This presentation discusses the high tech related results from a study conducted in late 2009 by the analyst firm AMR Research. The study looked ERP/B2B integration and the importance of having these two environments seamlessly integrated together. Updated April 2013
Many companies under estimate why they should consider integrating their ERP and B2B platforms. This could be due to the fact that traditionally, ERP and B2B systems have been implemented by different IT teams.As you will see later when I go through the AMR study, as much as a third of ERP related information is sourced from outside the organisation. This could be from a variety of suppliers, logistics partners and other third parties.Information fed into an ERP systems, especially when sourced from outside the organisation, is often inaccurate. This could lead to further downstream problems once this inaccurate data starts to spread across the extended enterprise.Management teams require up to date, real time information on the performance of their business in order to make operational decisions. Finally, having access to a highly available B2B infrastructure is important in order to allow an ERP system to operate as smoothly as possible
So coming to the study itself, there were a number of goals that we were looking to achieve with the research.Firstly we wanted to build awareness of the importance of B2B outsourcing with respect to the success of ERP related projectsWe wanted to understand why B2B integration is so critical to the success of ERP related projectsAnd finally to find out why B2B outsourcing is such a compelling proposition for manufacturers.In terms of the topics covered by the study.....We wanted to test three or four key hypothesesFirstly to understand the importance of external connectivity to trading partners, if there is an interruption in the B2B infrastructure, how does this impact their ERP system?Secondly, we wanted to confirm that ERP systems can be handicapped if they are fed with poor quality information from external trading partnersFinally, if B2B projects are delayed due to resources being diverted towards ERP projects, how will this impact both the ERP and B2B environments and what impact will this have on the ROI of the ERP system
So before I go into the study in more detail, I thought it might be worth pulling out some of the key findings from the high tech participants.....90% of respondents said they had experienced delays with ERP projects due to B2B integration issues37% of respondents said B2B integration staff were supporting ERP related projects30% of the data feeding ERP systems is sourced externally
In terms ERP deployment the survey found that 44% of those surveyed said they had between 2 and 4 regional systems but over the next three years they were looking to consolidate onto one single ERP instance.We found that ERP consolidation is one of the key drivers for companies looking to outsource the management of their B2B infrastructures.
ERP systems use information from a variety of external sources, for example distributors, logistics providers and financial services institutions. This information could originate in numerous business systems and could have been created using different industry related standards.Due to the global nature of many companies there are constant challenges with on boarding suppliers and getting them integrated to a company’s ERP platform.
The survey showed that up to 30% of information feeding an ERP system actually comes from outside the organisation, this is a significant number and unchecked this information could then find its way into many other business systems that feed off of the ERP system and cause significant downstream problems.
In terms of exception or error handling , 79% of all respondents said that more 1% of transactions needed re-working. Now 1% does not seem like a large number but if an ERP system is accepting 1 million transactions per year from outside trading partners then this would represent 10 000 transactions that would need reworking before they could enter the ERP system.This is a significant number and it helps to demonstrate the importance of B2B as a way of validating the accuracy of information from external trading partners.
For many companies, having access to real time information from outside the enterprise and ensuring that the platform is available 24/7 is crucial to the operation of their business. B2B platforms ensure that information from outside the organisation can be used efficiently by internal business applications such as ERP systems. If there is an interruption to the flow of transactions from outside an organisation then the internal business systems can be severely affected.
So we asked the question, how many respondents had experienced a loss of B2B connectivity with trading partners which had impacted their manufacturing operations. Nearly 50% of respondents had experienced an outage within their B2B environment. We then asked how important having a contingency plan was within their company and of those that had a plan, how effective it was, there was a 23% gap in importance versus effectiveness which demonstrates that this is a key area that companies need to address, ie improve the availability of their respective B2B infrastructures.
This next question asked whether a company had a policy for no scheduled downtime for the end of quarter sales periods. You can see that nearly three quarters of the respondents said yes. Downtime could occur when having to rework external data or trying to re-establish communication links with external trading partners.Once again having a no down time policy was most important amongst the automotive companies, in order to support ‘Just in time’ type production processes.
Having a dedicated program manager look after the implementation can be a worthwhile investment, they not only ensure that valuable IT related resources are being used effectively, they will also ensure that the project comes in on time and more importantly to budget.Program managers will undertake a number of roles to ensure that ERP to B2B integration projects go as smoothly as possible. Their role will include looking after the day to day communication with a community of trading partners and ensuring that trading partners can support new transaction types, data quality rules or KPIs to measure performance. Finally, they also offer support for testing and looking after the overall release and deployment of the newly integrated platform with the customer.
One of the main impacts of diverting resources away from B2B projects to help ERP implementations was that up to 29% said that their testing efforts for external trading partners was severely affected.Not being able to check whether external trading partners can even connect to an ERP/B2B integration platform or exchange the correct documents with the ERP platform can have a major impact on both the ERP implementation project as a whole and of course any downstream applications that could be relying on the information from the trading partners concerned.
So in closing, from a study review perspective, 90% of the respondents said that B2B integration issues had caused delays to their ERP projects.It is worth noting that in a conversation with the AMR researchers they said that such delays in both B2B planning and integration can cost companies in excess of $45,000 a day or more than $1million per month.
Most of the companies in the survey base have major ERP projects planned or in progressB2B Integration is frequently the cause of expensive delays in ERP implementation projectsERP projects often drive new B2B initiatives and significant changes in strategies and vendor preferenceB2B components receive less rigorous testing than internal ERP functions and during project delays B2B integration testing is frequently cut short to facilitate go-live datesERP consolidation/upgrade projects create disruption and consolidation opportunities for B2B