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Electric vehicles are sufficiently distinct from their gas-guzzling cousins that auto makers have the chance to toss out decades of legacy manufacturing systems. That can go for their IT infrastructure too. When General Motors named Namo Tiwari CIO of its internal startup BrightDrop, he decided to build an ERP from scratch rather than piggy-back on GM’s existing system.

GM set up BrightDrop in January 2021 to modernize first- and last-mile transport with an integrated ecosystem of electric vans and motorized pallets. By the time Tiwari arrived six months later, BrightDrop staff was already talking to parts suppliers and manufacturers, wanting to set up procurement processes.

“We were able to manage some of them through Excel and Word,” he says. “It was quite a handful, but one advantage we had was it wasn’t like we were dealing with millions or trillions of records in the first place.”

The race was on, though, to build the definitive system before those ad-hoc solutions took root. “We didn’t want to build a lot of ecosystem on Excel, Word and SharePoint because when you build the processes outside the tools then bring it back migrating historical data, it’s much more challenging,” he adds.

One of his first priorities, then, was to identify the key features the company required in an ERP system. In addition to the basics — the onboarding of suppliers, processing of invoices, and creating purchase orders already being done in Excel and Word — he needed something that could perform other important functions on his list, such as supply chain demand planning and financial forecasting.

Out-of-the-box thinking

“We were looking for something where we could leverage 90% or maybe 100% of out-of-box capability because we were just building the business processes,” he says. “Agility and speed is most important for us,” he says, emphasizing that he didn’t want to spend six months evaluating options either. So the process was short, but not cursory, he says.

The rest of GM runs on SAP, so although he evaluated other vendor offerings, this became the natural choice for Tiwari. But he wasn’t interested in using ECC, SAP’s legacy ERP offering. GM started the lengthy process of upgrading its ECC systems in June 2016, and by early 2019 had succeeded moving its global ledger to SAP S/4HANA for central finance.

He also wasn’t interested in having his small IT team — today the equivalent of 19 full-time staff serving almost 300 BrightDrop employees — manage racks of servers. “As soon as you hear about SAP ERP, it’s like, ‘Oh, it’s a gigantic elephant that requires tons of folks for IT operations,’” he says.

Instead, he chose to outsource these responsibilities, turning to SAP’s cloud-based offering. “With S/4HANA Cloud, and especially multi-tenant public cloud, you don’t have to deploy a lot of IT team to support this infrastructure,” he says.

That choice is in marked contrast to GM’s 2012 decision to insource IT operations wherever possible.

“I changed the whole dynamic here by going with the fully cloud solution,” he says.

Process implementation

BrightDrop’s status as a start-up also meant Tiwari could turn other things on their head too.

“Typically in IT,” he says, “you first map out all the business processes and then start implementing the tool, and for that you need to have people on the business side who will say, ‘This is how my business process works.’ In our case, we were hiring people and at the same time implementing.”

Choosing the public edition of S/4HANA Cloud means that BrightDrop gets the same version of the software as everyone else, and that configuration, rather than customization, is the key. That could have made his job difficult but, he says, because SAP already has so many customers in the auto industry, “SAP already knew that in automotive, this is how procurement happens,” and could offer an appropriate configuration right out of the box.

Internally, he had experience on his side too with product owners in the team with about 20 years of ERP or SAP experience —  people who know the technology and language to use when speaking with staff on the business side, and have seen SAP work in three or four other organizations before, giving them the confidence to put together a demo out of the box and tell users that’s how it’ll work.

“It wasn’t like a traditional ERP implementation where you’d write a bunch of documentation or business requirements, then go and build it,” he says. “It was kind of running parallel: building the processes while leveraging the out-of-box capability.”

That meant things could move quickly. “We started the project in the middle of last year, and then went live in February this year,” he says. That’s in stark comparison with the 30 months it took the parent company to migrate its global ledger.

Having the freedom to move at such speed is both liberating and terrifying. In one sense, he says, he felt empowered because he could move ahead without a lot of baggage. “But where I was a little bit nervous was that I didn’t know how the business processes might turn out,” he says. “People come and say, ‘This isn’t the way I’m used to. I want to do it this way,’ and that’s where your customization usually kicks in.”

In that scenario, many IT leaders are stuck with having to build a custom capability, adding to cost, but Tiwari’s approach was to look for other ways to match up workers’ desires with the out-of-the-box options available. So there was a lot of back and forth in the build process. “It was very interactive,” he says, with demos every week or so, rather than the IT team interviewing users about the requirements, then disappearing to return three months later with a solution that no longer met their needs.

Tiwari hasn’t built everything from scratch, though. For example, BrightDrop is still relying on GM’s central IT services for the HR management systems used to onboard staff and give them a gobrightdrop.com email address.

“Once they have that email, the way I’ve deployed my infrastructure, they’ll be able to connect to all my ecosystems using that address,” he says.

But as deliveries of BrightDrop’s electric vans begin, Tiwari needs to build out connections with the company’s network of dealers. “Some of them still use mainframes on their side of the house, and then my side is like 50 years ahead in the technology, so that’s my biggest challenge right now.”

Cloud Management, ERP Systems, IT Leadership, SAP

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At Melissa & Doug, a toy company whose mantra is “more play time, less screen time,” CIO Mike Macrie isn’t planning to take his colleagues’ screens away — but he is looking for ways for technology to better enable their creativity and remove drudgery. “My belief is that technology is a set of tools to help them express themselves, to empower them,” he says.

No matter where you work, he adds, “You never want to be in a role where you’re fighting the technology to get your daily job done.”

After a couple of years of change, however, there are still elements of that, he admits, but the leadership team is focused on improving its commitment to get employees the most modern tools in their hands to make their daily jobs as easy as possible. “We are seeing a tremendous difference in employee engagement,” he says.

One step in that direction is the replacement of Melissa & Doug’s homegrown ERP system, custom-built in Delphi, with a more modern SaaS platform.

Macrie has only been with Melissa & Doug for eight months, but he’s taken the time to learn where the Connecticut-based company was coming from, as well as where it’s heading. “The history was a very design- and creative-driven organization,” he says. “It was always about the children, and there wasn’t a lot of focus on the back office or supply chain,” he says.

The company is growing fast through online sales (in the US only for now) and international retail distribution, and also has operations in the UK and China. But the Delphi system was showing its age and the decision was taken a couple of years ago to look for a replacement, he says.

“We had challenges making all the international paperwork and transactions work across borders as we grew in volume,” he says. Getting to more flexible pricing was also proving difficult, as was offering real-time visibility into inventory for e-commerce operations.

Dropping Delphi

Continuing to build on the existing code base was out. “Trying to find Delphi coders isn’t an easy task,” he says. It was time to modernize the core ERP system.

The company evaluated a number of mid-market solutions, including Oracle NetSuite, but it was another Oracle product that won in the end: Oracle Fusion Cloud Apps.

There were several reasons for the choice. “It offered better international support and it better matched the company’s ambitions,” he says. “We didn’t want to be in a position where, as soon as we were finished implementing NetSuite, we had to start working on Fusion.” That turned out to be the right call because within a couple of years, they would have outgrown what NetSuite could have provided. And back-to-back migrations would certainly have put a strain on resources since Macrie’s IT team is a lean 24 serving around 700 employees globally with around 50 external consultants working on the Oracle Fusion implementation.

So a year into a three-year program, they have completed most of the financial implementation and all of the procurement implementation, and currently implementing the order to cash and warehouse management and inventory items, which are really the core of their distribution business, he says.

The changes in finance specifically are already helping with his goal of reducing drudgery. “Take the financial close process,” he says. “It was very manual in nature, a lot of spreadsheets. Now using Oracle’s ERP has probably cut the number of steps down by 75% for the accounting department.”

Similar changes are afoot in order processing as well, where a lot of paperwork has been removed, and Macrie is looking forward to the day when warehouse staff will be equipped with handled scanners rather than walking around with sheafs of paper. “[These are] all improvements that we think are going to provide significantly more efficiency to us as well as more employee satisfaction,” he says.

Communicating change

As you’d expect with such a major transformation, Macrie and his team are, internally and with their partners, constantly communicating at the executive level to all employees about why they’re doing it, what they hope to accomplish, and how it’s going to support growth objectives. Plus, there’s specific training associated with the changes, especially for staff working in the warehouses, in English and Spanish in the US, and in Mandarin in China, he says, “We continually work with them to get their feedback on that training: How do we make it better and more efficient; how do we get people up to speed on the new systems and platforms faster.”

It’s not all IT pushing through changes, though. Sometimes they are being pulled.

“As people’s eyes open up to what’s possible, they quickly start pulling through: Here’s how you can get another 10% efficiency, this is how we get another 5%, and all those ideas start flowing in,” he says. “It’s been a really great surprise for us how engaged the workforce can be to help us continually improve, whereas in the past they might have felt really restricted by our systems and not as open with us on how we can all work together to improve the company.”

Although the decision to adopt Oracle Fusion applications was made before Macrie arrived at Melissa & Doug, his experience so far has changed his mind about the Oracle offering. “Five years ago I would’ve said the world’s not ready for the midmarket to move into Fusion apps,” he says. “But if you can make it work in your organization and you’re bold enough to take the risk, it’s worth taking now since so much of the technical risk has been removed with cloud and SaaS.”

Even so, the company isn’t going all-in on Fusion apps; it’s adopting Manhattan WMS rather than Oracle Warehouse Management Cloud, and recently moved its e-commerce operations to Shopify Plus — a prescient move given the turmoil surrounding Oracle Commerce Cloud. And following a wave of layoffs in the Commerce Cloud team, some analysts figured Oracle had chosen to sunset the product, but Oracle later claimed it was shifting responsibility to better integrate it with other Fusion apps. If that’s so, then it may yet win Macrie over. “We will continue to be evaluating them over our needs as we move forward,” he says.

CIO, Cloud Management, ERP Systems, IT Leadership, Oracle, SaaS

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With enterprise resource planning (ERP) and customer relationship management (CRM) applications at the heart of many a company’s operations, the consequences of a failed software rollout can be serious, including shareholder lawsuits and financial meltdown.

But after a spate of high-profile failures, there are signs that vendors and customers are working hard to ensure the success of their ERP projects. Panorama Consulting Solutions, which regularly surveys businesses on the outcomes of their ERP projects, shows in its 2022 report that 81% of projects met ROI expectations a year or more after go-live.

However, the measure of success has been historically at odds with the number of projects said to be overrunning or underperforming, as Panorama has noted that organizations have lowered their standards of success.

It may be, too, that companies wish to avoid the reputational damage that comes from failure, and instead prefer to redefine success as whatever they get. Sometimes the only sign something has gone wrong is when the parties head to court — and the full details of the dispute rarely come out.

But however success is defined, we’ve assembled here some dramatic ERP flops from over the years and tried to glean wisdom from the wreckage.

1. Mission Produce: This avocado will self-destruct in five days

Mission Produce packs, ripens, and distributes avocados all over the world, and prides itself on its ability to deliver just-ripe avocados year-round. In November 2021 it turned on a new ERP system intended to support international growth with improved operational visibility and financial reporting capabilities.

Then everything went pear-shaped, and suddenly Mission no longer knew for sure how many avocados it had on hand, nor how ripe they were, with many of them ending up unfit for sale. It had to buy in fruit from other suppliers to meet its delivery commitments, taking a hit to margins. And on top of that, there were delays in its automated customer invoicing.

“Despite the countless hours we spent planning and preparing for this conversion, we nevertheless experienced significant challenges with the implementation,” CEO Stephen Barnard told investors with delightful understatement. “While we weren’t naïve to the risk of disruption to the business, the extent and magnitude was greater than we anticipated.”

The company was forced to develop new processes to keep information flowing around the business, and hire a third-party consultant to sort out the ERP system at a cost of $3.8 million over the following nine months.

That’s nothing, though, to the hit Mission took to its earnings. Attributing an exact cost to the ERP failure is difficult, as the company faced additional challenges from a poor avocado harvest in Mexico around the same time. However, it said that the $22.2 million year-on-year drop in gross profit for the quarter following the go-live was primarily due to the ERP problem.

2. Invacare faces long wait and increased cost for health care ERP intervention

Invacare, a manufacturer of medical devices, has put its ailing SAP upgrade into a coma, temporarily stopping the project — but not the bills.

The company’s North American business unit, which accounts for 40% of its revenue, was the first to move to the new system in October 2021. It didn’t go well, initially limiting online ordering and causing delays in accounts receivable, although things were getting back to normal by the end of the quarter.

ERP pains are a recurring illness for Invacare, which also had problems with an earlier upgrade between 2005 and 2009.

The company is busy restructuring in the wake of the pandemic, simplifying its product lines and adapting its supply chain to the new reality. That’s made it hard for the team working on the ERP upgrade to keep up, so early in 2022 Invacare decided to put the project on hold.

“We wanted to pause on investing in the current footprint, which would only be redone based on how the footprint is revised. And we think that’ll take a couple of quarters to resolve,” chairman, president, and CEO Matt Monaghan told investors in August 2022. “Once we have that template created in North America, that will be deployed globally.”

Even though work on the ERP project has stopped, the company still has to keep paying its systems integrator the same monthly fee, he said.

The ongoing delays and costs appear not to have pleased Invacare’s board, which two weeks later nudged Monaghan out saying the company needed “a change in leadership to oversee the successful execution of Invacare’s business transformation.”

If there’s one thing CIOs can take away from Invacare’s experience, it’s to make sure systems integrators’ contracts don’t require them to be paid when there’s nothing for them to do.

3. Protective packaging firm’s profit takes a knock from ERP

Packaging firm Ranpak’s SAP migration was far from a disaster — it took less than a year and was delivered on time and to budget — but nevertheless initially led to disappointing results.

The move to a cloud-based ERP system came several years into a broader digital transformation at Ranpak.

The company rolled out the new ERP in January 2022, coinciding with its new fiscal year. After a period of planned downtime, “We experienced inefficiencies as we got up the learning curve in the new system,” CEO Omar Asali said in a presentation of first-quarter results.

The software roll-out coincided with Russia’s attack on Ukraine, making it harder for the company to respond to supply chain disruption and increasing input costs. That meant a decline in sales across the board, inefficiencies in processing and shipping, and an inability to increase prices in line with costs, leading to a $5 million drop in net profit in the quarter.

Some of the software issues remained unresolved into the second quarter, and by the end of the third quarter the company had run up $6.5 million in implementation costs. But in early November Asali said the new ERP system had started to deliver better and faster measurement of productivity and KPIs.

4. Snack manufacturer bites off more than it can chew with ERP change

J&J Snack Foods’ ERP problems stem not from a modern system but an older one — Oracle’s JD Edwards.

J&J has long used JD Edwards in its frozen beverages division and decided to move the entire company to the same platform. Unusually, the company decided not to switch ERP systems after closing its books for the year, but in the middle of its second fiscal quarter. For J&J, that was in February, usually a quiet period for snack sales.

February 2022 turned out to be busier than usual, although not for the best of reasons.

“The implementation created unforeseen temporary, operational, manufacturing and supply chain challenges that affected the performance of our food service and retail segments during the quarter,” CEO Daniel Fachner told investors in May. By then, though, the problems were largely resolved and the company was “just fine-tuning a few pieces of it,” he said.

Those challenges meant J&J lost out on $20 million in sales and $4.5 million in operating income. It would’ve been a banner quarter if not for the ERP disruption: The company’s frozen beverages segment, already running JD Edwards, saw sales rise 50%.

5. Leaseplan: A monolith unfit for the emerging digital world

After an initially successful SAP deployment at its Australian subsidiary, in 2016 vehicle management company Leaseplan commissioned HCL Technologies to develop a new SAP-based Core Leasing System (CLS) that was to be the heart of the group’s IT transformation across 32 countries.

In early 2018, auditors warned of exceptions with respect to user access and change management in CLS, and recommended improvements to IT controls and governance as more countries were expected to migrate to CLS that year. By March 2019, things were slipping. The auditors noted that rollout of “the first phases” of CLS was now expected that same year, and added recommendations on managing outsourcing risk to their earlier warnings.

Leaseplan abandoned CLS months later, writing off €92 million ($100 million) in project costs, and millions more in related restructuring and consultancy fees. It managed to salvage just €14 million it had spent on separately developed IT modules that it expected would generate economic benefits in the future.

The problem, Leaseplan said in its second-quarter results, was that CLS would “not be fit for purpose in the emerging digital world in which [it] operated.” The monolithic nature of the SAP system “hindered its ability to make incremental product and service improvements at a time of accelerated technological change,” according to Leaseplan.

Instead, the company planned to build a modular system using best-of-breed third-party components alongside its existing predictive maintenance, insurance claim and contract management systems. It expected this to be more scalable and allow incremental product deployments and updates.

6. MillerCoors: Fighting in public, then making nice

In 2014, MillerCoors was running seven different instances of SAP’s ERP software, a legacy of the years of booze industry consolidation that had produced the alcohol behemoth. The merged company hired Indian IT services firm HCL Technologies to roll out a unified SAP implementation to serve the entire company. Things didn’t go smoothly: The first rollout was marked by eight “critical” severity defects, 47 high-severity defects, and thousands of additional problems recorded during an extended period of “go-live hypercare.” By March 2017 the project had gone so far south that MillerCoors sued HCL for $100 million, claiming HCL had inadequately staffed the project and failed to live up to its promises.

But the IT services company didn’t take that lying down. In June 2017, HCL countersued, claiming MillerCoors was in essence blaming HCL for its own management dysfunction, which HCL said was at the real cause of the failure. Outside observers noted that the wording of the contracts, as outlined in the lawsuits, seemed to be based on a pre-existing general services contract between the two companies, and left plenty of room for error. Then, in December 2018, the two companies resolved the dispute “amicably,” having apparently used the courts as a venue for a high-stakes, public negotiating session.

7. Revlon: Screwing up badly enough to enrage investors

Cosmetics giant Revlon was another company that found itself needing to integrate its processes across business units after a merger — in this case, it had acquired Elizabeth Arden, Inc., in 2016. Both companies had positive experiences with ERP rollouts in the past: Elizabeth Arden with Oracle Fusion Applications, and Revlon with Microsoft Dynamics AX. But the merged company made the fateful choice to go with a new provider, SAP HANA, by December 2016.

Was HANA an undercooked product doomed to fail? Maybe. What’s clear was that the rollout was disastrous enough to essentially sabotage Revlon’s own North Carolina manufacturing facility, resulting in millions of dollars in lost sales. The company blamed “lack of design and maintenance of effective controls in connection with the … implementation” for the fiasco in March 2019. It also noted that “these ERP-related disruptions have caused the company to incur expedited shipping fees and other unanticipated expenses in connection with actions that the company has implemented to remediate the decline in customer service levels, which could continue until the ERP systems issues are resolved.” The crisis sent Revlon stock into a tailspin that, in turn, led to the company’s own stockholders to sue.

8. Lidl: Big problem for German supermarket giant

It was supposed to be the marriage of two great German companies: SAP, the ERP/CRM superstar, and Lidl, a nationwide grocery chain with €100 billion in annual revenue. The two began working together on a transition away from Lidl’s creaky in-house inventory system since 2011. But by 2018, after spending nearly €500 million, Lidl scrapped the project.

What happened? The scuttlebutt centered on a quirk in Lidl’s record-keeping: They’ve always based their inventory systems on the price they pay for goods, whereas most companies base their systems on the retail price they sell the goods for. Lidl didn’t want to change its way of doing things, so the SAP implementation had to be customized, which set off a cascade of implementation problems. Combine this with too much turnover in the executive ranks of Lidl’s IT department, and finger-pointing at the consultancy charged with guiding the implementation, and you have a recipe for ERP disaster.

9. National Grid: A perfect storm

National Grid, a utility company serving gas and electric customers in New York, Rhode Island, and Massachusetts, was facing a difficult situation. Their rollout of a new SAP implementation was three years in the making and already overdue. If they missed their go-live date, there would be cost overruns to the tune of tens of millions of dollars, and they would have to get government approval to raise rates to pay for them. If they turned on their new SAP system prematurely, their own operations could be compromised. Oh, and their go-live date was November 5, 2012 — less than a week after Superstorm Sandy devastated National Grid’s service area and left millions without power.

In the midst of the chaos, National Grid made the fateful decision to throw the switch, and the results were even more disastrous than the pessimists feared: some employees got paychecks that were too big, while others were underpaid; 15,000 vendor invoices couldn’t be processed; and financial reporting collapsed to the extent that the company could no longer get the sort of short-term loans it typically relied on for cashflow. National Grid’s lawsuit against Wipro, its system integrator, was eventually settled out of court for $75 million, but that didn’t come close to covering the losses.

10. Worth & Co.: Interminable rollout leads to a lawsuit at the source

Worth & Co. is a Pennsylvania-based manufacturing company that just wanted a new ERP system, and after hearing several pitches in 2014, decided to hire EDREi Solutions to implement Oracle’s E-Business Suite. The first go-live date was November 2015. But things began to slip. The deadline was pushed back to February 2016. At that point, Oracle demanded that Worth & Co. pony up $260,000 for training courses and support contracts. But 2016 came and went and still no rollout. In 2017 Worth & Co. jettisoned EDREi for another integrator, Monument Data Solutions. Another year was spent attempting, without success, to customize Oracle’s suite for Worth & Co.’s purposes.

Finally, after the project was abandoned, Worth & Co. did something novel in February 2019: they sued not their IT vendor, but Oracle, specifically citing the $4.5 million they paid the software giant for licenses, professional services, and training. The lawsuit is still ongoing.

11. Target Canada: Garbage in, garbage out

Many companies rolling out ERP systems hit snags when it comes to importing data from legacy systems into their shiny new infrastructure. When Target was launching in Canada in 2013, though, they assumed they would avoid this problem: there would be no data to convert, just new information to input into their SAP system.

But upon launch, the company’s supply chain collapsed, and investigators quickly tracked the fault down to this supposedly fresh data, which was riddled with errors — items were tagged with incorrect dimensions, prices, manufacturers, you name it. Turns out thousands of entries were put into the system by hand by entry-level employees with no experience to help them recognize when they had been given incorrect information from manufacturers, working on crushingly tight deadlines. An investigation found that only about 30% of the data in the system was actually correct.

12. PG&E: When ‘sample’ data isn’t

Some rollouts aim to tackle this sort of problem by testing new systems with production data, generally imported from existing databases. This can ensure that data errors are corrected before rollout — but production data is valuable stuff containing a lot of confidential and proprietary information, and it needs to be guarded with the same care as it would in actual production.

In May 2016, Chris Vickery, risk analyst at UpGuard, discovered a publicly exposed database that appeared to be Pacific Gas and Electric’s asset management system, containing details for over 47,000 PG&E computers, virtual machines, servers, and other devices — completely open to viewing, without username or password required. While PG&E initially denied this was production data, Vickery says that it was, and was exposed as a result of an ERP rollout: a third-party vendor was given live PG&E data in order to fill a “demo” database and test how it would react in real production practice. They then failed to supply any of the protection a real production database would need.

Surviving an ERP rollout

So what have we learned? Well, don’t fall afoul of regulators, make sure your data is secure and clean, and document your processes before you move to a new platform — all good advice for any rollout or any other big IT project, really.

More on ERP:

11 tips for selecting and implementing an ERP system

10 most powerful ERP vendors today

5 benefits of an ERP system review

CRM vs. ERP: What’s the difference and which do you need?10 common ERP mistakes to avoid

Enterprise Applications, ERP Systems, IT Leadership, Outsourcing, Project Management Tools

Posted on Posted in Digital transformation, General topics Tagged with , , , , , , , ,

It wouldn’t be far-fetched to call ERP (enterprise resource planning) the brain of an organization’s IT infrastructure. After all, an ERP system streamlines, standardizes, and integrates a wide range of vital business processes across diverse business functions.

Implementing an ERP solution ranks among the most capex-intensive projects any IT leader will undertake. In addition to substantial investments, the solution has the potential to impact all strategic business units of a company. It is, therefore, imperative for a CIO to follow best practices for deploying an ERP solution and then keep a close watch on the trends shaping it going forward.

Here’s a look at how the ERP category is evolving as an enterprise-wide solution and how these trends will impact IT leaders.

Customization gives way to standardization

The traditional practice of enterprise technology leaders customizing an ERP solution to meet their specific enterprise or business needs is giving way to implementing an off-the-shelf solution. A key driver for this is the steep resource cost in keeping customized implementations apace with the latest features — a cost many CIOs forgo in favor of stagnancy, at the risk of falling behind.

“There are regular updates to the ERP, which could be in the form of features and functionalities that are pushed into the live environment. If there is a high level of customization, a CIO will have to tweak the update in context of the customization. This is cumbersome and leads to additional cost. By going in for a standardized ERP solution, IT leaders can avoid these issues, and most are following suit,” says Abhishek Mundra, practice director for enterprise platform services at research firm Everest Group.

Implications for CIOs: Besides avoiding cost and complexity, deploying an off-the-shelf ERP solution also helps in accelerating time to market and making the business agile. “Earlier, because of the customization, the implementation lifecycle used to take anywhere between four to five years. With an out-of-the-box solution, implementation now takes just six months to one year,” Mudra says, adding that IT leaders using off-the-shelf solutions can better spend their time modernizing processes instead.

 

Best-of-breed solutions overtake the enterprise-wide approach

Earlier CIOs used to deploy an ERP solution and gradually extend it to the various strategic business units across the enterprise. However, rapid digitization and the SaaS revolution are pushing IT decision-makers to adopt a different approach.

“Enterprise technology leaders are aggressively undertaking digital initiatives such as marketing automation, customer experience, social media marketing, and HR transformation,” Mundra says. “However, in these areas, cloud ERP solutions are still behind in terms of functionalities compared to their on-premises versions. So, for a core function such as finance, CIOs go for a cloud ERP solution from a top vendor, which meets their requirements but for other areas, they adopt best-of-breed point solutions.”

Implications for CIOs: In making the most of best-of-breed SaaS solutions, IT leaders must shift their emphasis from implementation to integration. To get the best of both worlds —an ERP for their core functions and myriad targeted solutions for vital line-of-business needs, such as Workday for HR or a Salesforce for CRM — CIOs must undertake process modernization and take on more of an orchestrator role.

 

Integration takes center stage

With the emergence of next-generation technologies such as IoT, analytics, and AI, enterprises are looking to gain business advantages from them. Taking a cue, leading ERP vendors are aligning with this trend by integrating their solutions with such emerging technologies, and IT leaders are following suit.

“With the availability of web services and JSON, it has become easy to integrate an ERP solution with other satellite applications,” says Achin Sharma, vice president of IT at logistics company Movin India.

Abhay Bapna, CIO at fast-moving consumer goods company Adani Wilmar, agrees: “We have thousands of sensors in our plants and each sensor sends out data every 15 seconds. With ERP moving to the cloud and integrating with technologies such as real-time analytics, huge volumes of data can now be processes on the fly.”

Implications for CIOs: Integration of ERP with other technologies has eased the pains of CIOs to a large extent. For instance, the finance module is a key component of an ERP solution. In the absence of real-time data, at the end of each month, it took a few days to run the numbers and ultimately carry out management reporting. Now with near real-time replication, CIOs can close this month-end activity the very next day, making the entire process seamless and time effective. Similarly, in healthcare, electronic medical records are getting integrated with the ERP solution, providing better insights to healthcare practitioners.

 

The rise of industry-specific solutions

Given the diverse needs of each vertical, a one-size-fits-all approach is failing to meet the expectations of business and technology leaders. This is giving rise to ERP platforms that offer functionalities catering to specific business verticals.

“Industry ERP solutions are increasingly finding favor among CIOs. There are emerging vendors who have found their niche verticals. For instance, Infor has an ERP solution for the manufacturing vertical; Salesforce offers its ERP for healthcare, banking, and financial services verticals; and ServiceNow is strong in the telecom and public sector space,” says Everest Group’s Mundra.

Implications for CIOs: Industry cloud ERP solutions enable CIOs to get insights into the best practices being followed by their peers. Also, having a broad base of customers offers a better probability of the solution provider investing in product development and innovation.

 

The move to cloud

Enterprise technology leaders are replacing their legacy, on-premises ERP solutions by switching to the cloud. While the advantages of leveraging cloud were already acknowledged, the pandemic further highlighted its value as it enabled employees to work from anywhere.

“Currently about 60% to 65% of the ERP market in India is still on-premise. This will change over the next three to four years when cloud will surpass on-premise with about 55% to 50% deployments on it. This trend is fast catching up,” says Sheetanshu Upadhyay, research head at global market research firm Strategic Market Research.

Gartner defines the market for cloud ERP as a market for application technology. According to the technological research and consulting firm, within addressable market segments, enterprise IT spending on public cloud will overtake spending on traditional IT in 2025. It predicts that almost two-thirds (65.9%) of spending on application software will be directed toward cloud technologies in 2025, up from 57.7% in 2022.

Implications for CIOs: By taking their ERP solutions to the cloud, CIOs can benefit from lower costs, new functionality, mobility, simpler deployment, elasticity, less need for internal IT resources, and the ability to easily add users and functions to accommodate business growth.

ERP Systems

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Oracle on Wednesday said that it is opening up its ERP applications platform to customer developers and partners, unveiled new B2B commerce services, and announced a variety of additions to its enterprise planning management (EPM), supply chain management (SCM) and human capital management (HCM) Fusion Cloud offerings.

The updates, which were announced at the company’s ongoing CloudWorld 2022 conference, are meant to not only to enhance its ERP offerings for customers, but also  compete with rivals such as Microsoft, SAP, Infor and IFS.

These announcements come at a time when competition in the ERP market is heating up.

By 2024, at least 50% of existing customers of large ERP vendors will evaluate multiple vendors, rather than automatically adopt the latest version of their incumbent ERP suite, according to a Gartner report.  

Oracle’s Fusion Cloud service, the market research firm noted, is targeted toward upper-midsize and large enterprises.

The company, which has been adding incremental updates in the past twelve months, has been baking in more automation and analytics into its Fusion Cloud ERP and EPM suite.

Oracle opens app platform to developers

Now, as enterprises look to add applications to their ERP suite, Oracle said that it was opening up its applications platform to allow customer developers and partners to design their own applications for their ERP systems.

“With Oracle Applications Platform, we’re giving customers and partners access to the same tools that Oracle’s own development organization uses to enable them to extend and personalize our applications to fit their unique needs,” Jenny Lam, senior vice president of user experience design at Oracle, said in a statement.

The platform consists of several tools, including the company’s Redwood UX Building Blocks, a low-code development suite, a search and recommendation engine, a digital assistant, and analytics features.  

Oracle describes the UX Building Blocks as a software development toolkit that allows developers to modify and assemble UX (user experience) components without the need for lengthy software development projects, thereby saving time.

The toolkit resources include Redwood reference application, page templates, a component repository, reference architecture, and design guides.

The search component of the platform allows developers to integrate self-tuning search capabilities in applications, the company said, adding that self-tuning is achieved by the incorporation of machine learning in the system.

The components of the platform include a machine-learning based recommendation engine for developers, allowing them to create user interfaces that adapt to user needs, according to predictions of user behavior.

Further, the platform comes with Oracle’s Visual Builder Studio, a low-code development platform, and analytics components from Oracle Analytics Cloud, to allow developers to embed data visualizations within their applications.

B2B service automates transactions among Oracle customers

Claiming to reduce the cost of doing business, Oracle has added a set of services, dubbed B2B Commerce, designed to integrate and automate business-to-business transactions.

The company’s strategy is to bring together most of its ERP customers and build transactional connectivity in between them, if possible, said Natalia Rachelson, group vice president of outbound product management in the cloud applications division at Oracle.

In order to launch the new set of services, which will be offered via the Fusion Cloud ERP suite, the company has partnered with JP Morgan and FedEx.

“Oracle B2B Commerce will combine direct connectivity between Oracle Cloud ERP and service providers ranging from J.P. Morgan Payments and FedEx to other financial services firms, insurance companies, and delivery services with a unified data model and secure workflows to digitize the entire B2B commerce process for mutual customers,” Oracle said in a statement.

Oracle will work with FedEx partnership to offer an integrated logistics solution that they claim will eliminate the need for custom integrations and provide features including real-time rate quoting as well as shipping and tracking capabilities.

More advanced capabilities that look to reduce delivery costs and improve performance are already in the works, Oracle said.

JP Morgan and Oracle also expect to offer a mobile application for employee reimbursements and an integrated travel card.

Meanwhile, Oracle will work with JP Morgan to offer integrated banking services that they say will not only reduce time for deployment but also add capabilities such as understanding real-time cash positions and predictive cash forecasting.

HCM gets talent acquisition updates

At a time when enterprises are dealing with issues around skilled labor, Oracle has introduced a new talent acquisition feature, dubbed Oracle Recruiting Booster, that allows enterprises to improve engagement with candidates, build communities of top talent and personalize the hiring process, the company said.

Recruiting Booster, which is an addition to the existing Oracle Fusion Cloud Recruiting tool offered under the HCM suite, adds capabilities for hiring-event promotion, two-way messaging with candidates, an interview management streamlining tool and a digital assistant.

The digital assistant includes features that allow candidates to sign up for and check into recruiting events, receive job recommendations based on preferences and qualifications, complete job applications, answer pre-screening questions, and schedule interviews.

The assistant can also conduct candidate surveys to help recruiters better understand overall sentiment, the company said, adding that the interview management tool can identify ideal times for interviews that align with the hiring team’s availability.

In April, the company launched a new employee experience platform, dubbed Oracle ME, under its Fusion HCM suite to help enterprises with workforce challenges such as attrition in the wake of the Great Resignation and the pandemic.

Automation helps prevent asset downtime

At a time when enterprises are looking at ways to deal with economic headwinds, Oracle has launched a new service to automate the prevention of asset downtime, specifically targeted toward high tech and manufacturing industry sectors.

The service, which will be offered as part of Oracle Cloud Fusion Applications suite, will help enterprises predict and prevent asset downtime to reduce costs, and optimize service efficiency, the company said, adding that the service was pre-integrated with the Fusion SCM suite.

The services includes proactive monitoring and maintenance, automated field service capabilities, and capabilities for depot repair automation.

Under the depot repair automation feature, the service automatically generates repair estimates and authorizations while creating work orders and following the workflow to purchase new parts.

AI updated for Unity customer data suite

Oracle also said that it was adding 15 baseline AI models to its Unity Customer Data Platform (CDP), an offering inside Oracle’s Fusion Customer Experience suite.

As part of the update, Unity will blend these AI models with industry-specific data to deliver highly personalized, industry-specific analysis capabilities across sectors such as automotive, consumer packaged goods, communications, financial services, healthcare, and high-tech.

In May, the company had enabled the integration of data from Unity into its customer service offering, dubbed Oracle Service.

Oracle gave the following information for availability of the Fusion Cloud updates: the apps platform development capabilities, the Recruiting Booster, asset services for high tech and manufacturing, and the Unity updates are generally available now; the B2B commerce services will be available “soon.”

(This story has been updated with details for availability of the new Oracle software.)

Cloud Computing, Developer, ERP Systems

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NetSuite is adding a host of new features and applications to its cloud-based NetSuite ERP suite, in an effort to enhance its automation capabilities and compete with midmarket rivals such as Epicor, IFS, Microsoft Dynamics, Infor, and Zoho in multiple domains including HR, supply chain, banking, finance, and sales.

The new capabilities were announced Wednesday at the company’s annual SuiteWorld conference in Las Vegas.

NetSuite and other ERP software providers have been focusing on automation as CIOs and other C-suite leaders look to navigate challenges such as labor shortages and supply chain issues caused by geopolitical crises and the pandemic, said R Wang, principal analyst at Constellation Research.

Enterprises want to cut down the number of employee hours spent on certain processes, and so are asking for automation, Wang said, adding that automation frees up resources to focus on strategic areas and can cut down errors in repetitive tasks.

NetSuite differentiates itself from its corporate parent, Oracle, by focusing on customers in the midmarket segment that may not be big or complex enough to require, or may not be ready to implement, many separate applications.    

“The addition of the new tools feeds directly into the expansion of the suite strategy as most NetSuite customers prefer to keep all software solutions inside NetSuite,” Wang said.

NetSuite uses the SaaS model, with customers paying a subscription fee based on number of users.  NetSuite ERP is a suite of applications that work together, reside on a common database, and are designed to automate core enterprise business processes. The ERP suite is  available on Oracle Cloud Infrastructure; companies need various tools and connectors to run the system on infrastructure from other cloud providers.

New tools automate routine HR tasks

In an effort to automate some human resources tasks such as wage calculations and attendance tracking, NetSuite has added a workforce management software suite to its HR application, SuitePeople. The software includes tools that can help schedule shifts, calculate labor and operational metrics, and record employee engagement.

A new visual scheduling tool, according to NetSuite, will allow companies to eliminate the use of standalone scheduling applications or spreadsheets.  It also enables teams to use a combination of forecasts, employee schedule templates, labor costs, and labor deployment models to build a staffing plan.

In order to automatically track attendance, the management suite of tools comes with a SuitePeople Time Clock that gives employees various capabilities, available via mobile devices, to record time and attendance. Time Clock comes with options for photo capture and biometric fingerprint verification that eliminate the risk of employees logging in and out of work on behalf of other employees, NetSuite said.

In addition, SuitePeople’s now can also automate wage calculations, as data from other tools such as Time Clock and scheduler can flow directly into the payroll tool for processing.

The SuitePeople Workforce Management suite is presently available in the US, Canada, Australia and New Zealand.  Information on timing of the rollout in other geographies was not immediately available.

Mobile app enhances warehouse operations

NetSuite has also introduced a new mobile application, NetSuite Ship Central, as part of its warehouse management system (WMS) software suite. WMS software is typically architected to optimize warehouse tasks such as manpower allocation and inventory control.

The mobile application, which can also be installed on a kiosk device, is expected to minimize shipping costs and transit times, NetSuite said.

NetSuite Ship Central is being sold now in the US and will be available worldwide in November, the company said.

Automation speeds accounts payable

Looking to help enterprises process bills and pay vendors faster from within NetSuite’s ERP platform, the company has introduced a new tool, Accounts Payable (AP) Automation, inside its SuiteBanking application.

The tool can capture vendor bills using machine learning-based object detection and optical character recognition (OCR), the company said, adding that it comes with a bill-matching and approvals feature to avoid overpayment or fraudulent or duplicate payments.

Automated bill matching ensures vendor bills are two- or three-way matched with the associated purchase orders to ensure details such as unit pricing, quantity, and totals are accurate, NetSuite said.

The new tool comes with a vendor payment automation feature in partnership with HSBC Bank, the company added. This partnership allows enterprises to access payment options such as checks or virtual credit cards, among others.

AP Automation also offers payment reconciliation, designed to improve the accuracy of accounting with the help of a rules engine that matches and reconciles virtual credit card charges while flagging discrepancies for further review by accounting staff. 

“Having core account aspects within the ERP gives the user the opportunity to incorporate all the other data flows within the organization into their accounts payable planning and accounts payable strategy. Using one window to see the entire spend workflow and ERP data saves time and reduces errors,” said Kevin Permenter, research director at IDC.

The software is currently available in the US, and Oracle is offering free implementation, no charges for bill scanning, plus a 50% discount on the subscription fee to its first 1,000 customers for AP Automation.

CPQ tool streamlines sales process

NetSuite also introduced a new add-on sales application, NetSuite Configure, Price and Quote (CPQ). The software, according to the company, will help enterprise sales teams configure, price and quote complex products accurately and reliably, directly from with the NetSuite ERP.

While the guided selling feature is designed to allow enterprises to find the exact products and services needed from thousands of SKUs by providing an e-commerce-like catalog experience and filtering tools, the configurator feature allows enterprises to save time spent on reworking orders by applying customizable rules that ensure every configuration, across product and service features, is correct.

The add-on tool, which is priced separately from the core NetSuite ERP system, is currently being offered only in the North America region and includes features such as a proposal generator, bill of materials calculator and e-commerce integration.

ERP Systems

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In a push to continue its growth momentum, NetSuite recently took a leaf out of Oracle’s  playbook to reach more cloud ERP customers, starting referral rewards and association-buying programs.  Several months after the launch of the programs, they appear to be having an effect, according to NetSuite.

The programs from NetSuite, which was acquired by Oracle for $9.3 billion in 2016, are similar to its corporate parent’s Support Rewards program, which offers enterprises deals on support costs if they reach a certain cloud infrastructure spend.

“We launched these programs as we’re looking to grow. We’re continuously looking at how can we find new ways to reach folks that we’re not talking to today,” said Ranga Bodla, vice president of field marketing and engagement at NetSuite.

Now, three months after the programs were launched, the company has seen a 20% jump in leads when compared to the same three months a year back, according to Bodla. In addition, he said, the referral programs have accounted for 9% of annual recurring revenue (ARR) from new customers during the three-month period.

The new revenue is fueling a business that already appears to be on an upward trajectory.  In total, NetSuite ERP cloud revenue was up 30% in constant currency terms for the company’s first quarter of its fiscal year, said Oracle CEO Safra Catz during an earnings call earlier this month.

The NetSuite referral program, dubbed SuiteReferral, offers rewards and other benefits to enterprises that invite peers to join the NetSuite community.

SuiteReferral program offers discounts

SuiteReferral participants will receive a referral fee equivalent to 10% of the new customer’s first year license, the company said, adding that more referrals will lead to benefits such as discounts on training as well as access to NetSuite’s Learning Cloud Support and SuiteGurus.

SuiteGurus, according to the company, is a cohort of NetSuite Support subject matter experts who can provide technical support for various NetSuite product areas including supply chain management and manufacturing, receivables and payables management, and the SuiteCommerce and SuiteCloud platforms.

There are three categories of memberships (bronze, silver and gold), depending on the number of referrals in a year, with a growing list of benefits, the company said.  

The other marketing initiative—the NetSuite Associations and Buying Groups Program—is aimed at associations comprised of groups of businesses.

“This new initiative will provide access to an engaged and growing number of businesses and valuable benefits through educational events, networking opportunities, and exclusive group discounts,” Bodla said.

Some of the buying groups already enlisted in the program include US associations such as  the Nationwide Marketing Group, the Independent Laboratory Distributors Association (ILDA), and the National Association of Wholesale Distributors (NAW).

The two new programs, according to Constellation Research’s principal analyst Ray Wang, are the company’s first and most explicit effort to continue its growth momentum in a cost-effective manner.

“Referral programs by partners drive down customer acquisitions costs and are much more qualified leads,” Wang said, adding that NetSuite’s buying groups channel strategy can scale out if they have the right buying groups.

NetSuite is sold primarily to midmarket enterprises, but has a wide global footprint, an analysis from Gartner showed.

“Oracle NetSuite’s offering should be considered by midsize product-centric organizations that are seeking a single-vendor solution,” the market research firm wrote.

The new rewards programs, according to Wang, will help NetSuite as there is an intense battle for lucrative midmarket customers.

Currently, NetSuite has over 30,000 customers compared to over 28,000 customers at this time last year, according to Bodla. The company had 12,000 customers when it was acquired by Oracle in 2016.

ERP Systems

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ERP definition

Enterprise resource planning (ERP) is a system of integrated software applications that manages day-to-day business processes and operations across finance, human resources, procurement, distribution, supply chain, and other functions. ERP systems are critical applications for most organizations because they integrate all the processes necessary to run their business into a single system that also facilitates resource planning. ERP systems typically operate on an integrated software platform using common data definitions operating on a single database.

ERPs were originally designed for manufacturing companies but have since expanded to serve nearly every industry, each of which can have its own ERP peculiarities and offerings. For example, government ERP uses contract lifecycle management (CLM) rather than traditional purchasing and follows government accounting rules rather than GAAP.

Benefits of ERP

ERP systems improve enterprise operations in a number of ways. By integrating financial information in a single system, ERP systems unify an organization’s financial reporting. They also integrate order management, making order taking, manufacturing, inventory, accounting, and distribution a much simpler, less error-prone process. Most ERPs also include customer relationship management (CRM) tools to track customer interactions, thereby providing deeper insights about customer behavior and needs. They can also standardize and automate manufacturing and supporting processes, and unify procurement across an organization’s business units. ERP systems can also provide a standardized HR platform for time reporting, expense tracking, training, and skills matching, and greatly enhance an organization’s ability to file the necessary compliance reporting across finance, HR, and the supply chain.

Key features of ERP systems

The scale, scope, and functionality of ERP systems vary widely, but most ERP systems offer the following characteristics:

Enterprise-wide integration. Business processes are integrated end to end across departments and business units. For example, a new order automatically initiates a credit check, queries product availability, and updates the distribution schedule. Once the order is shipped, the invoice is sent.Real-time (or near real-time) operations. Because the processes in the example above occur within a few seconds of order receipt, problems are identified quickly, giving the seller more time to correct the situation.A common database. A common database enables data to be defined once for the enterprise with every department using the same definition. Some ERP systems split the physical database to improve performance.Consistent look and feel. ERP systems provide a consistent user interface, thereby reducing training costs. When other software is acquired by an ERP vendor, common look and feel is sometimes abandoned in favor of speed to market. As new releases enter the market, most ERP vendors restore the consistent user interface.

Types of ERP solutions

ERP systems are categorized in tiers based on the size and complexity of enterprises served:

Tier I ERPs support large global enterprises, handling all internationalization issues, including currency, language, alphabet, postal code, accounting rules, etc. Tier I vendors include Oracle, SAP, Microsoft, and Infor.Tier I Government ERPs support large, mostly federal, government agencies. Oracle, SAP, and CompuServe PRISM are considered Tier I with Infor and CGI Momentum close behind.Tier II ERPs support large enterprises that may operate in multiple countries but lack global reach. Tier II customers can be standalone entities or business units of large global enterprises. Depending on how vendors are categorized there are 25 to 45 vendors in this tier.Tier II Government ERPs focus on state and local governments with some federal installations. Tyler Technologies and UNIT4 fall in this category.Tier III ERPs support midtier enterprises, handling a handful of languages and currencies but only a single alphabet. Depending on how ERPs are categorized, there are 75 to 100 Tier III ERP solutions.Tier IV ERPs are designed for small enterprises and often focus on accounting.

ERP vendors

The top ERP vendors today include:

OracleSAPMicrosoftWorkdaySageInforEpicorServiceNowQADSalesforce

Selecting an ERP solution

Choosing an ERP system is among the most challenging decisions IT leaders face. In addition to the above tier criteria, there is a wide range of features and capabilities to consider. With any industry, it is important to pick an ERP vendor with industry experience. Educating a vendor about the nuances of a new industry is very time consuming.

To help you get a sense of the kinds of decisions that go into choosing an ERP system, check out “The best ERP systems: 10 enterprise resource planning tools compared,” with evaluations and user reviews of Acumatica Cloud ERP, Deltek ERP, Epicor ERP, Infor ERP, Microsoft Dynamics ERP, NetSuite ERP, Oracle E-Business Suite, Oracle JD Edwards EnterpriseOne ERP,  Oracle Peoplesoft Financial Management and SAP ERP Solutions.

ERP implementation

Most successful ERP implementations are led by an executive sponsor who sponsors the business case, gets approval to proceed, monitors progress, chairs the steering committee, removes roadblocks, and captures the benefits. The CIO works closely with the executive sponsor to ensure adequate attention is paid to integration with existing systems, data migration, and infrastructure upgrades. The CIO also advises the executive sponsor on challenges and helps the executive sponsor select a firm specializing in ERP implementations.

The executive sponsor should also be advised by an organizational change management executive, as ERP implementations result in new business processes, roles, user interfaces, and job responsibilities. Reporting to the program’s executive team should be a business project manager and an IT project manager. If the enterprise has engaged an ERP integration firm, its project managers should be part of the core program management team.

Most ERP practitioners structure their ERP implementation as follows:

Gain approval: The executive sponsor oversees the creation of any documentation required for approval. This document, usually called a business case, typically includes a description of the program’s objectives and scope, implementation costs and schedule, development and operational risks, and projected benefits. The executive sponsor then presents the business case to the appropriate executives for formal approval. Plan the program: The timeline is now refined into a work plan, which should include finalizing team members, selecting any external partners (implementation specialists, organizational change management specialists, technical specialists), finalizing contracts, planning infrastructure upgrades, and documenting tasks, dependencies, resources, and timing with as much specificity as possible. Configure software: This largest, most difficult phase includes analyzing gaps in current business processes and supporting applications, configuring parameters in the ERP software to reflect new business processes, completing any necessary customization, migrating data using standardized data definitions, performing system tests, and providing all functional and technical documentation. Deploy the system: Prior to the final cutover, multiple activities have to be completed, including training of staff on the system, planning support to answer questions and resolve problems after the ERP is operational, testing the system, making the “Go live” decision in conjunction with the executive sponsor. Stabilize the system: Following deployment, most organizations experience a dip in business performance as staff learn new roles, tools, business processes, and metrics. In addition, poorly cleansed data and infrastructure bottlenecks will cause disruption. All impose a workload bubble on the ERP deployment and support team.

Hidden costs of ERP

Four factors are commonly underestimated during project planning:

Business process change. Once teams see the results of their improvements, most feel empowered and seek additional improvements. Success breeds success often consuming more time than originally budgeted.Organizational change management. Change creates uncertainty at all organization levels. With many executives unfamiliar with the nuances of organization change management, the effort is easily underestimated.Data migration. Enterprises often have overlapping databases and weak editing rules. The tighter editing required with an ERP system increases data migration time. This required time is easy to underestimate, particularly if all data sources cannot be identified.Custom code. Customization increases implementation cost significantly and should be avoided. It also voids the warranty, and problems reported to the vendor must be reproduced on unmodified software. It also makes upgrades difficult. Finally, most enterprises underestimate the cost of customizing their systems.

Why ERP projects fail

ERP projects fail for many of the same reasons that other projects fail, including ineffective executive sponsors, poorly defined program goals, weak project management, inadequate resources, and poor data cleanup. But there are several causes of failure that are closely tied to ERPs:

Inappropriate package selection. Many enterprises believe a Tier I ERP is by definition “best” for every enterprise. In reality, only very large, global enterprises will ever use more than a small percentage of their functionality. Enterprises that are not complex enough to justify Tier I may find implementation delayed by feature overload. Conversely, large global enterprises may find that Tier II or Tier III ERPs lack sufficient features for complex, global operations.Internal resistance. While any new program can generate resistance, this is more common with ERPs. Remote business units frequently view the standardization imposed by an ERP as an effort by headquarters to increase control over the field. Even with an active change management campaign, it is not uncommon to find people in the field slowing implementation as much as possible. Even groups who support the ERP can become disenchanted if the implementation team provides poor support. Disenchanted supporters can become vicious critics when they feel they have been taken for granted and not offered appropriate support.

Cloud ERP

Over the past few years, ERP vendors have created new systems designed specifically for the cloud, while longtime ERP vendors have created cloud versions of their software. Cloud ERP There are a number of reasons to move to cloud ERP, which falls into two major types:

ERP as a service. With these ERPs, all customers operate on the same code base and have no access to the source code. Users can configure but not customize the code.ERP in an IaaS cloud. Enterprises that rely on custom code in their ERP cannot use ERP as a service. If they wish to operate in the cloud, the only option is to move to an IaaS provider, which shifts their servers to a different location.

For most enterprises, ERP as a service offers three advantages: The initial cost is lower, upgrades to new releases are easier, and reluctant executives cannot pressure the organization to write custom code for their organization. Still, migrating to a cloud ERP can be tricky and requires a somewhat different approach than implementing on on-premises solution. See “13 secrets of a successful cloud ERP migration.”

Enterprise Applications, ERP Systems

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Competition in the entertainment industry has never been as intense as it is today. For decades, the movie business in the U.S. was dominated by a handful of entertainment conglomerates, known as “The Big Five”: Disney, Universal, Paramount, Warner Bros, and Sony Pictures. But these days, an ever-blossoming field of cable networks and streaming services – from Apple to Hulu to YouTubeTV – have gotten into the act and are not only featuring work created by the established Hollywood titans but producing high-quality content of their own.

What all this adds up to is a huge amount of content. Which means a huge amount of choice. Which means a huge amount of competition.

This is a brutal environment for content producers whose business depends on catching and holding the attention of viewers who have choices – so many choices. It’s never been more critical to an entertainment company’s success to function with maximum efficiency, especially when it comes to handling its data.

Sony Pictures Entertainment needed to up their game

Sony Pictures Entertainment (SPE) had a problem. Their enormous volume of data was split between two separate SAP ERP systems, causing delays in data access and loading, creating gaps in historical reporting, and preventing them from using the latest accounting principles to manage their lead ledger. These inefficiencies affected everything from accounting to production planning.

SPE wanted to combine their rich reservoirs of data into a single, readily accessible, insights-driven platform that would provide a single source of truth, improving efficiency while reducing cost of ownership and removing redundancies.

Doubling down on risky business

When a large organization depends on a highly customized ERP system, any change invites a host of potential perils from go-live failures to endless testing cycles. The process is risky enough when upgrading a single legacy ERP – with two, the risks more than double. And when you’re proposing to implement change while the vehicle is already in motion, there’s no room for error.

In technical terms, SPE’s mission was to re-implement SAP S/4HANA from a combination of legacy SAP S/4HANA and SAP ERP Central Component systems, while making numerous value-added process improvements including standardizing document types, eliminating retired accounts, and improving overall data quality.

As with any perilous mission, success would depend on a combination of the right strategy and the right team.

The Strategy – ESOAR lets Sony roar

SPE adopted a five-phase strategy known as ESOAR, which stands for Eliminate, Standardize, Optimize, Automate, Robotize.

Phase one, “Eliminate”, identifies and eliminates wasteful, inefficient and redundant business activities.Phase two, “Standardize”, seeks to implement business processes that are standardized in strict alignment with business priorities and goals – the key here is guidance and approval from key stakeholders to ensure that standards serve their needs, rather than standardization for its own stake.Phase three, “Optimize”, introduces technological solutions wherever machines can perform more effectively and efficiently than their human counterparts, freeing up people to devote their skills and energy to areas where the human factor is critical.Phase four, “Automate”, introduces new technologies, such as machine learning and AI, to increase intelligence or add new functionalities to existing solutions.Phase five, “Robotize”, builds on the previous phase by deploying robots to handle repetitive or simple tasks, further liberating people to focus on activities only human beings can perform.

All for one – one for all

A strategy is only as good as the people who carry it out. To ensure that they would accomplish their mission with maximal success and minimal disruption to the enterprise, Sony Pictures engaged SAP’s ActiveAttention services, which leverage not only SAP’s technology but its people. It is a program that establishes a Front Office, a Mission Control Center, and a Transformation Hub, bringing SAP experts into the organization to assist with all aspects of implementing SAP solutions in a complex system landscape.

SPE and SAP worked together as one change management team. Thanks to this partnership, the mission was a success, yielding a 60% reduction in finance systems operating costs, 80% data load improvement leading to continuous accounting optimization, and cutting the project timeline due to SAP enterprise services methodology by six months.

Bill Stellman, SPE’s Executive Vice President – Global Finance Operations, hailed the partnership approach: “The level of commitment, project management and collaboration across all teams was not just unprecedented but has raised the bar for all projects to come.”

To learn more about SPE’s amazing accomplishment that earned them an SAP Innovation Award for 2022, check out their award pitch deck.

Data Management