Does your ERP "fit in" with your business systems?

This article is a continuation of our ERP Pyramid series where we explore the building blocks critical to a successful implementation of an Enterprise Resource Planning (ERP) system. In Chapter 6 we dig into the technology and data integrations for the ERP. 

Block 6 is the single most critical building block where all technologies and data integrate together to build and support the ERP.

It is here that all business master data (integrations with other enterprise systems) and business processes can be integrated into a consolidated ERP to make process automation and analytics possible throughout the organization. All integrations, regardless of the ERP vendor, require similar activities to get all the pieces working together smoothly.

So what work must be identified, planned and completed to integrate your ERP?

Manage Your Business’ Master Data

ERPs require accurate and timely business data. ERP implementations are in fact the best opportunity to identify/define, standardize and cleanup business data across the entire organization. This is an opportunity to simplify corporate data such as Chart of Accounts, Job Codes, Pricing, Asset Codes, & Inventory Items. The adage of garbage in, garbage out is very pertinent here, so this is the right time to do some serious house cleaning.

Getting this master data ready requires the following activities:

• Data Architecture – define an architecture for data processing and analytics that aligns with standards (internal or regulatory) and business needs
• Data Ownership – identify who in the business owns the data definition
• Data Transactions – define which business functions and processes should create, read, update or delete (CRUD) data in the lifecycle of the data
• Source of truth – ensure that the data’s source (whether the ERP houses the master data or uses a data feed) is clear and that it can be trusted

Whether the plan includes the mapping of legacy data via automated interfaces or one-time migrations into the ERP (by Extract, Transform and Load (ETL)), a clear and concise data design is critical to the long term success of an ERP implementation.

Integrating with Legacy Enterprise Applications

Organizations with legacy (or existing) systems need to ensure the business understands how those applications will co-exist with the ERP and when they are to be used in their work duties. 

Legacy systems with functionality being replaced by the ERP either need to have that functionality disabled or the entire system decommissioned. Allowing legacy systems to run in parallel (or in competition) with the ERP will cause business confusion and unnecessary operational costs. A deployment plan needs to include a transition away from these legacy systems or a clear rationale to support both.

Legacy systems that complement the ERP and continue to support the business needs must still align with the ERP. This alignment can be accomplished in a number of ways ranging from manual procedures and possible duplicate data entry all the way to automated and real-time interfaces with embedded data translations. Examples could be Point Of Sale (POS), cloud type services (e.g. CRM) or special manufacturing systems.

Configure and Automate the ERP

A complete configuration of the ERP is more than likely to take several attempts. It will require technical resources familiar with the nuances of the ERP software and its standard out-of-the-box capabilities. Many businesses believe they are not only unique in their market space, but also unique in their business processes. However it is more than likely that with configuration, the standard out of the box functionality of the ERP will work for most organizations. Maintaining a vanilla installation (restricting modifications as much as possible to recommended defaults) will greatly simplify upgrades down the line and reduce learning and training costs in the long term.

Configuring the ERP typically includes:

• Setup of operational parameters such as back-ups, redundancy, system interfaces
• Loading or migration of business data (E.g. Chart of Accounts, Organization Structure, Assets, historical)
• Initializing user access
• Enabling/Disabling functionality
• Configure functionality (e.g. Month Ends, Invoice Payment Terms, Approval Workflows)
• Defining any unique business rules
• Configure basic reporting 

There will be instances where business functions or groups believe the ERP will not work for them. This will lead to many temptations of customizing functionality into the ERP. Besides the added cost of customizing the ERP, there are some other later costs to consider:

• Special testing requirements
• Possible updates to the custom code later with every ERP upgrade
• Increased training costs with new hires for the special code
• Possible double standards between groups where one has custom code

There is certainly more work to getting the business aligned with a standard process, but this should be the goal. Deviation from the standard out-of-the-box functionality should be the last resort.

Reporting & Analytics

A major benefit of an ERP is improved visibility into how the business is operating. Whether the ERP provides reporting and analytics or feeds another reporting system, there needs to be hooks in the ERP for process control points and measurement of key performance indicators. Ideally, these should have been captured in the future state process mapping and enabled in the ERP.

In the ERP world there are no short cuts to any of the activities to integrate technologies and data together. Phased approaches to functionality and data are of course possible with a good plan.

How well does your ERP integrate with your enterprise and how do you keep it running?

In Chapter 7, we next look at unifying the ERP system and validating it through testing.

Allen Miko is a Senior Partner at Chrysylys