on the scope of the project, implementation can last anywhere from six months to three years. After implementation, ERP software should support an organization for at least five to ten years. As you can imagine, choosing an ERP solution to scale with your business is an important consideration when selecting an ERP system.

Software scalability refers to a system’s ability to keep pace with your businesses’ trajectory. This means that an ERP solution should be able to take on new markets and handle exponential increases in transactional volume, workload and amount of data.

When looking for a scalable ERP solution, we recommend asking ERP vendors about factors, such as global functionality, infrastructure options and integration capabilities. Most importantly, ask them how they address the latest technology trends, and how they can adapt to your future business needs.

To help you get started, we’ve outlined four questions to consider during ERP selection:

1. Does the ERP System Have Global Capabilities?

One way that many businesses expand is through globalization. If your company currently is in the US market but plans to expand to the rest of North America and eventually to Europe and Asia, you may want to consider an ERP system that offers a global solution out-of-the-box. Here are some considerations:

Taxes and Regulations

There are some countries for which many ERP systems have difficulty complying with their tax rules and government regulations.

For example, Brazil has one of the most complex tax systems in the world, and oftentimes ERP consultants will need to specialize in – or at a minimum – have experience with Brazilian implementations to be successful. Knowing this challenge, some ERP vendors have come up with “localizations” specific to countries to help companies doing business in other countries stay compliant.

Another example is the data localization laws in Russia. The laws require that data relating to Russian customers must reside on servers within the country. This poses a challenge for companies beginning a new ERP implementation or expanding an existing ERP system.

Other countries, like China, are adopting similar data localization laws, forcing many ERP vendors to build localizations for their customers.

Languages

If your business wants to compete in the global marketplace, it must advertise and transact in a multitude of different languages.

For example, vendor-facing documents, like requests for proposal (RFPs) or purchase orders, must be in the local language. Customizing reports for different languages can be costly and time consuming.

The same thing can be said for customer-facing documents, like sales orders and invoices. If your business maintains an e-commerce presence, this adds another layer of complexity regarding languages and translations.

Many ERP vendors today provide out-of-the-box language translations to support global customers. When assessing if an ERP system is the right fit for your business, make sure to ask about language options to prevent an unwelcome surprise when you scale your company in the future.

2. Does the ERP System Have a Scalable Infrastructure?

As your business grows, you want your ERP system infrastructure to be able to grow with you. This may look different depending on your IT infrastructure:

Cloud Scalability

It’s easy to change the specs of your underlying cloud infrastructure by talking with your cloud service provider (CSP). Some CSPs, like Microsoft or Amazon Web Services, offer different subscription plans based on your business needs. They can also see your transactional volume and tune your virtual machines accordingly to give you high performance.

The ability to scale has become even easier today with SaaS ERP systems. The CSP assesses your unique situation to determine how many database servers you need with what specs. This is just one of many advantages of SaaS ERP systems.

On-premise Scalability

If your organization must keep its technology on-premise, there are still some scalable ERP solutions available. Consider ERP systems that tune performance based on the number of servers dedicated to it. This allows your business to procure additional servers to accommodate larger transactions sets.

Scaling on-premise infrastructures is doable but more costly compared to scaling cloud solutions. Data storage, for example, is more costly in an on-premise system, especially when you’re dealing with a large amount of data.

3. Does the ERP Vendor Have a Futuristic Outlook?

The ability for employees to perform tasks from mobile devices is becoming the norm, and if your company doesn’t already allow this, there’s a high chance it will need to in the future. ERP systems that offer mobile solutions and integrate with IoT and machine learning are considered on the visionary end of Gartner’s scale.

Even if an ERP solution does not have these capabilities built in, an ERP vendor should at least have these ideas on their roadmap. If an ERP vendor can’t speak to their future vision in relation to these technology trends, it is a red flag that their software might not be scalable for your business.

Many companies we work with have a futuristic outlook, so they are looking for an ERP vendor that does, as well. We recommend conducting business process reengineering before ERP selection, so you know what the future state of your business looks like and can find an ERP vendor that meets your needs.

4. Does the ERP System Have Adaptability?

During ERP selection, adaptability is a key factor to keep in mind. Even though your organization may not take advantage of all the features offered by the software immediately due to budget constraints, there may come a time in the future that you will.

ERP software that has feature sets across a wide variety of industries can be helpful in the future, as you may be able to use some components to meet your new requirements – as opposed to purchasing a third-party software for a specific need.

If you plan to expand your company’s business model and offer different products or new services, here are some ERP selection considerations:

Business Model Expansion

Perhaps your current business model is only for the manufacturing and sales of a certain product, but in the future, you want to expand to offer installation services, as well. Your current ERP system may not have a services module or feature set that will allow you to take advantage of this without disrupting your current manufacturing processes. You could purchase another software package to handle selling and providing the installation services, but eventually your disparate systems will need to exchange data. This requires a custom (and expensive) interface and an internal or external IT team dedicated to database management.

The ability to add new features or modules without affecting current business processes is a key indicator of whether an ERP solution will scale with your business.

Easy Integrations

Another feature to keep in mind when selecting an ERP system is the ease of integration. Luckily, ERP vendors today often partner with third parties to build “plug and play” connectors that provide holistic solutions to customers, especially for certain industries.

For example, several ERP systems that cater to the retail industry have pre-built credit card payment connectors that allow businesses to accept credit card payments. If your business doesn’t accept credit card payments now, but you have plans to in the future, then asking about potential connectors is a wise choice.

Realistically, every ERP system will not have pre-built connectors for every interface requirement. Asking about the ease of building custom integrations is important, as it’s very likely you’ll need to build one in the future. You might bring a new vendor into your business environment, or your reporting requirements may change from sending PDFs to a form of electronic exchange. Whatever the need is, finding an ERP solution that will allow you to easily integrate with outside systems will help you to scale in the long term.

Workforce Expansion

If your company plans to make any acquisitions or push for a big hiring campaign, you’ll need to determine if the ERP system can handle a large increase in users.

Every ERP vendor markets their software based on the size of the business supported. For example, Workday caters to giant enterprises, while SAP Business One targets small- to medium-sized business.

When vetting your ERP choices, it’s good to be realistic in your predictions of the future. You don’t want to pay for hundreds of extra licenses if you will never use them.

What Can Change in Ten Years? A lot!

An ERP system should last your organization at least ten years. During this time, your company likely will go through some major changes. It’s important to determine if an ERP system can support these changes, before you select and implement it.

Panorama’s ERP consultants can help your company assess the scalability of various ERP solutions based on our experience working with growing, innovative companies.

If you’re considering an ERP implementation, you’re probably not enjoying the process of obtaining budget approval. Executives have a litany of questions, some of which you aren’t prepared to answer.

While you can’t anticipate all of their questions, we will help you answer one of executives’ most common questions: “Who needs to be on the ERP project team, and how much time will they need to dedicate to the project?”

Providing a detailed answer will require an understanding of what it takes to build a winning core team.

Contents

1. Who Should be on Your ERP Project Team?

2. Project Team Personality Traits

3. How to Build an ERP Project Team

4. How to Find a Good ERP Project Manager

5. What Other Internal Resources Will You Need?

6. 5 Roles of a Change Management Team

7. What About Outsourcing?

Who Should be on Your ERP Project Team?

Depending on the size of the organization and the scope of your project plan, your team might range anywhere from 15 members to just a few. At minimum, you need representation from each of your organization’s functional areas. Look for people who understand multiple parts of the business, not just their own little world.

If you’re using ERP consulting services, the consultants likely will recommend that you secure a certain level of commitment from certain internal groups in order to augment external resources. Leveraged appropriately, the following groups can facilitate a more effective ERP selection, implementation and/or business transformation:

1. Executives

Every successful ERP project needs an engaged executive team. Executives must be ready and willing to kick-off the project and remain active participants.

It’s important to have an executive sponsor for your ERP project. This person will be heavily involved in the selection and implementation process, giving guidance when difficult decisions arise. Executive sponsors will encourage employee buy-in by displaying unwavering commitment to the ERP project.

2. IT Team

Your IT team will be essential, not just in implementation, but also in maintaining your ERP system. An ERP project should be a collaborative endeavor, where your IT team is heavily involved. If your IT team is lacking in the skills or knowledge necessary to handle this responsibility, consider training opportunities to bring them up to speed.

3. HR Team

You might not know it, but the human resources professionals that you employ might be some key contributors to your ERP project. HR professionals can help you obtain external resources for the ERP project. Many companies need external resources for backfilling.

In addition, HR has their ear to the ground and will often know about the roadblocks employees encounter. This is helpful for identifying pain points as well as processes that are redundant or inefficient. Your HR department also can be of great assistance with organizational change management.

4. Employees who can Help With ERP Selection

ERP selection involves requirements gathering. Your project team can prepare employees for requirements gathering sessions by developing workshop guides, which get employees thinking about their processes. The project team also is responsible for conducting requirements gathering sessions and ensuring all essential requirements from all departments are documented and prioritized.

ERP selection also involves business process reengineering and ERP vendor demonstrations. Your project team can ensure the right people are involved in these activities. While these people may not be project team members, they should be heavily involved in the selection process. Involvement facilitates project buy-in and organizational alignment.

5. Employees who can be Change Agents

Change agents are team members across the organization who support your ERP implementation strategies and goals. The most important change agent is the project manager. This point person should be capable of leading the project team and demonstrating accountability and transparency.

Change agents are responsible for communicating goals and status updates to employees. Change agents create excitement and help diffuse rumors by being accessible and willing to answer questions.

6. Employees who can Manage Training

Other change agents are the team members responsible for training. They often take on the role of the “super user,” – people who not only buy into the change, but who also know how to make the most of the new system.

Super users might host workshops or provide personalized instruction and assistance to ensure employees are ready and able to operate the new ERP solution. While super users don’t replace formal training, they make it comfortable for employees to ask questions.

Project Team Personality Traits

Organizations must identify skill sets and personality traits that contribute to business transformation success. Professors Kenneth Benne and Paul Sheats published a study, Functional Roles of Group Members, in which they identified key personality traits that contribute to strong teams. Here are five of those personality traits:

1. The Cheerleader

This team member should encourage other project team members to participate and recognize them for their contributions. This role is useful for encouraging engagement on both the project team and throughout the organization.

2. The Peacemaker

This member helps project team members reach a consensus when compromise is necessary. Peacemakers focus on the success of the organization as a whole. This role is useful when defining and prioritizing business processes.

3. The Sergeant-at-Arms

This member ensures the project team meets deadlines and expectations while adhering to the organization’s core values. This role can help develop strong project controls and governance and gently remind team members of these guidelines.

4. The Good-Humor Man

This member helps relieve the tension and anxiety of business transformation. The right amount of jest can lighten the mood and reenergize team members.

5. The Contrarian

This member is a critical thinker and innovator who is not afraid to share their opinion. This role can challenge project team members to think about the project from a people and process perspective instead of a technical perspective. The contrarian can also ensure that the project team preserves the organization’s competitive advantage during business process management. They are long-term thinkers who can help align the ERP project with the organizational vision.

How to Build an ERP Project Team

It is important to start building your ERP implementation team before ERP selection to avoid falling into the trap of poorly resourced teams, lack of representation from key business areas or low accountability. Below are a few things to consider when assembling your project team:

1. Seek Executive Sponsorship

Executives can have a strong influence on who is selected to serve on a project team so it’s critical that executives are on board with the goals of the project. The project manager is responsible for ensuring that executives are well-aware of project scope, project budget and project resource requirements – and aligned in terms of overall goals and project priority – so that executives can make informed decisions when helping project managers choose team members.

2. Look for Strong Communicators

Some organizations build their project team based on who they believe to be the smartest or most technically skilled. While technical expertise and operational knowledge are important, communication skills are also valuable, especially when the project team must execute a change management plan.

Communication is also essential during requirements gathering. Team members will need to be vocal during this phase to ensure the business requirements from their department are represented. Ensuring all business requirements are met in the new ERP system is essential for ERP selection.

3. Make the ERP Implementation the Team’s Top Priority

At key points throughout the project, your project team may need to devote their entire focus to the ERP project rather than their day jobs. In a perfect world, the project team would be fully dedicated to the project during these times, but that’s not feasible for most organizations.

Project managers and executives must help the project team prioritize work, so the project is a top priority. Some organizations staff their project teams with a certain amount of external resources to ensure project team members can more fully focus on the ERP project.

If your organization’s communication about the project have been sparse, your project team probably doesn’t understand the importance of the project’s success. Overcome this hurdle by taking the time to talk to address concerns on an individual basis before assigning responsibilities. If some of your staff are already up to their ears in another major project, respect the preexisting situation and try to limit their involvement in the ERP project until the time is right.

4. Clearly Define Roles, Responsibilities and Accountability Measures

Project team members should be assigned responsibilities in accordance with their strengths, experience level and bandwidth. Begin defining roles and responsibilities at the beginning of the project to ensure accountability and representation from key business functions. Responsibilities can include anything from process definition to end-user training.

You can use a project charter to assign responsibilities for each phase of the project. The project charter defines exactly who is responsible for what as well as how decisions should be made and how issues should be resolved.

In addition to defining what team members are responsible for, you also should define what they’re not responsible for. For example, final sign-off on future state business processes and decisions about the organization’s operational model should not be driven by the project team but the executive steering committee. In several of our expert witness engagements, we have seen steering committees delegate everything to the project team.

5. Avoid Bad Hires

Not only can a bad hire derail an ERP project by not performing their duties, but they can impact the attitude of other employees. These employees may already be on edge because of organizational changes when a bad hire comes along and gives them another reason to resist change.

Many companies don’t know how to hire for an ERP project. They don’t know what questions to ask, how to evaluate technical skills or how to assess cultural fit. Panorama’s IT Staffing services help organizations overcome this hurdle. We offer a flexible array of contract, contract-to-hire and permanent placement services.

How to Find a Good ERP Project Manager

If a company has a weak project manager, no one knows who is responsible for what or whether progress is being made. Here is a list of five qualities a project manager must possess for your ERP project to succeed:

1. Organized

People waste time when they are hunting for lost emails or switching between devices to find what they need. Being organization not only increases efficiency but helps make and reinforce good impressions.

Every workplace has at least one desk that is heaped with files. If keeping a desk tidy is difficult for your project manager, how are they going to handle more complex tasks?

2. Punctual

Punctuality sets the tone for organizational conduct. If a project manager is late to meetings or misses deadlines, this sets the tone for all employees. The best project managers are always early. “I didn’t have time,” is never an unacceptable answer unless there was an extenuating circumstance.

3. Transparent

When project managers are upfront with employees about the status of the ERP project, it helps build trust between management and employees. Additionally, making information available to all employees empowers them to make better decisions and produces a product of higher quality.

Closely related to transparency is receptivity toward the thoughts and opinions of employees. The best project managers listen to the people who are in the weeds, performing the details of a much bigger picture.

4. Experienced in Your Industry

Given the choice between a fledgling project manager with deep industry knowledge or an experienced project manager with shallow industry knowledge, choose the former.

A project manager must have industry experience in order to ask detailed questions about business processes and methodologies. Project managers with no industry experience may have a high-level understanding of how things operate but almost everyone in the company should possess that knowledge anyway. When a project manager understands the inner-workings of an industry, fewer blind spots exist.

5. Communicative

When people do not know what is expected of them, this indicates the project manager is not doing their job. For a successful ERP project, every employee needs to understand their role and should be held accountable.

The best project managers hold status meetings to keep tabs on the progress of various tasks. If a team member needs help completing a task, they can ask during these meetings. Status meetings are also helpful in keeping everyone motivated because employees can see how the project is progressing towards its goals.

What Other Internal Resources Will You Need?

1. Executive Steering Committee

This group includes executives and members of the board of directors. The steering committee communicates the importance of the project and explains how it supports the organization’s mission and vision. The committee also participates in milestone meetings regarding software recommendations, organizational alignment and organizational change management.

In addition, the committee helps select project team members in accordance with the project scope, budget and resource requirements. The steering committee has a good understanding of project goals and organizational vision, so their input is valuable when choosing project team members.

While some department managers may be resistant to lending resources, your steering committee can work with them to ensure the right resources focus on the ERP project when necessary.

2. Subject Matter Experts

Much like the project team, this group includes representatives from each functional area. Subject matter experts participate in requirements gathering, requirements validation and vendor demonstrations. These are your “super users,” “change agents” and advocates for your project.

3. Change Management Team

Without the contributions and encouragement of a change management team, the ERP project team would most likely be overwhelmed by project fatigue and conflicting priorities. The change management team is responsible for working with third-party implementation partners to develop strategies that address communication, training and benefits realization.

5 Roles of a Change Management Team

1. Leading by Example

The change management team should not only communicate that the ERP project is a priority, they also should demonstrate this in their actions and decisions.

There’s no doubt that the team will have to make tough decisions, such as postponing or suspending another initiative outside of the ERP project. In order to make such decisions, the team needs to understand the pressures of competing priorities and be able to communicate their concern to the project team.

2. Recognizing Achievements

When the project team loses sight of priorities, reinforcing these priorities through recognition of effort goes a long way. The change management team should regularly acknowledge and celebrate the work being done and sacrifices being made by the project team, SMEs and end-users.

3. Promoting Accountability

Speaking to project team members about their responsibilities will reinforce their accountability to each other and to the organization as a whole. The change management team should encourage team members to hold each other accountable and to voice disagreements constructively.

Regular meetings are a great way to lay everything on the table for discussion and to encourage the project team to come to a consensus. Once a consensus is reached, the change management team should ensure everyone understands the shared responsibilities and reinforce overall expectations.

4. Including Change Agents

Change agents may be a part of the change management team, or they may just serve as liaisons between the project team and end-users. Either way, change agents can redirect employees’ attention to what really matters – the goals and objectives of the organization as a whole and their individual role in the success of the project.

5. Communicating Effectively

Organizations should staff their change management teams with strong verbal and written communicators. Team members should be empathetic but persistent.

What About Outsourcing?

Project managers walk a fine line between the use of internal resources and external resources. A lack of external resources can mean limited expertise. On the other hand, a lack of internal resources can mean poor project ownership and a lack of organizational alignment. Only internal stakeholders can make the ultimate decisions on how your business will run going forward. 

It’s no secret that ERP projects require a dizzying array of skills and competencies. Organizations embarking on business transformations are hard-pressed to assemble project teams that have a vision for how the business can evolve, have business process reengineering and change management competencies, and have a host of other skill sets that are difficult for most organizations to develop internally.

Because of the challenges associated with assembling such a rare and broad set of collective skills, many organizations turn to outside resources to augment their internal skills. Here are a few considerations to help you determine when it may be most appropriate to outsource your ERP project:

1. Focus on People and Processes

It can be easy to take a myopic view of ERP projects, focusing almost exclusively on finding external pinch-hitters with software-specific functional and technical expertise. While these skills are important, they are also somewhat of a dime a dozen. Let’s face it: compared to the people and process aspects of an implementation, configuring and implementing ERP systems are fairly cut and dry propositions.

The business components of implementations – such as change management, project management and business process reengineering – are much more difficult. These skill sets are harder to find. When looking for outside help, it is critical to find a partner that has a comprehensive skill set and a strong ERP implementation methodology.

We’ve found through our implementation and expert witness experiences that ERP success and ERP failure typically has very little to do with how well technical aspects were handled during the project.

Instead, success or failure is more commonly determined by how the business components of a project are handled. While the technical skills may seem more specialized and therefore more important – especially if you’re a CIO or IT manager – it’s actually the more intangible areas that will determine your project’s success or failure.

2. Don’t Outsource Everything

Some companies take more of a hands-off outsourcing approach. While you certainly want to rely on outside assistance wherever it makes sense, you won’t be successful if you don’t step up to the plate to provide a minimum level of internal support and skill sets.

For example, outside consultants – no matter how talented they may be – can’t make decisions about how to run your business for you. In addition, they can’t tell you if the designed and delivered enterprise resource planning system does exactly what you want it to. Only people within your organization can provide these inputs.

Therefore, it is important to identify and recognize those skills and responsibilities that your internal team should provide versus those that can be outsourced to outside parties.

3. Look for the Biggest Gaps

It can be helpful to conduct a gap analysis of the required skills versus the skills you currently possess in-house. The biggest gaps are going to be the ones that you’ll want to outsource to ERP consultants and other external resources.

An independent ERP consultant can be a smart addition to your team. A consultant will often see trends or risks before other members of the team, since they are not caught up in day-to-day activities. Often, teams with previous experience implementing an ERP system, may have a false sense of security. The world of ERP software is dynamic and ever changing.

What’s Your Project Scope?

Your project team structure mostly depends on the scope of your project. Is it simply an ERP implementation or is it a broader business transformation?

Panorama’s ERP consultants can help you determine the scope of your project and the degree of organizational change entailed. This insight will guide the structure and size of your project team.

In a matter of a few years, IT departments across most industries have fully embraced cloud computing and its benefits. While cloud computing is popular, is it secure?

It is often a huge headline in the news when an organization’s ERP software is comprised due to a cloud security breach. This negative press was once the motivating factor for organizations to stay on-premise, but with the overwhelming advantages of moving to the cloud, businesses are making the move in order to stay competitive.

While moving from an on-premise infrastructure to a cloud-based one shifts some of the responsibility from the organization’s IT department to the cloud service provider (CSP), security remains a focal point for which both parties should bear responsibility.

Understanding who is responsible for which security measures is crucial to keeping your organization’s data safe in the cloud. According to Gartner, “In nearly all cases, it is the user – not the cloud provider – who fails to manage the controls used to protect an organization’s data.”¹

This is similar to what we’ve found in our ERP implementation experience – people, not technology, determine the success of an ERP project. We’ve seen all different aspects of ERP implementations – including security – fail based on a lack of organizational alignment between people, processes and technology.

In fact, our 2019 ERP Report shows that more than a third of organizations experienced budget overruns due to organizational issues, and more than half of organizations experienced timeline overruns due to organizational and/or training issues.

Whether you are currently using cloud computing, are planning to a move to the cloud or are staying on-premise, it’s important to know the difference in security design. Below we’ve outlined the key differences between on-premise and cloud security, as well as some of the advantages and disadvantages to both.

Differences Between On-premise and Cloud Computing

1. Ownership of Responsibilities

The biggest difference between on-premise and cloud security design is the amount of responsibility that rests on the organization itself. With an on-premise infrastructure, a business is responsible for ERP system security from end to end. They procure the servers where the data will be housed, build and manage the firewalls used to control access to the network and control the ability to query and extract data from the system.

In a cloud world, these security responsibilities are shared between the organization and the cloud service provider (e.g. Amazon Web Services or Microsoft Azure). This is often referred to as the “shared responsibility model.” Depending on what type of service a cloud customer is subscribed to, the security responsibilities of the customer differs:

Infrastructure as a Service

In the case of infrastructure as a service (IaaS), cloud customers are not responsible for physical elements, such as the actual hardware that applications are hosted on or data centers. Instead, they need only to manage the provisioning of virtual machines, secure the virtual network and monitor all applications and interfaces within the network.

Platform as a Service

When it comes to platform as a service (PaaS), the cloud service provider inherits additional security responsibilities. Since the customer is now paying for an entire platform, as opposed to only the cloud infrastructure, the CSP now manages the duties listed for IaaS as well as the provisioning of virtual machines and securing the virtual network. The cloud customer is still responsible for their data, monitoring their interfaces and securing their applications.

Software as a Service

For software as a service (SaaS), the CSP is responsible for all the previously mentioned duties for IaaS and PaaS, plus they are responsible for the application itself. This makes sense as now the cloud customer is paying to use the CSP’s application hosted on their platform and cloud infrastructure. In this case, the cloud customer is responsible for the security of their data and all interfaces.

In all cases, it is the sole responsibility of the customer to ensure that their specific security requirements are being met. If your organization is planning a move to the cloud, it’s helpful to list all your security requirements. When meeting with potential CSPs, give them the list of your requirements, and let them vet how their service can meet your requirements.

It’s extremely important to note – even though in a cloud-based environment many of the responsibilities now lay with the CSP, the cloud customer must follow the appropriate processes and procedures and hire knowledgeable personnel in order to maintain the integrity of a secure cloud. Designing and documenting processes around ERP security can help the organization prepare its IT staff for new roles and responsibilities. A strong business process management methodology is essential when defining new business processes.

2. Points of Access

Another key difference between on-premise security and cloud security considerations is the means in which the network is accessed. On-premise ERP systems only exist on the devices they are installed on. When business users need to access their company data in an on-premise environment, they need to be physically in the office (on the company’s network).

For example, an employee could have SAP installed on their work laptop, allowing them to view company data from that device (on the company network, of course). The same employee could also have a personal laptop that does not have SAP installed. This makes controlling access to applications and data simple, as there is only a single access point.

While this may pose challenges for employees working remotely, they can always use a virtual private network (VPN) to log into their in-office device. VPNs are secure because they require a security key or other means of identity management

In a cloud-based environment, employees can access company applications via a web browser. This means that any device with internet access becomes an entry point to business critical data.

Cloud-based environments also allow the use of application program interfaces (APIs). While APIs can be used with applications running on-premise, their use didn’t become normalized until cloud service (and software) providers began pre-building them into their platforms. Now, interfacing with third party software applications is as easy as exposing the appropriate API and allowing third party access to your environment.

This ease of interfacing has its benefits but adds an additional layer of complexity when it comes to security design. In an on-premise environment, interfacing with outside systems is usually driven by the IT department, and the communication channel must be built in collaboration with the third party. With this approach, security considerations can be designed into the communication channel up front.

When utilizing an API to create, read, update or delete data in another system it is crucial that proper planning takes place. Not all permissions are typically needed by an API to perform its designated function. Identifying proper permissions and their repercussions is just as important. We always advise against taking the easy road and just giving full permissions to an API.

When creating the API, you should investigate the security of the system you are interfacing with. One question to ask when interfacing is this: “If this system security is breached how can it affect our data?” Developing your connector or API with this in mind can save you headaches and potential lawsuits down the road.

The Advantages and Disadvantages of On-premise and Cloud Computing

Whether you have an on-premise infrastructure or are already in the cloud, there are some strong advantages to both in terms of security:

Advantages of Cloud Security

A huge advantage when it comes to security in the cloud is the accessibility of security tools built by the cloud service provider or ERP vendor. Usually, for an additional fee, CSPs like Amazon, Microsoft and Google offer built-in security tools that help your IT department identify and remediate network vulnerabilities and provide suggestions on how to improve your security design.

Cloud service providers have a lot riding on the security of your data – namely, their reputation. Even if a data breach is the fault of a cloud customer, the reputation of the CSP also takes a hit. Because of this, CSPs have heavily invested in machine learning to help identify weak spots in your system and notify you immediately in case of an attack.

Another benefit of security in the cloud is the level of automation that can be achieved leveraging APIs. These APIs make it simple to orchestrate incoming and outgoing messages between your company’s network and third parties, ensuring that the proper authentication methods are in place each step of the way.

Disadvantages of Cloud Security

While the use of APIs can be considered an advantage in terms of automation, it can also be seen as a disadvantage when looking at the amount of access points to manage. If you have several third parties automatically accessing your environment, it can be difficult to monitor all the inbound and outbound traffic. In the case of a breach, it is even more problematic to find out where your security issues lie.

Advantages of On-premise Security

An obvious advantage of an on-premise security design is the clarity of responsibilities and ownership around security requirements. With a physical data center, it’s easy to see that access to the facility must be protected by the customer. The ownership of security requirements falls 100-percent on the organization.

As long as the organization prepares its people and processes, its data security will be strong. An organization must not only prepare its IT department but its end users, as well. While end users have a very different set of security responsibilities, their role is no less important. Some organizations develop an organizational change management plan to prepare employees for the security considerations of a new ERP system.

Disadvantages of On-premise Security

With the ownership of the data center resting solely on the business, the amount of security responsibilities given to your IT department is more than double that of cloud-based security.

Additionally, in an on-premise environment, there is usually little to no automation in terms of communicating with third parties. This means your IT department must securely build and manage a channel of communication each time a new vendor is added to your ecosystem.

Lastly, as if your IT department doesn’t have enough on its plate, the majority of security tools made for on-premise environments are outdated. With new ways for cybercriminals to access sensitive company data, security tools must constantly evolve to keep up with new threats. When the defense is no match for the threat, IT professionals must be even more diligent in monitoring your network’s security.

The most common form of attack on company networks is not so much a virus or brute force hacking. It is social engineering and elevated permissions granted to individuals or groups not requiring full access.  This is the result of not having a solidified IT plan and documentation.

You can address social engineering by having official training for all staff on the attackers’ methods and tactics. Non-essential security permissions can be audited and refined by your in-house IT security professional or an external IT auditing firm.

Where Should You Host Your ERP System?

During ERP selection, cyber security is a concern for many organizations. Ultimately, security depends less on technology and more on your people and processes.

For example, cloud hosting may be more secure than on-premise hosting if your internal IT department is not large enough, skilled enough or prepared enough to manage the full security of an on-premise ERP system. However, a cloud environment still requires internal security responsibilities, so a strong internal team and clearly defined processes are still essential.

Panorama’s ERP consultants take the time to understand your organization’s unique situation. We can help you prepare your people and processes for the challenges of either cloud or on-premise security.

1. Gartner, Is the Cloud Secure?, https://www.gartner.com/smarterwithgartner/is-the-cloud-secure/, March 2018

Many organizations that are using Microsoft Dynamics AX are considering an upgrade to Microsoft Dynamics 365 for Finance and Operations (D365). If your organization is considering this upgrade, you may be interested in learning more about the differences between these two systems before you commit to an ERP project.

Before delving into these differences, we’d like to share one caveat:

Before beginning an ERP project or digital transformation, we always recommend that organizations take a step back and evaluate their business goals. According to our 2019 ERP Report, less than half of organizations find the technology aspects of their ERP projects to be difficult. In contrast, more than half of organizations find the business aspects of their project to be difficult. These findings show the importance of focusing on organizational alignment before technology.

We recommend that businesses align their organization and conduct a comprehensive ERP selection to determine if an upgrade is preferable to moving to a completely new ERP vendor. Evaluating multiple ERP vendors allows organizations to see which systems align with their business goals.

Nevertheless, we recognize that an upgrade to a D365 is a popular choice for many Dynamics AX customers, so in this post, we’ll focus on these two systems. First, we’ll provide a brief history of how AX has evolved over time, and then we’ll review the key differences between AX and D365.

A Brief History of Dynamics

Originally developed in 1998, IBM Axapta was created through a collaboration between IBM and Damgaard Data to fulfill the need for a computer-based accounting program geared towards enterprise-level businesses.

A few years later, Damgaard Data merged with Navision Software A/S to create the company Navision A/S, which Microsoft later acquired. During this time, the ERP system was known as Axapta.

Over time, Microsoft further developed Axapta to cater to businesses across a variety of industries, including financial services, manufacturing and retail. Axapta then became known as Dynamics AX.

Several versions of Dynamics AX were released by Microsoft, each continuing to establish the business software as a contender in the market – from AX 4.0 to AX 2009 and finally AX 2012. The ERP system was widely adopted, and many customers are still using a version of Dynamics AX as their means of operating their businesses.

Fast forward to 2019, and Microsoft is proudly marketing and implementing D365 as the greatest version of their ERP software to date. The transition started with moving AX into the cloud, allowing users to access the application via a browser. Briefly, the name of this version was AX7. Later on, when Microsoft was rebranding their product line, they changed the name to Dynamics 365 for Finance and Operations.

Dynamics AX vs. Dynamics 365: 5 Differences

Although they are essentially two different versions of the same business solution, there are a few key differences between the two ERP solutions. For the sake of this post, we will compare Dynamics AX 2012 to Dynamics 365 for Finance and Operations.

1. Infrastructure

The biggest difference between Dynamics AX and Dynamics 365 is the infrastructure the systems are built on. When Microsoft committed to putting cloud technology first when CEO Satya Nadella took over in 2014, they moved the Dynamics products into the cloud, as well. This meant that Microsoft’s cloud service, Azure, would host D365 and any other applications from the Dynamics 365 suite of products. In contrast, Dynamics AX 2012 can still be run on-premise, meaning that customers can host the application on their own servers that are physically onsite.

Initially, there was some resistance to the cloud-driven model. Organizations were used to storing their production data locally and having the ability to access it at any time. For example, with an on-premise ecosystem, a system administrator could write a SQL query to view data in real-time.

Customers who had a production environment of AX did not want a cloud based application, as they would have to request copies of their production database from Microsoft to pull from the cloud.

The process for code deployment to production was also changed in the cloud. System administrators could no longer promote code to production on-demand, and instead, had to schedule a deployment, which Microsoft would do on the customer’s behalf.

Despite the initial resistance, cloud based infrastructure has become an accepted and, oftentimes, preferred method of managing an ERP system. Creating and maintaining an on-premise ecosystem is an administrative project on its own – you must acquire the necessary hardware, build the network in a way that allows employees around the globe to access it and plan for disaster recovery. All of this can be extremely costly and a headache to maintain.

With Microsoft Azure hosting your software system, these steps are done by Microsoft in collaboration with the customer, making environment management convenient and simple.

2. Custom Development

Another key difference between Dynamics AX and D365 is the method in which custom code is written and implemented.

With any ERP implementation, there is bound to be some software configuration or customization needed to meet specific business requirements. With Dynamics AX, custom development can be applied using the over-layering method. Over-layering is a concept that allows the core product, customer code and any value-added reseller (VAR) code to be separated from each other in different layers. The different sets of code are then layered on top of each other within the ERP system. Sometimes, when the code is merged, compatibility issues arise, and developers must adjust their code before it can be deployed.

D365 requires the use of the extensibility model as opposed to over-layering. This means the core code of the ERP system is locked down, not allowing any customizations. Developers must customize the software through built-in extension points.

Only objects that have extension points can be customized, but if a customer has a need for a new extension, they can request it from Microsoft. Microsoft often provides extensions directly to customers or includes them in future releases. When it comes to upgrading, the extensibility model is highly preferred as it causes significantly fewer compatibility issues than the over-laying method.

While Dynamics products are easier to customize than many other vendors’ products, it should be noted that extensive customization is a key failure point we see in many of our software expert witness engagements. We recommend that organizations carefully manage customizations by developing project governance and controls to ensure customizations are made only when absolutely necessary.

3. Upgrade Model

Upgrading to a newer version of Dynamics AX – like AX 2009 to AX 2012 – often requires a new implementation. Many AX customers considering an upgrade find that they first need to evaluate the business impact of the upgrade and improve their business processes. This requires a new implementation because new processes often require new configurations and/or customizations.

Other AX customers see the need for a new implementation when they realize that their custom code conflicts with the code delivered by Microsoft in the new software version. In these cases, developers must change and sometimes entirely rewrite their customizations.

Upgrades from AX 2012 to D365 can typically be done without a new implementation, depending on the amount of custom code involved. However, upgrades from AX 2009 to D365, require a new implementation since there is no direct upgrade path from one to the other.

With the move to the cloud came the opportunity for Microsoft to adopt a new upgrade model, similar to the upgrade model of modern applications consumers are familiar with today.

This model, used in D365, does not require a new software implementation. Instead, monthly updates are pushed out to customers on the ERP application. Large feature changes are delivered as parameters or configuration keys, allowing customers to decide if they want to turn on the new functionality. For customers with custom code, the chances of conflicts with the upgrade are drastically reduced.

4. User Interface

A very apparent difference between Dynamics AX and D365 is the user interface. With Dynamics AX, a user can launch the application from a desktop and perform their work within the program. Dynamics AX has the aesthetic of most ERP systems, which is, to be honest, a little out of touch with today’s typical ERP user.

With D365, a user can launch a web browser and enter a URL. Within the browser, the user can perform his or her work and open additional tabs if necessary. D365 can be launched from desktops and mobile devices alike – anywhere with an internet connection. The look and feel of D365 is more aligned with Microsoft’s branding and matches the style of other Microsoft products, like the Office 365 suite.

In Dynamics AX, the homepage defaults to an area called Role Centers. Here, users can create custom queues and links that make performing their daily functions easier.

In D365, the homepage defaults to an area called Workspaces. While similar to Role Centers, Workspaces are prebuilt queues, links, lists and graphics that are related to specific modules and security roles.

An unfriendly user interface can exacerbate the user adoption challenges inherent with ERP implementations. When organizations experience user adoption issues – user interface-related or otherwise – they often seek guidance from ERP consultants. If user adoption issues are severe enough, this can be considered an ERP failure. ERP consultants, like Panorama, have extensive experience recovering ERP implementation failures caused by variety of factors.

5. Navigation

Navigational differences, though minor, are worth noting.

A common theme across ERP systems is that certain screens can be launched from several different places in the system. In Dynamics AX, a user must know the menu path to a specific screen. For example, to create a new sales order, a user can navigate to Sales and marketing > Sales orders > All sales orders. However, this is not the only place to launch the sales order screen, which makes it difficult and time consuming for users to memorize any particular path.

In D365, a new search capability was added to allow users to type in the name of the screen they are looking for and click from the results to launch the page.

Should You Upgrade Your AX System?

Now that you know the basic differences between AX and D365, you may be more confident that you need to upgrade to D365. This is a wise decision for organizations seeking a more manageable production environment, easier customizations and upgrades, or an improved user experience.

However, an upgrade from AX to D365 is no easy task. Our ERP consultants can help you understand the business impact of an ERP upgrade. We will guide you through organizational change management activities and other essential project activities that make upgrades smoother and more beneficial to your bottom line.

Whether your business operates on a collection of homegrown applications, a select suite of products designed for specific business needs or a full ERP system that does it all, there are several reasons why your organization might benefit from new ERP software. Some reasons hit close to home, like losing out on new customers who prefer a modern shopping experience. Other reasons are out of sheer necessity to keep your business going.

Determining your organization’s motivations is not a small task. Your motivations could be based on a mixture of different factors. To help you determine if your organization might need a new ERP system, we’ve defined some of the major reasons organizations implement or switch to new ERP software, along with some tips, best practices and disclaimers for each:

1. Replacing Your Legacy System

The most obvious reason for an ERP implementation is simply to replace your legacy system. There comes a time in the trajectory of every organization when the CIO or other executives recognize that their current software isn’t cutting it anymore. There are several reasons behind this:

Your Current Software is Outdated

If the business processes that your current system supports have changed, users may be relying on workarounds to perform their daily functions. Workarounds are exactly what their name implies – extra steps performed in a system to work around missing functionality required to complete a task. Workarounds cause inefficiencies, and in turn, can increase costs and create unhappy employees.

Along the lines of employee happiness, a younger workforce may find it difficult to learn the existing application and find newer software more attractive and even familiar. Newer technologies follow similar design patterns to consumer applications of which younger generations are already experts. Retention of the best talent is important to stay competitive in any industry, and keeping your workforce engaged has a direct correlation to employee retention.

Most importantly, the modern consumer is looking for convenience. When a customer transacts with your organization, he or she wants a simple and efficient experience. With older ERP software, sometimes the entry point for customers is extremely dated. For example, a system that accepts sales orders via fax, but not online can turn potential customers away and towards a more accessible competitor.

Your Organization is Going Through Digital Transformation

The phrase “digital transformation” can be heard often when CEOs address stakeholders or VPs give a keynote at internal conferences. But what does it mean? According to the website CIO.com, a digital transformation is the “application of digital capabilities to processes, products, and assets to improve efficiency, enhance customer value, manage risk, and uncover new monetization opportunities.”

One of the biggest shifts in the IT paradigm related to digital transformation is accepting that business applications can live in the cloud and don’t need to be on-premise to be serviced. When an organization decides to transform its IT infrastructure from in-house to a cloud-based setup, most applications require a major upgrade or need to be retired and replaced.

Another shift related to digital transformation is organizations acquiring new, modern applications to perform ancillary functions. For example, suppose an organization implements a new expense tool. Both employees and management alike are loving the new tool as it allows an easy way to submit, view and approve expenses from any kind of device. This scenario may not seem like it has anything to do with needing new ERP software, but what if the organization has several of these examples and none of the applications integrate with the current ERP solution without heavy customization? A new system would most likely be more efficient and beneficial than creating all those custom interfaces.

Your Legacy System has Issues

The most dire of reasons for replacing your legacy software is the need to address issues with the current platform. Workarounds alone may not be enough to solve a business problem created by your system. If your legacy system simply cannot handle real-time inventory updates and your sales depend on this, it’s time for new ERP software.

The worst crime any business application can commit is to provide bad data to its users and customers. If your legacy system is providing inaccurate data to customers (for example, current pricing on items) or faulty data is being used in demand forecasting, it’s time to part ways with it. In an era where consumers have a wide-reaching platform to share their mishaps with the world (a.k.a. social media and review sites), it’s critical to have a system you can trust to provide accurate and relevant information to your customers.

2. Scaling Your Business

When business is good, it grows – and with growth comes a need for a more robust enterprise backbone. There are some ERP systems that are built for small to medium sized businesses and others that are built for large enterprises. If your organization has substantially expanded since you implemented ERP, you may be outgrowing your system. Here are some telltale signs that your business could benefit from new ERP software to scale your business:

Performance is Slow in the Current System

Due to increased transactional volume, the performance of some ERP solutions may slow depending on their architecture. This will become apparent when users submit tickets for reports taking longer to run than normal or when batch jobs are not completing in the time they are allotted.

Users Experience Intermittent Issues and Outages

If your ticketing system is constantly filled with users reporting outages and issues, your ERP system likely is not keeping up with the business demand. A key indicator is time-out related issues. Once you start seeing an influx of these, you’ll know it’s time to make a change.

If a new ERP solution is implemented for this reason, it’s a smart idea to pay particular attention to performance requirements and load testing throughout the implementation.

3. Cutting Costs

Commonly, one of the first places an organization looks to reduce costs is to the IT department. After some analysis, a CIO or business leader could find that moving to a new ERP system would save the company a significant amount. Cost savings could come in the form of lower cost licensing and savings on custom support fees:

Lower Licensing Costs

Different vendors have varying licensing models – some can be considered a premium while others are in the affordable range. Comparing your licensing cost for your current ERP solution to others in the market requires reaching out to the sales teams of different ERP vendors. It may seem too early when you’re simply trying to analyze the costs, but bringing in different vendors can actually save costs in the long run as the sales teams are fighting for your business.

If this seems a little intimidating, Panorama offers ERP selection and contract negotiation services to help you through the RFP process and to be your advocate in meetings with vendors. Our experienced team can help you make the right decision for your organization when selecting a new ERP solution.

No Custom Support Fees

If your organization is currently paying vendor fees to support custom applications, this may be another place to save. Implementing new ERP software provides the opportunity to realign your business processes with industry standards, allowing you to drop custom support and utilize out-of-the-box capabilities of the system.

4. Upgrading Your Existing ERP

Another reason for implementing a new ERP system is the need for a software upgrade. There are a few key reasons for performing an upgrade, each with slightly different implications:

The Current Software Version is Sunsetting

Software vendors can’t support all versions of a product indefinitely, and with that constraint comes the need for customers to upgrade. Typically, when a vendor has a major version of their software approaching the end of its life in terms of technical support, they will proactively reach out to customers to help them through a transition plan. During this communication with the vendor is the right time to make your ERP selection to the appropriate version, or new product, for your unique needs.

Bug Fixes are Included in the new Release

As mentioned previously, oftentimes users will be resourceful and find workarounds to system shortcomings to complete vital tasks. If an upgraded version has fixes to these workarounds, the justification for upgrading is satisfied immediately.

Contrary to the previously mentioned scenarios, upgrading your existing ERP solution can be handled differently than a brand-new implementation. Users are already familiar with the software and communication can be adjusted to excite users about coming improvements. Your organizational change management strategy will look different for an ERP upgrade, as users are more open to improvements than large-scale changes.

ERP Selection Help

No matter your reason for implementing (or upgrading to) a new ERP system, having an experienced team in your corner will make any project less stressful and more productive. Our ERP consultants are experts in ERP selection and can ensure you invest enough in the selection process to save time and money during implementation.

Most organizations would agree that evaluating ERP software is as enjoyable as being stranded in a blizzard. There are so many ERP vendors in the market today that it’s hard to see the details while there’s a flurry of snow blowing around you.

If you’re about to begin ERP selection, a good place to start digging into the details is with some of the more well-known ERP vendors. While these vendors are a good fit for many organizations, they may not be right for yours. Then again, one of these vendors’ products might be just what your organization needs to reach its strategic goals.

Why not find out for sure by looking at some of the product details that most organizations aren’t privy to until the later stages of selection? Our ERP consultants have in-depth knowledge on hundreds of ERP vendors, but today, let’s look at some insider information on Oracle JDE and the Oracle Cloud Applications.

Oracle Overview

Founded in 1977, Oracle is a $39 billion-dollar company that develops enterprise software and other technology for mid- to large-sized organizations. Oracle’s primary strength is developing and acquiring robust product lines, such NetSuite, that provide flexible functionality to a variety of industry niches. We have evaluated and/or implemented Oracle products for organizations across various industries and verticals and found Oracle’s products to be very versatile.

Insider Information on Certain Oracle Products

Oracle JD Edwards (JDE)

Oracle JD Edwards EnterpriseOne has always been a good fit for manufacturing companies and professional services companies. However, in our experience, JD Edwards software is not as good of a fit for consumer-packaged goods companies that have extensive distribution, supply chain management and transportation needs. Typically, Oracle’s JD Edwards works best for larger organizations with complex manufacturing and service management processes.    

While JD Edwards products are robust, they aren’t receiving the same R&D funding they once did. Oracle has significantly reduced the amount of development and minimized the research component of JDE funding. Our recent experience with Oracle at client engagements has confirmed the fact that little to no new development of JDE will be performed. This was stated by numerous Oracle representatives at multiple levels.

This trend is mostly due to the fact that Oracle has decided to focus on its Cloud Applications. This shift in focus means that it will only be a matter of time before a vast majority of JDE system integrators and resellers will no longer focus on JDE.

Typically, in these times of transition, an ERP vendor shifts internal resources to its new product. We have found this to be the case with Oracle, as they are decreasing JD Edwards resources for technical support in order to focus on training and certifications for its Cloud Applications suite.

So what is Oracle’s long-term plan for JDE? Oracle will continue to release updates, but they likely will only include functionality that has already been developed by the channel or include minor bug fixes. Many vendors follow a similar process when starting to sunset a product line.

The sunsetting of JDE doesn’t just affect organizations in the long-term, but in the immediate term as well. Organizations using JDE may find the user interface difficult to navigate. This is because Oracle has not made any significant improvements to the JDE user experience in many years, and they don’t intend to make any improvements in the future. It’s not surprising that JDE has historically had a low rate of user adoption. This is not a challenge that cannot be overcome, however, as we have used organizational change management activities to increase user acceptance of new enterprise resource planning software.

All technology that Oracle is currently developing is designed for the cloud model. Development kits, integration toolsets and other integration technologies are being built on a common cloud platform. Fortunately, JDE can be embedded onto this platform, and we hope that it will eventually be integrated so customers don’t have to be responsible for their own system maintenance.                   

Despite the lack of research and development, JDE is still a very functional product. Based on RFP summaries from our recent client engagements, we have found that JDE can meet most clients’ financial, manufacturing and professional services requirements. If you’re considering an ERP implementation in one of these industries, JDE may be a good fit.

Oracle Cloud Applications

The Oracle Cloud Applications are designed for organizations across industries with at least $750 million in annual revenue. Smaller organizations can run the application set but are often resource-constrained, which leads to less functionality being adopted or implemented.   

Oracle started developing its Cloud Applications seven to eight years ago. While rebranding Oracle Fusion into the Cloud Apps and broadening the scope of functional areas has benefited Oracle’s cloud ERP offering, it still lacks some functionality. This is slowing down their new sale and cloud conversion rates.

The intent of the product is to bring best practices from their other products (CRM, Manufacturing, Financials – Seibel, JDE and EBS). However, not all complex processes and functionality have been built into the new application, and Oracle is relying on system integrators for heavy configuration or product extensions to supply basic functionality. Many organizations, including Panorama clients, see the Cloud Apps as too risky and too expensive.

However, the Cloud Apps do have an intuitive user interface. Historically, separate applications, like Transportation Management or Demand Forecasting, had different user interfaces and were difficult to navigate. With the Cloud Apps, Oracle has done a nice job of combining functionality of these separate applications while updating and harmonizing the user interface.

Despite the intuitive user interface, we have found that user adoption rates for the Cloud Apps are behind the curve when compared to other leading vendors regarding innovation, deployment methods and overall maturity. For example, Oracle has been developing their artificial intelligence platform for many years, but it has lagged in functionality for production and distribution environments.

Another challenge for the Cloud Apps has been Oracle’s recent change in leadership. Last year, Thomas Kurian, Oracle’s President of Product Development in charge of the Cloud Apps, left the company, leaving the focus of the future development of the Cloud Apps unclear. Kurian wanted Oracle to be more public-platform-agnostic, inclusive of Amazon Web Services (AWS) and Microsoft Azure. This conflicted with Oracle co-founder, Larry Ellison’s desire to continue to operate solely on the Oracle platform.

What does this mean for Cloud App customers and potential customers? For the time being, the Cloud Apps will only operate on the Oracle platform and not the Azure or AWS platforms. This may pose challenges for some organizations as full dedication to the Oracle platform, including toolsets and services, is often too much to ask for mid-sized organizations. Platforms like Azure and AWS make it easier for customers to source experienced resources to support their ERP systems.  

Oracle’s dedication to the Oracle platform has also affected customers’ ability to automate certain business processes as some functionality is still in development. While Oracle continues to develop functionality, it is hesitant to tie future releases to specific dates. As a result, many system integrators are developing their own extensions as a bridge until Oracle releases the necessary functionality.

During ERP implementation, organizations often become frustrated with products that lack certain functionality as this can mean a longer time to full benefits realization and return on investment. However, this does not need to lead to ERP failure, as long as the organization sets realistic expectations and has a plan for continuous improvement.

Despite slow product development, the Cloud Applications is headed in the right direction, with new functionality emerging every day. Based on RFP summaries from our recent client engagements, we have found that the Cloud Apps can meet most clients’ financial, manufacturing, consumer-packaged goods and supply chain management needs.

Should You Implement an Oracle Product?

Your ERP selection considerations will depend on your organization’s unique needs and goals. Therefore, your decision about Oracle shouldn’t be based solely on this blog post. Oracle has many other viable products that may be a good fit for your organization’s business requirements and digital strategy.

Panorama’s ERP consultants can help you prepare for ERP selection by understanding your unique organizational goals and recommending suitable products from several different vendors. We are experienced in facilitating vendor demonstrations and evaluating products against organizations’ business requirements.

More organizations are realizing the benefits of ERP software. Not only are Fortune 500 companies implementing and upgrading ERP systems, but small businesses are taking advantage of niche ERP solutions tailored for their industry. If your organization is looking to realize increased business benefits from ERP software, our experience has shown it is critical to develop a detailed and comprehensive business case.

By developing a business case for new ERP software, you can shed light on operational issues, determine how to solve them and estimate the resulting business benefits. This is easier said than done, as organizations tend to have different ideas regarding what constitutes an effective business case. With that in mind, we want to share seven tips for developing an effective ERP business case:

Understand the Importance of a Business Case

Don’t develop a business case until you understand its importance. You’ll develop a much more thorough business case when you know what’s at stake. So, what’s at stake? Business benefits. A business case ensures your organization realizes measurable business benefits from its ERP software. It ensures the project achieves business goals, not just IT goals.

Identify Pain Points

A good business case begins by identifying problems and determining what solutions are needed to solve them. Not everyone will agree that problems exist or that they require an ERP solution. A business case can help you achieve organizational alignment regarding the need for an ERP system.

Acknowledge Challenges and Risks

There are, obviously, challenges in every ERP implementation. A business case allows an organization to take an honest look at obstacles that must be overcome, whether it’s a lack of resources, lack of expertise and/or lack of employee and executive buy-in. We have seen many high-profile cases where ERP implementations failed because those responsible for developing the business case and implementing the system were not forthcoming about potential risks.

Determine Your Organizational Goals

Chances are, your reason for implementing ERP software isn’t just to replace an old system. Often, we find organizations have many goals they want to achieve through implementation:

Improving Customer Service

Every business case should consider the customer service benefits of new ERP software. Does your organization want to enable customers to order online 30% faster once an ERP solution is implemented? If so, include this in your business case.

Improving Business Processes

If your operational pain points are related to broken or inefficient business processes, then outline these processes in your business case. Potential process improvements should be specific and measurable.

Improving Employee Morale

An ERP system can improve employee morale by making employees’ jobs easier. Employee morale is measurable since it can be gauged by distributing surveys, conducting focus groups and/or tracking turnover rates.

Increasing Revenue

If processes are streamlined, customer satisfaction increases and employee morale improves, this will most likely result in a positive financial outcome as well. We have found that identifying potential cost savings within a business case increases the likelihood of achieving executive buy-in. The business case also should outline the total cost of ownership of new ERP software, including implementation costs. When you focus on both the costs and the benefits, you can show how the latter outweighs the former. After all, ROI is the language of executives.

Consider Alternatives to Implementing ERP

Instead of implementing new ERP software, some organizations upgrade their existing software, improve their business processes without new technology, or simply decide to do nothing for the time being. It is important to examine the costs of each of these options against the cost of an ERP implementation. For example, it may become evident that the cost of doing nothing and remaining inefficient is greater than the cost of an ERP project.

Develop an ERP Project Plan

Your business case should include a detailed section outlining the components of your ERP project plan. While the business case helps get the project off the ground, the project plan ensures a project maintains momentum and sticks to the expected timeline and budget. Accounting for all essential project activities, including change management and business process reengineering, sets realistic expectations regarding implementation timeline and budget.

Measure the Results

Once you’ve built a business case and begun your project, it’s time to start measuring results. It’s important to measure results throughout the project so you can track your progress, promote accountability and monitor your budget. Measuring results can also help sustain project buy-in when and if it wanes.

A Business Case Supports ERP Success

A thorough business case will, more often than not, result in a successful ERP selection and implementation. If your organization is considering an ERP implementation, Panorama’s ERP consultants can guide you in developing a business case that allows you continuously prove the value of new ERP software.

Organizations implement ERP systems for a variety of reasons. While one organization may want to streamline its order-to-cash process, another might be more interested in refining its hiring practices.

To address these unique needs, ERP vendors have developed systems that address a variety of functional areas. Below are examples of five functional areas that can be improved with the implementation of a modern ERP solution:

Finance, Accounting, Payables and Receivables

Virtually every organization that invests in an ERP system does so in order to gain greater control over their financial operation. All financial activity within your organization can benefit from an integrated ERP system. It enables your organization to successfully manage financials with a modern, integrated interface geared to higher levels of productivity and transparency.

Customer Service

Many ERP systems have e-commerce functionality. Others integrate well with standalone e-commerce systems. In either case, you can gain better data insights by ensuring your e-commerce function isn’t siloed. Better data insights can in turn improve your customer service. One of our process manufacturing clients implemented an integrated ERP system that automated their inbound customer service, giving reps more time for outbound calls.

Supply Chain Management

Successfully refining the supply chain management function is the holy grail for manufacturing companies that deal with materials, inventory, assembly and line personnel. ERP software can help you streamline your manufacturing processes domestically and internationally. When dealing with variations such as manufacturing compliance from country to country, currency fluctuations and import/export laws, an ERP solution well-versed in supply chain management can be a valuable asset.

Order Processing

An order processing module within an ERP system is designed to help an organization better manage order entry, credit checking, shipping, sales analysis and reporting. Oracle SCM Cloud and others like it provide the capability to manage inventory, shipping and other fulfilment tasks. Many of these systems also feature customer interface modules that can integrate into your company’s website and various modules with IoT capability.

Human Resources

ERP solutions with a human resources module can improve the management of staff system-wide and is a great benefit for any organization no matter the size. Robust capabilities are not necessary for every organization, but for those that do require them, there are a few providers that offer it.

Project Management

When activities such as billing, expense management and human capital management must be accounted for and incorporated into your overall balance sheet, ERP solutions can play an important role in helping your organization run smoothly and accommodate when scalability is necessary.

How to Maximize ERP Business Benefits

While ERP software can automate many functional areas, you’ll realize more business benefits if you optimize your functional areas prior to ERP selection. Requirements gathering workshops can help you understand your business processes and identify pain points. From there, you can determine which processes need improvement.

This method – known as business process reengineering – ensures your ERP system supports your organizational goals. When you improve your processes, your ERP implementation is no longer an IT project, but a strategic initiative that executives are more likely to support.

We recently conducted process mapping workshops with a company specializing in government subcontracting. Employees and executives were so excited about the future state processes they designed that they turned the process maps into giant posters for display in executives’ offices.

This is an example of organizational alignment. You should strive for this alignment no matter what functional areas you’re automating. If you want to turn your IT project into a strategic business initiative, our ERP consultants can help.

The beauty of ERP software is that it can manage both sides of an organization’s operation: the procurement and accounts payable side, as well as the order-to-cash and accounts receivable side. While both sides of the equation are critical to the financial health of any company, it is the nurturing of customer relationships that ultimately keeps the lights on.

To improve the customer experience, an ERP system is necessary and should incorporate several different modules. Whether each module is a built-in component of the core or an integrated, third-party add-on, it must all work seamlessly from beginning to end. 

Good customer relationships don’t just happen. They are a byproduct of strategic actions at several stages of the engagement continuum. Each of these processes can and should be managed by an integrated ERP system. Conducting a technology assessment can help you document your pain points and identify the processes where ERP software can make a difference.

5 Ways an ERP System can Improve the Customer Experience

Customer Management

Managing customer relationships is a vital component of the order-to-cash process. The best way to handle customer relationships, especially for mid-size and large organizations, is to look for an ERP vendor that incorporates master data management (MDM) and customer relationship management (CRM). While the MDM and CRM can be used together, they could also be two different modules with two distinct purposes.

An MDM module can ensure consistent and reliable customer information is gathered, housed and retrievable by internal stakeholders. That information can include key pieces of data such as order history, company history, credit information, locations, key contacts, annual revenue and more. It can be thought of as a catalog of all relevant data about that customer.

The challenge many organizations have when implementing an MDM module is compiling all necessary data from each customer. The information may already exist in some form but could be scattered in various locations and formats. If information is scattered, then identifying and consolidating that information into a single resource is necessary. Once consolidated, that information is available to all internal stakeholders and modules through integration.

While MDM compiles overall data about a customer, a CRM solution enables sales staff to track prospect and customer interactions in order to identify opportunities. For organizations that have more than a handful of customers, manually tracking of every interaction is nearly impossible. Only a CRM system can consolidate trends, opportunities, preferences and financial data. This allows organizations to better plan revenue projections and budgets.

Many of our clients are seeking better data insights that they can use to improve the customer experience. We often walk these clients through business process reengineering to ensure their processes are aligned with their digital strategy.

Order Management and Fulfilment

An order management system (OMS) allows companies to track the status of every customer order at every stage. By understanding when orders are being entered as well as how and when they will be fulfilled, an organization can better manage customer relationships. An OMS can also help an organization manage different shipping options, warehousing and multiple currencies. During ERP selection, be sure to look for a system that can . . .

• Improve customer relationships – The customer experience can be greatly enhanced by enabling a better ordering process, faster delivery and more accurate invoicing. The more enhanced the experience, the more confidence customers will have when placing an order. If an issue with an order does occur, an OMS allows staff to quickly identify and correct the problem.
• Maximize working capital and cash flow – An OMS reduces errors, increases the speed of order fulfillment and enables more accurate billing. As a result, a company can experience improved cash flow and greater working capital.
• Enhance supply chain efficiency – An OMS can provide valuable insight into inventory, workflow, pricing and market trends. This can lead to greater organizational efficiency and facilitate proactive decision making. From a supply chain perspective, an OMS may help reduce costs due to leaner inventories and an understanding that products and materials can always be sourced quickly from other reliable providers.
• Improve staff management – By allowing customers to place orders online in a way that is connected to an ERP solution, the organization can better manage its staff. Automating the ordering process will funnel customer requests into the operation where resources are then allocated to ensure the operation is properly staffed. Handling orders this way enables organizations to better meet customer expectations.

Credit Management

Incorporating a credit management component into an ERP system allows for transparency, helping an organization adhere to an approved set of terms for each customer.

Without such a credit management policy and overall credit philosophy incorporated into an integrated ERP solution, organizations put themselves at greater risk by possibly extending credit terms to customers that may be unable to pay.

While many companies mistakenly place the responsibility solely on customers for unpaid debts, quite the opposite should be true. It is often the lack of a clear credit policy within an organization that results in late or unpaid invoices.

In the same way that fences make for better neighbors, a clear and actionable credit policy incorporated into an ERP system makes for better customer engagements.

Invoicing and Accounts Receivable

When submitting invoices to customers, leveraging technology and incorporating some form of automation is preferred over manual submission. Automation allows for better tracking and helps organizations get paid more efficiently.

A robust ERP solution should incorporate some form of invoice automation, ideally via a method that submits the invoice directly into the ERP software. This helps eliminate errors and delayed payments.

ERP solutions can provide comprehensive accounts receivable reporting, tracking the progress by which invoices are submitted and ultimately paid. This capability can help organizations identify and eliminate possible invoicing errors well before they get to the customer.

Payment and Cash Application

Almost no other segment of the order-to-cash process requires more attention than customer payment and cash application. These two processes are vital to the health of every business. Leveraging ERP software that can manage these two areas will go a long way in ensuring on-time customer payment and accurate application of that payment to a customer’s account.

While the payment process may sound straightforward, it’s a challenge for many organizations. Even after a new system is implemented, optimized processes may be difficult to maintain. This is because employees often resist new processes and cling to the old way of doing things. We employ change management techniques to help clients mitigate this challenge.

Customer Engagement Affects the Entire Organization

While ERP software can effectively manage multiple operational areas within a company, the area that has a ripple effect across the entire organization is customer engagement. It’s the experience customers have while engaging with their providers that will go a long way in determining whether that customer will continue the relationship or find another provider to do business with. A robust ERP system is an organization’s secret weapon, helping them provide the experience customers desire.

If you’re considering an ERP implementation, be sure to develop a business case that outlines all of the benefits you expect to achieve, especially those related to the customer experience. Our ERP consultants can guide you through the process of convincing executives to invest in ERP software. You can schedule a free consultation below.

With advancements in technology and faster, more reliable internet capability, we’re seeing more organizations use a mixture of IT solutions to address their specific needs. This mixture is sometimes referred to as a postmodern ERP approach.

A postmodern ERP system might be configured many different ways, but primarily it’s understood as an on-premise system augmented by several SaaS solutions that have been tightly integrated with the on-premise system.

The term postmodern ERP was coined by Gartner, identifying it as:

A technology strategy that automates and links administrative and operational business capabilities (such as finance, HR, purchasing, manufacturing and distribution) with appropriate levels of integration that balance the benefits of vendor-delivered integration against business flexibility and agility. This definition highlights that there are two categories of ERP strategy: administrative and operational.*

In other words, there are multiple parts to a postmodern ERP system: from financial, supply chain and manufacturing modules to marketing and staff management modules. What is required is a core ERP system with integration of various components that enhance the core – all designed to meet an organization’s unique needs.

While most large organizations tend to use on-premise, all-inclusive ERP solutions, the trend is moving toward the postmodern model. This is due to the unique role ERP vendors play, especially those that operate as SaaS companies. These vendors provide a level of flexibility that less nimble providers can’t. SaaS providers often focus on niche functionality that some of the larger players don’t address very well.

The postmodern ERP trend will likely continue and evolve into greater integration of in-the-cloud core systems with continued integration of other solutions. Because this trend is not lost on many of the smaller solution providers, they often position their compatibility with the larger ERP systems as a component of their value proposition.

It’s not just niche software providers who are benefiting from this trend. Systems integrators and other IT companies are positioning themselves as experts on the complex integrations and customizations necessary to make postmodern ERP work.

Should You Consider Postmodern ERP?

The important issue to remember regarding the move toward postmodern ERP software is that it is a strategy and an approach, not a product. There is no “Postmodern ERP” product developed and sold by ERP Company, Inc. In our experience with clients, we’ve found that some organizations find this approach ideal for their needs, while others find it too cumbersome and costly.

Organizations considering a postmodern ERP implementation must do a great deal of homework to determine which new software will work well with existing systems and who will handle the integration and future management.

Larger corporations may find the postmodern approach more attractive, as they likely have a robust IT budget and in-house expertise to effectively manage the implement a new digital strategy.

Smaller organizations, with more limited budgets and smaller IT departments, might find the work necessary to pull off a transition to a postmodern ERP environment too cost-prohibitive. If the new environment requires a great deal of manual intervention and data does not seamlessly flow from one system to the next, then a move to postmodern ERP might be a waste of time and resources. In our project recovery engagements, we’ve seen how data inconsistencies can cause a ripple effect throughout the organization, setting the company back financially and impeding their customer engagement and growth strategy.

Postmodern ERP Challenges

For any worthwhile endeavor, especially those that could have a transformative effect on an organization, there are always pitfalls and challenges. While pitfalls should be avoided, challenges should be identified and embraced. The key to any organization hoping to transition to a postmodern ERP environment is to embrace and overcome those challenges.

Integration

Although a postmodern ERP system may be an ideal solution for many companies, it usually requires a great deal of integration and oversight by IT personnel. A vital component to managing pre- and post-integration is the ongoing management. After different components have been integrated, individual solution providers may change a component of their software. If that is the case, a refinement of the original integration may be required. Being aware of and planning for these situations will be important for those with hands-on management of this process.

Customization

In addition to complex integration, customization will likely be required, depending on how the add-on is developed and the functionality the organization is hoping for. Customization may be ongoing in a postmodern ERP environment, as specific requirements from different solutions could change every so often depending on industry standards, changes in reporting, etc.

Training

If using different, yet integrated, systems in a postmodern environment, training of employees may be different from one system to the next. Anticipating training needs, investing in the training and being aware of when functionality changes from one solution to the next should be factored into the transition. We frequently use change management plans at organizations experiencing significant technology changes.

SaaS Service Level Agreements

Finally, support will likely vary from solution to solution. Even if a postmodern ERP system is so well-integrated that it runs like a Swiss watch, one weak link in a particular add-on solution could impact the entire system. Isolating the issue could prove problematic, especially with multiple add-on systems. It will be important for any organization implementing a postmodern ERP system to clearly understand what is and is not included in the service level agreement (SLA) associated with individual solutions. It’s also imperative that organizations understand if warranties and support have been voided based on certain customizations.

Postmodern ERP Checklist

Similar to the due diligence performed during an ERP selection, organizations should approach a transition to a postmodern ERP environment with discipline and commitment. Several items should be included on an organization’s checklist:

Stakeholder Involvement

As is often the case when making enterprise-level decisions with organization-wide impact, a team of stakeholders should be involved. Since several different systems will require integration into a core system, stakeholders from the impacted departments should have input into what processes are most important to their area. Focus on business process management as early as possible.

ERP System Evaluation

Since the notion of a postmodern ERP environment means dealing with several distinct solutions, a thorough understanding of what each provider offers – and doesn’t offer – is paramount. It’s also necessary to understand how warranties and SLAs will be impacted if integration requires a great deal of customization. If customization voids certain SLAs, the organization must determine if their in-house support team is capable of addressing issues as they arise. Finally, if significant changes are made to SaaS solutions that have been meticulously integrated into a core system, a significant upgrade to that solution might require another intricate integration.

Total Cost of Ownership Analysis

As mentioned earlier, some postmodern ERP systems may be cost-prohibitive. The total costs must be weighed against other solutions that might be more balance sheet-friendly. The overall cost of doing nothing should also be weighed against such a transition.

What’s Your Business Strategy?

Each organization’s approach to postmodern ERP will look different. It’s not important that an organization move to a pure postmodern ERP environment. What’s important is each organization configures a solution that suits their unique needs.

If you’re considering a postmodern ERP approach, our ERP consultants can help you weigh the costs and benefits. We will assist you in understanding your business strategy and ensuring organizational alignment before you make any technology decisions.

*Gartner, IT Glossary: Postmodern ERP, https://www.gartner.com/it-glossary/postmodern-erp, 2019

Manufacturing organizations today are increasingly focused on streamlining their operations to drive profits, increase margins and deliver high quality to customers in a timely fashion. While striving to remain competitive, some manufacturing organizations use every tool imaginable except the one tool that can truly help them: ERP software.

A robust ERP system helps organizations properly integrate and streamline interdependent departments. For most companies, it’s very important. For manufacturers, it’s vital.

Understanding Manufacturing ERP Software

Early attempts at developing an enterprise resource planning system can be traced back to the 1940s with the advent of calculating machines. This effort evolved into an early version of an ERP system in the 1960s through a collaboration between tractor manufacturer J.I. Case and IBM. The challenge at that time was to get a better handle on planning and scheduling materials for complex manufacturing operations. By the 1970s, companies such as JD Edwards, Lawson Software, SAP and Oracle were building ERP systems.

Today, ERP solutions are helping companies in various industries improve efficiency and help managers deliver on the promise of increased profits. Our clients in the manufacturing industry have seen many benefits from implementing enterprise software:

1. ERP Software Integrates Your Supply Chain

Effectively managing the inflow and outflow of materials is vital to any manufacturing organization.

In addition to managing materials, a robust ERP solution can manage a global supply chain that requires an understanding of multiple languages and currencies. Every country does business differently. For example, some countries incorporate a value-added tax while others don’t. Rather than having staff focus on the minutia of manually managing every detail of every transaction, you can implement an ERP system to automate operations. As a result, staff is freed up to focus on higher-value work.

2. ERP Software Improves Production Scheduling

To ensure materials coming into the organization are used when ordered and excess inventory does not accumulate, those materials must be planned into production. Enterprise software not only helps manage the procurement, pricing and payment of raw materials, it also helps manage scheduling of staff as well as machine operation and maintenance to maximize production schedules.

Some of our manufacturing clients use an engineer-to-order process where the order is placed prior to the product being designed, engineered and finished. These organizations benefit from ERP solutions that incorporate just-in-time inventory and an automated ordering system for customers. Depending on the items being produced and supply chain capability, a customer could place a tailored order on Monday and have the final product delivered by Friday – all with little to no waste.

A manufacturing ERP implementation also can help you utilize a just-in sequencing process, where materials are ordered and utilized in a production schedule as they arrive. If your system has serial genealogy functionality, you can trace the location and constituent components of completed goods to build complex products at scale.

The manual intervention and ensuing paperwork would be unmanageable without automation of these processes.

3. ERP Software Improves the Customer Experience

Many enterprise systems allow customers to access a customer portal and inquire about product availability, delivery and price. This data can then be used to dictate production schedules. When a customer can easily place orders and have them quickly delivered, that customer will be more inclined to be loyal to your organization.

We always recommend that our manufacturing clients not allow customers to place orders by phone. Organizations with millions or billions of dollars in revenue and an extensive global supply chain require automation.

4. ERP Software Removes Silos in Your Financial Operations

A manufacturer can be both a customer and a supplier. In these cases, it’s important to implement an integrated system with the modules necessary to manage both sides of the business. When evaluating ERP vendors, look for a system that manages the order-to-cash process for the supplier side, as well as the procure-to-pay process for the customer side. This is especially helpful for organizations that have incorporated a shared services model, where management of customer and supplier functions is managed centrally.  

Most suppliers prefer to be paid as quickly as possible, while most customers wish to hold onto their cash for as long as possible. An organization with separate supplier and customer financial operations can be disconnected from this financial philosophy. An ERP system, especially if deployed in a shared services department, can alleviate siloed mentality and integrate decision making.  

5. ERP Software Helps You Manage Staff and Other Resources

No manufacturing organization, no matter how much automation is introduced, can adequately function without appropriate staffing. An ERP solution can help with staffing issues, such as scheduling, hourly wages, time off/vacation, skill set, etc.

When managing a particular margin for products being shipped to a customer, a manufacturer with an enterprise system might only schedule certain staff to handle certain production lines. Without an ERP system, an organization might allow any staff at any hourly wage to operate any line, which might throw off and endanger margins, profits and overall staff availability.

ERP is Essential for Manufacturing Operations

During the ERP selection process, manufacturers may be overwhelmed by choices. However, focusing on finding a system that helps you achieve these five benefits is a good place to start. If you’re considering implementing a manufacturing ERP solution, be sure to contact us to help you develop a digital strategy and select the best system to meet your organization’s unique needs.

If you’re in a similar situation, you’re probably wondering how to transition to a new system. Before you make any decisions, you’ll want to read this post to learn about the potential risks of ERP transitions.

Why ERP Vendors Sunset Products

A vendor may have 30 different systems they’ve built or acquired over the years. Some of these are older applications. Consolidating these products and moving them to the cloud is one way for vendors to simplify their product offerings. It also allows vendors to reallocate funds to what they believe will be most profitable in the future.

How ERP Vendors Sunset Products

The process of retiring an ERP system can take several years – sometimes up to eight. During this time, a vendor cuts back on their implementation resources, removes technical support and reduces R&D funding. The product may still have new releases but these are not major. They are bug fixes or minor tweaking of the IP. If the product is moving to the cloud, the vendor will take best practices from this product and combine it with best practices from other products.

How to Transition to a New ERP System

Here are four tips for responding to the phasing out of your ERP system:

1. Understand the Vendor’s Sunsetting Plan for Your Product

It’s important to know what the sunsetting looks like in terms of timing and support. There are several questions you should ask your vendor:

• Will the phasing out be immediate (3 to 6 months) or will it be completed over a longer period of time (18 months)?
• Will support for issues, such as bugs and security patches, still be available? If so, for how long?
• Will new features still be added to the software or has the final feature already been added?

2. Involve Stakeholders in the Decision-making Process

Your transition team should include stakeholders from every department that will be affected by the change. The team will need to make decisions about how much to invest in the current ERP software in the interim. Most organizations decide to invest in fewer upgrades and less technical configuration. Each stakeholder should have input commensurate with their use of the ERP system.

3. Develop a Transition Plan

Does your current ERP vendor offer a comparable solution that your organization could migrate to, or will you make a wholesale transition to another vendor’s solution? While your vendor may offer you discounts for transitioning to their cloud offering, it usually comes out to be a similar cost as moving to another vendor.

Besides cost, another important factor for many organizations is ease of transition. However, the transition to your vendor’s cloud offering won’t necessarily be easier than the transition to another vendors’ product. In many cases, an upgrade is just as extensive as a full ERP implementation.

Whichever path you choose, you should ensure the new ERP solution aligns with your business requirements and organizational strategy. If you haven’t looked at your business processes in a while, you may want to spend time on business process reengineering before selecting a new system. This takes time, so don’t abandon your current solution too quickly.

Many organizations think a new system means more functionality, but this isn’t always the case. Some cloud ERP solutions are still being developed and may not have all the functionality you need.

4. Prepare Your Employees

As with any ERP implementation, employees need to be informed of upcoming changes. Personalized communication and training are essential.

While the new ERP solution offered by your current vendor may have familiar features, don’t discount the possibility that a different vendor might offer a solution that is more user-friendly. Either way, it’s important to invest in change management before selecting and implementing new enterprise software.

Challenges of Transitioning to New ERP Software

A mid-sized agricultural distributor was using an old version of Microsoft Dynamics GP for accounting and finance. The organization knew this product was on the sunset path, so they implemented a new system without engaging an ERP consultant.

The organization eventually discovered that the new system did not have the right functionality. As a result, they invested in extensive customization. They also implemented niche solutions for warehouse management, transportation management, advanced forecasting and demand planning. It wasn’t long before they decided to hire an ERP consultant.

The organization hired us to help find a single solution to replace their best-of-breed solution. The hurried transition off GP had created a mess of disparate solutions.

How did this happen? The organization had replaced GP too quickly. If they had taken their time and sought third-party guidance earlier, they would not be in a position of needing another replacement so soon after the first.

When transitioning off an old ERP, be sure to implement a solution that will last your organization at least five

Is Your ERP System Sunsetting?

If you’ve just discovered your ERP system is being retired, don’t panic. Vendors’ sunsetting timeframes are long on purpose. They know they have a large install base, and they know it takes organizations significant time to assess and transition to new solutions.

You have enough time to find a solution that aligns with your digital strategy.

As you begin ERP selection, you’re probably wondering how long the process takes. If you want to set realistic expectations, you need to plan for some of the overlooked aspects of ERP selection. This includes defining organizational goals, developing an IT strategy, evaluating deployment options, defining business processes and reviewing statements of work.

5 Overlooked Selection Activities

Defining Organizational Goals

Many organizations decide to evaluate ERP systems because their current system cannot scale to support the company’s growth. However, this reason alone doesn’t justify an ERP investment. You must be able to articulate how a new ERP system aligns with your organizational goals.

While enabling business growth may seem like a legitimate goal, it’s not specific and measurable enough. Consider goals such as improving data visibility or improving the customer experience. These goals are legitimate because you can measure the return on investment.

Before evaluating ERP systems, you should develop a business case to justify the investment and to estimate business benefits and return on investment. (You can use our ROI Calculator for these initial estimates). Defining your goals and developing a business case ensures you realize the full potential of ERP software. It also ensures organizational alignment.

Developing an IT Strategy

Once you understand your organization’s overall strategy and goals, you can develop an IT strategy. Now, you have a lens through which to evaluate your current enterprise systems and infrastructure. Determine what’s working and what needs to change if you are going to pursue new organizational goals.

Understanding your current state is essential as you’ll need to determine how new ERP software will integrate with your current IT infrastructure. For example, a best-of-breed solution may require many more integrations to your existing systems than a single ERP solution. Additional software integrations are worth the investment if a best-of-breed strategy aligns with your organization’s long-term goals. In fact, a standalone CRM system may have more robust functionality than a CRM application within a single ERP system.

When selecting best-of-breed ERP software, one mistake many organizations make is looking for software for one particular functional area without considering other functional areas. While all your business functions may not be in need of improvement at this current juncture, they likely will require new technology in the future. The functional area you’re focusing on now needs technology that will align with technology you implement in the future. If you define your long-term IT strategy, you will know what to look for in a standalone CRM system or HCM system.

The final step in developing an IT strategy is defining key performance indicators (KPIs). This will help you measure your return on investment throughout your ERP implementation. It’s also important to develop a benefits realization plan.

Evaluating Deployment Options

While evaluating deployment options is part of developing an IT strategy, it deserves to be mentioned separately. There are some important market trends of which you should be aware.

Lately, ERP vendors have increased their investments in cloud and SaaS ERP. As a result, many organizations who’ve been partial to on-premise software are now considering moving to the cloud.

Different deployment options each have their risks and benefits. Your decision should depend on your organization’s unique needs and goals. While cloud and SaaS solutions can be easier to deploy, they can limit your flexibility. ERP vendors may claim they will only support cloud solutions in the near future, but we have found this is purely a sales tactic. Cloud ERP is more profitable for vendors, so they provide higher compensation to sales reps who successfully sell cloud technology.

The truth is, on-premise software isn’t dead. We work with several VARs and system integrators that still sell and support on-premise solutions. These solutions are viable. In fact, some have ten- to twenty-year roadmaps, which is great news for their large install bases. As you’re evaluating deployment options, be sure to take the cloud sales hype with a grain of salt.

Many organizations choose cloud deployment for some but not all their business functions. This is called hybrid deployment. In these situations, organizations keep their back-office functions on-premise and implement cloud solutions for functions like sales and marketing.

Defining Your Business Processes

How can you know what enterprise technology you need without knowing what business processes it needs to support? You can’t. That’s why it’s important to define your business processes before selecting ERP software.

Start by mapping your current processes and looking for pain points. Involve all departments and ensure managers seek input from their teams. This collaborative approach results in process improvements that align with your organizational goals. Your future state will be a combination of optimized and standardized processes from which you can define business requirements. Prioritize these requirements so you can evaluate the functionality of various enterprise systems and determine which systems are most effective at addressing your highest-priority requirements.

Business process reengineering is a complex activity that can increase your selection timeframe. However, you will make up for this time during implementation since you won’t have to spend time defining your processes after selection.

Reviewing Statements of Work

Once you have statements of work from your top vendors, you may think the worst is behind you. Unfortunately, one of the most challenging tasks of selection remains: You must compare cost estimates that each make different assumptions about your implementation approach and desired level of customization.

When reviewing statements of work, you should ensure that the estimates include essentials, such as support and maintenance fees. You don’t want your system to go down just because you didn’t keep it updated. You also don’t want a security breach.

As you can imagine, this process is confusing and time consuming. Many organizations hire an independent ERP consultant to analyze statements of work and negotiate with vendors.

How Long Does ERP Selection Take?

These five activities don’t encompass the entire ERP selection process. ERP selection also requires you to conduct organizational readiness assessments, develop a data management strategy and attend ERP vendor demos, among other things.

All these activities can add up to a selection process that takes a minimum of fourteen weeks. Larger organizations with multiple locations typically need at least sixteen weeks to select the right system.

Now that you have realistic expectations, you can find the right expert to assist you. Consider working with Panorama’s ERP consultants. We focus on all the necessary success factors of ERP selection.

You know you need new ERP software, but before you dive in, you should understand the basics of this often-misused technology. Once you understand the basics, you can develop an ERP strategy.

What is ERP software?

Enterprise resource planning (ERP) software is used by organizations to integrate and organize the data necessary for front office and back office operations. ERP software integrates organizations’ key operations, including the manufacturing, distribution, financial and human resources, into one software system.

When properly implemented, an ERP solution increases organizational efficiency, performance and profitability. However, ERP implementations are challenging and often require an ERP consultant to manage the software selection, implementation, process management and organizational change. A large enterprise software implementation is particularly difficult when multiple, global locations are involved. Strong project management is key to achieving an integrated enterprise.

What are the most popular ERP vendors?

SAP, Oracle, Microsoft Dynamics and Infor are among the most popular ERP vendors. One of the most searched terms on Google is “SAP vs. Oracle.” That should tell you something about the popularity of these vendors.

Niche software vendors are also popular, especially for smaller organizations or organizations looking for industry-specific functionality. Niche products are designed for specific industries or business functions. For example, Syspro, IQMS and Plex are specifically built for the manufacturing industry.

While you may want to select a well-known enterprise resource planning system, the best solution depends on your unique business needs. A better question is, “What are the best ERP vendors for my future-state processes and organizational goals?”

What kind of organizations use ERP software?

ERP software is beneficial to organizations regardless of size or industry. In recent years, small- to mid-sized organizations have fueled most of the growth in the ERP industry. While large enterprises dominated ERP usage in the past, niche solutions have made it possible for smaller organizations to implement ERP software.

Organizations pursuing digital transformation often implement ERP software to enable their digital strategies. These organizations use technology to create new business and operating models. Their goal in implementing new technology is to improve data insights and the customer experience.

What is the difference between ERP and CRM software?

Customer relationship management (CRM) software is a type of enterprise software that automates the sales and marketing functions of an organization. Many vendors include CRM software in their full suite of solutions, but some organizations take a best-of-breed approach. They’ll implement a CRM system from another vendor and integrate it with their main system.

CRM software provides real-time data on lead behavior and demographics allowing organizations to personalize their communication with leads and customers. CRM functionality enables organizations to maximize the benefits of their ERP implementations. Improving the customer experience is a common reason organizations implement software solutions.

What is manufacturing resource planning (MRP II) software?

MRP software is included in most ERP systems. While ERP automates the entire supply chain, manufacturing resource planning focuses on the manufacturing processes involved in product conception through production planning. For example, when you need to purchase raw materials to build a product, MRP software allows you to create an accurate bill of materials.

An MRP system can be purchased as a standalone system or as part of a full ERP system. Some organizations take a best-of-breed approach when it comes to the individual modules within an MRP system. For example, they may look for a specialized solution for a function like materials costing.

How much does ERP software cost?

ERP software for larger organizations tends to cost more than niche software. However, even the larger vendors offer point solutions that can be implemented individually. Organizations can save money by only implementing the functionality they need instead of implementing a full suite of solutions.

Licensing costs also depend on the deployment model. While cloud computing may be cheaper in the short-term, it is more expensive than on-premise software in the long-term. Cloud and SaaS ERP is subscription-based so you pay per user or per module. If you plan to implement software in phases, be sure you’re not paying for all licenses upfront.

Maintenance, customization and resources are other costs to consider. You’ll need resources for configuration, data migration and implementation. Beyond these technical components, you’ll need to budget for business process reengineering and change management. The ideal ratio of software costs to service costs is 2:3.

If a vendor’s proposal seems unreasonable, you can negotiate a better price by hiring an independent enterprise software consultant. An ERP selection consultant can facilitate apples-to-apples comparisons of vendors’ statements of work, so you know your points of leverage. Some ERP consultants save clients as much as 30-60% of what they would have paid otherwise.

While ERP software is expensive, cost shouldn’t be your main concern when deciding whether to initiate an ERP implementation. You likely will recoup your costs within three years due to the business benefits you achieved.

What are some of the risks associated with ERP software?

While ERP has the potential to provide numerous business benefits, it can also be a risky proposition. If not managed properly, ERP projects can cost more and take longer than expected. They can also cause operational disruption and employee resistance.

Organizations assume the most risk when they approach their ERP project from a technical perspective instead of business perspective. If you don’t align new technology with your people and processes, you may not realize expected business benefits. You can’t improve data visibility if your ERP system can’t support optimized processes. You also can’t improve the customer experience if your employees don’t know how to perform optimized processes. Other than ERP failure, the biggest risk of ERP implementation is a low ROI.

A Business Case for ERP Software

Once you’ve recognized your need for new ERP software, you should define what kind of technology you need based on your digital strategy. This will help you develop a business case convincing executives to make the investment. Be sure to highlight not only benefits of ERP software but also the costs and risks.

Panorama’s ERP consultants can help you develop a strong business case so you can gain the executive support necessary for a successful ERP selection.

How do you decide which ERP system to implement when internal bias and vendor enthusiasm threaten to sway you? The best way to evaluate ERP systems is to weigh the strengths and weaknesses of each according to the following six criteria.

ERP Selection Criteria

1. Deployment Options

Most Tier I ERP vendors are heavily investing in cloud technology, but functionality is still limited compared to many on-premise solutions. This doesn’t mean every organization should select an on-premise solution. In the future, your ERP vendor may stop developing or even supporting their on-premise products. At that point, you’ll have to transition to the cloud, which is more complex and time-consuming than vendors claim.

While vendors are heavily investing in their cloud offerings and providing more robust functionality, the novelty of the cloud is still intimidating to many organizations. No one wants to be among the first to take the leap. They want a long list of references from companies of similar size and industry. A vendor’s cloud implementation resume for large organizations may be smaller than you expect.

2. Scalability

Software scalability refers to a system’s ability to handle an increasing amount of work and increasing number of users.

Some ERP vendors target large organizations with complex operations, but do you know which products and deployment models can continuously scale to support your growing business? If your customer base increases, the software should be able to handle an increasing number of users and transactions. It should continue to provide real-time data despite an increase in data volume.

Scalability can be expensive for some on-premise solutions. You might need to purchase additional servers to support the increased workload. It’s important to ask vendors what their products can support out-of-the-box and if they can be scaled.

3. Technical Fit

ERP vendors have different functional strengths that make them well-suited for certain industries. While industry focus is a strong indicator of technical fit, your business requirements should have the final say.

If you take the time to map your step-by-step processes and define your ERP requirements, you can ask vendors to demonstrate specific functionality. You’re not expecting too much by asking a vendor to demo their ERP system based on your requirements list rather than presenting a canned sales demo. Sharing your business requirements with vendors and allowing access to subject matter experts ensures vendors fully understand your business.

While no ERP system can address every possible business requirement, you should look for a system that addresses your highest priority requirements. In addition, you should determine which processes should be standardized based on ERP functionality, and which processes are competitive differentiators that could require software customization.

4. References

Vendors will make many claims about their system’s capabilities and ease of use. If you want to validate these claims, you should request references, so you can ask previous customers about their experience.

What functionality did they implement, and did they achieve the desired results? Did the vendor offer ongoing support and training?

References should be from organizations similar to your own that have implemented similar functionality. If you’re considering cloud ERP, ask for references that have deployed their software in the cloud.

5. Return on Investment

While total cost of ownership is a common consideration during ERP software selection, return on investment (ROI) is even more important. If you choose an ERP system based on ROI rather than total cost of ownership, your ERP project will result in increased business benefits.

Developing a business case will help you quantify the benefits you expect. This will guide you in improving your processes and defining your business requirements. Your ERP system will be more likely to deliver a high ROI if it’s configured based on optimized processes.

If you’re comparing the ROI of several different ERP systems, you may find Panorama’s ROI Calculator useful.

6. Product Viability

Do you know the long-term outlook of the ERP software you’re evaluating? While SAP and Oracle aren’t likely to go out of business any time soon, they may stop supporting certain products.

It’s also worth knowing where a vendor plans to invest their R&D in the future, as it’s your responsibility to select a product that will support your organization in the long-term.

You should conduct industry research to determine if a software product is on par with its competition. If not, the vendor may be planning to discontinue the product. In the short-term, product stagnation hurts your business as you’ll spend a fortune on customization just to remain innovative.

Other Selection Considerations

. Before beginning the ERP selection process, you should define a digital strategy. What are the pain points of your current IT infrastructure, and what needs to change to support your organizational objectives?

While an ERP implementation can bring much needed change, the only way to enable long-term, large-scale change is through business process reengineering and change management. Even if you select one of the top ERP systems, you won’t transform your organization unless you enable change by focusing on your people and processes.

Our ERP consultants can walk you through the full selection process, which includes activities related to organizational alignment and business design. We’ll ensure you select technology that lasts your organization for at least the next ten years.

The SAP vs. Oracle debate is common among large, complex companies. Clients often ask us, “which is the better ERP software system?” Of course, as an independent ERP consultant, we determine the best fit for our clients based on their unique business requirements. However, we’d still like to provide a comparison of SAP and Oracle based on industry benchmarks and client experience.

A Brief Overview of SAP and Oracle

SAP primarily builds its products from the ground up rather than through acquisition. The vendor targets companies with at least $1 billion in annual revenue. SAP ERP software has deep functionality, so it requires a very technical, time-consuming implementation.

S/4HANA Cash Application enables real time, intelligent invoice-matching powered by machine learning.

Oracle’s primary strength is acquiring product lines that can provide flexible functionality to a variety of industry niches. However, niche functionality is still transitioning from EBS and JD Edwards into Oracle’s newer products. Oracle targets companies with at least $750 million in annual revenue.

Oracle Business Intelligence 12c provides seamless analytics across cloud and on-premise solutions.

Both SAP and Oracle provide a full business suite of solutions, including HCM software, CRM software, SCM software, etc. Both vendors were featured in our manufacturing ERP report and distribution ERP report on the top ERP systems for those industries. The vendors in these reports have robust supply chain management and inventory management capabilities. They also offer strong production management software.

Panorama Client Experience With SAP and Oracle

Based on our experience evaluating and implementing these ERP solutions for clients, we’ve gleaned some interesting insights:

Business Requirements

We help clients create requests for information (RFIs) to send to ERP vendors. These RFIs list the client’s business requirements in detail. Vendors must indicate if (and how) their solution can fulfill each requirement. Below are examples of some of the requirements fulfilled (or not fulfilled) by various SAP and Oracle products. It is broken down by functional area:

Manufacturing

Business Requirement: The ability to support manufacturing production management.

Distribution

Business Requirement: The ability to auto-recommend warehouse staging location for products based on delivery (ship-via) type.

Finance and Accounting

Business Requirement: The ability to support user-configurable invoice structure.

Sales

Business Requirement: The ability to track historical product pricing at the customer level by sales rep (user).

Business Intelligence

Business Requirement: The ability to create and display user defined hierarchies for dashboards and reporting purposes.

Human Resources

Business Requirement: The ability to support integration with external benefits platforms.

As you can see, SAP and Oracle can both support a variety of business requirements with minimal software configuration. These are the kind of answers companies want to see in a RFI response. Even if some configuration is required, it is greatly preferred to software customization, which SAP and Oracle both strongly recommend against.

The products mentioned above are not the only products these vendors offer. You can find a complete list in our vendor database.

Demo Scores

We regularly coordinate ERP vendor demonstrations for clients. After each demo, clients score functionality on a scale from 1 to 5. The highest score a vendor can receive is a 5. The following metrics are based on clients’ ratings of SAP and Oracle across a variety of products during the last two years:

SAP and Oracle Products Scored Closely in These Areas

Demand Forecasting – (SAP) 2.3 / (Oracle) 2.2

Industry Intelligence – IBM partnered with SAP to create a Cognitive Demand Forecasting Solution for the retail industry. The solution can be integrated into SAP S/4HANA and the SAP Customer Activity Repository. Oracle Demand Management Cloud is a supply chain management solution that accurately predicts customer demand for a broad range of industries.

Material Requirements Planning – (SAP) 1.8 / (Oracle) 1.9

Industry Intelligence – SAP recently updated its material requirements planning (MRP) capabilities within SAP S/4HANA. Oracle NetSuite also has recent updates to its MRP.

Fixed Asset Management – (SAP) 3.3 / (Oracle) 3.3

Industry Intelligence – SAP Business One has a fixed asset management function that eliminates the need for repetitive manual data entry. Oracle NetSuite Fixed Asset Management automates asset acquisition, depreciation, revaluation and retirement.

E-Commerce – (SAP) 2.2 / (Oracle) 2.2

Industry Intelligence – SAP Upscale Commerce allows manufacturers and merchants to quickly launch “pop-up” e-commerce stores. Oracle Commerce On-premise, has likely stopped releasing updates. However, Oracle Commerce Cloud is frequently updated, with its last update this month.

SAP Products Scored Higher in These Areas

Multi-Currency – (SAP) 3.0 / (Oracle) 2.7

Industry Intelligence – SAP ECC has improved precision in currency conversion of foreign exchange rates.

Audit Management – (SAP) 3.8 / (Oracle) 3.4

Industry Intelligence – SAP Audit Management instantly captures audit documentation while providing drag-and-drop tools. You can access the application through mobile devices.

User-Defined Dashboards – (SAP) 3.9 / (Oracle) 1.4

Industry Intelligence – Not all BI vendors provide user-friendly dashboards. However, SAP BusinessObjects allows you to create interactive, role-based dashboards accessible from any device. An alternative is SAP Analytics Cloud, which allows you to easily create predictive models and integrate them into workflows.

Oracle Products Scored Higher in These Areas

Workflow Configuration – (SAP) 2.9 / (Oracle) 3.3

Industry Intelligence – Oracle has a new set of artificial intelligence applications that automate processes within its cloud suite.

Customer Contract Management – (SAP) 3.0 / (Oracle) 3.7

Industry Intelligence – Oracle Project Contract Billing Cloud provides pre-built templates and automates project billing. The application ensures contracts are compliant with project billing requirements.

Purchasing – (SAP) 2.8 / (Oracle) 3.3

Industry Intelligence – Oracle Purchasing Cloud automates routine transactions, such as invoice validation. The application fully integrates with accounts payable modules.

Quality Assurance – (SAP) 2.1 / (Oracle) 3.1

Industry Intelligence – Oracle Product Lifecycle Management Cloud allows you to define inspection plans by connecting product design standards and quality specifications.

While these scores are just averages of more detailed metrics, they show the perceived strengths and weaknesses of each ERP system. Demo scores are one of several factors to consider during an evaluation of SAP and Oracle.

Deployment Options

SAP and Oracle both have products with multiple deployment options. They typically encourage our clients to consider cloud-based technology even if they’ve expressed interest in on-premise technology.

Focusing on cloud ERP is a smart move for SAP and Oracle as the market is increasingly demanding flexible deployment options. However, we’ve found that neither SAP nor Oracle have very many references for cloud implementations at large, complex companies.

Vendor Viability

While SAP and Oracle aren’t likely to go out of business any time soon, they occasionally discontinue certain products.

SAP S/4HANA is a fairly new platform for SAP. The product has strong R&D funding as does Oracle ERP Cloud. However, R&D spending on Oracle EBS on-premise, is waning as the product is moving exclusively to the cloud. It’s difficult to find technical resources to implement EBS on-premise as most Oracle system integrators are focused on the cloud.

Want to learn more? Our SAP vs. Oracle white paper features a case study on a client in the distribution industry.

ERP Industry Benchmarks

When evaluating ERP vendors, it can be helpful to consider industry benchmarks and independent research. Our comparison report, 2019 Clash of the Titans, provides benchmarks on some of the challenges companies experience when implementing SAP or Oracle:

ERP Implementation Duration

According to our report, SAP projects last around 14.7 months, while Oracle projects take about 12 months. One possible reason that SAP projects take longer is because its clients are typically global and complex companies. These companies choose SAP because of its scalability and robust functionality. Global ERP projects naturally require a longer time commitment due to the number of locations and decisions about standardization vs. localization.

Operational Disruption

ERP implementations can cause operational disruptions, such as the inability to manufacture or ship products.

Disruptions that occur during SAP projects last about 128.5 days, while disruptions that occur during Oracle projects last about 121.7 days. This might reflect the fact that SAP works with large companies with complex, global operations. An operational disruption at a large company can affect multiple locations, which can take more time and effort to resolve.

To reduce the risk of operational disruption, companies should take a phased implementation approach. It’s also wise to conduct multiple conference room pilots before go-live.

Internal vs. External Resources

Resource allocation is one of the most common struggles for companies implementing enterprise software. While ERP vendors typically recommend at least eight to twelve full-time internal resources, this isn’t feasible for most companies. Many companies heavily rely on external resources from the vendor and systems integrator. Unfortunately, this increases implementation costs.

Companies implementing Oracle use slightly more internal resources than companies implementing SAP. In both cases, respondents reported that their team was almost an even split between internal and external resources.

Complex customization is a major reason why companies rely on external resources. Oracle is a flexible solution that typically requires simple customization and configuration that can be done in-house.

Role of ERP Software in Companies’ Digital Strategies

More than half of SAP customers reported that their ERP project played a significant role in their digital strategies. However, this was true for less than half of Oracle customers.

Oracle’s marketing strategy seems to focus on promoting specific modules, such as finance. This might attract more companies looking to automate particular processes and fewer companies looking to transform their entire operating model.

Summary of Results

SAP and Oracle both provide robust ERP systems that can transform your company. These benchmarks don’t prove one vendor is better than the other, but highlight challenges companies may face.

Diving deeper into these challenges, it’s apparent that they’re not caused by technical shortcomings. Both of these vendors provide value to companies that understand how enterprise resource planning software aligns with their goals.

The Final Decision: Oracle vs. SAP

Comparing Oracle and SAP requires an in-depth understanding of software capabilities, deployment options and vendor and product viability. An informed decision also requires business process reengineering and requirements definition prior to selection. Armed with this insight, a company can decide whether SAP, Oracle or another system altogether best fits their business needs.