Presentation delivered by Steve Keifer of GXS at the 2010 American Hardware Manufacturers Association Hardlines Technology Forum event in Schaumberg, Illinois. Covers types of ERP projects - consolidation, standardization, upgrades and extensions. Highlights key challenges such as 80% of ERP projects are delayed due to B2B integration related issues and 34% of all ERP data comes from outside the enterprise.
4. Categories of ERP Changes
Most Projects are Hybrid Combinations
Retire Legacy Merger &
Mainframes Acquisitions
Rapid Company New Installs Consolidations Shared Services
Growth for Back Office
Vendor End of Supply Chain
Life Support Upgrades Extensions Planning
Expanded Treasury or Bank
Feature Set Relationship
Management
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5. Multi-National Example
Before Consolidating Regional ERP Instances
Europe
3 x SAP 4.5
PeopleSoft 9
Dynamics AX
North America
4 x SAP 4.6
China Oracle 10.7i
SAP 6.0 Japan
2 x JD Edwards
In-House
India Middle East
Oracle 10.7i SAP 6.0
Southeast Asia Mexico
SAP 4.6 SAP 4.6 Brazil
In-House
Australia & NZ
Oracle 10.7i
South America South Africa
SAP 4.6 JD Edwards
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6. Why Consolidate?
Six Key Drivers for ERP Consolidation
Mergers & Centralization –
Acquisitions Global vs Local
Shared Services Visibility to
Model Foreign Operations
Consistency Supply Chain
With Customers Coordination
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7. Oracle’s Acquisitions
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WELCOME to the FORUM Source: Wall Street Journal – February 2009
http://www.oracle.com/us/corporate/acquisitions/index.htm
8. Why Upgrade ERP?
Six Drivers for ERP Upgrade & Extension
End of Leverage Latest
Maintenance Technology
Functional Standardize or
Requirements Consolidate
Improve Legal
Usability Compliance
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9. Why Extend ERP?
Example: SAP’s Supply Chain Management Modules
Extended
Advanced Planner & Warehouse
Optimizer Management
Master Data Transportation
Management Management
SAP Supply
Sales & Operations Chain Supply Network
Planning
Management Collaboration
Modules
Service Parts Global Trade
Planning Services
RFID & Sensory Retail Supply Chain
Network Support Planning
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WELCOME to the FORUM Source: http://www.sap.com/solutions/business-suite/scm/index.epx
11. What is B2B e-Commerce?
Customer
ERP
Applications Web
Portal
Purchase Orders
Advanced Ship Notices Supplier
Invoices
B2B
e-Commerce
Gateway Internet
Translator Bank
Integration Broker
Payment Instructions
Point of Sales
Inventory Positions
Value
Added
Logistics
Network
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12. ERP Data Sources
1/3 of Data from B2B Interfaces
Origin of ERP Data
43% of External Data
External 34% from Customers &
Distributors
31% of External Data
Internal 66% from Suppliers &
Contract
Manufacturers
0 20 40 60
WELCOME to the FORUM Source: AMR Research – ERP and B2B Integration Study 2009
13. External Data into ERP
Customers, Suppliers, 3PLs & Financial Institutions
Sales Manufacturing Supply Chain Financials Service
Forecast Inbound Materials Shipment Status Bank Statements Repair Order
Point of Sale Inventory Proof of Delivery Remittance Advice Work Order Status
Sales Order Work In Progress Product Catalogs Trade Confirmations Warranty Claim
Direct Ocean Commercial
Distributors
Suppliers Carriers Insurers
Contract Freight Financial 3rd Party
Customers
Manufacturers Forwarders Institutions Logistics
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14. ERP Projects and B2B
Sales & A/P Customer
Web Portal
Staff
ERP –
Europe
Instance Mapping of Data
to Multiple
Formats Supplier
1
Fixing Bad Data
from Trading
Partners ERP –
5 Testing of B2B Direct
China
Functions with Connection
Instance ERP Upgrades
2 Distributor
On-Boarding of
ERP – New Trading
6 Bank
North Partners
Managing America 3
Exceptions from Instance
Trading Partners
High Availability &
Real Time Data
ERP – Transfer Logistics
Asia 3rd Party
4
Instance Networks &
B2B/IT Marketplaces
Team
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15. AMR Research Study
Relationship between ERP and B2B
Survey of 120 Discrete Manufacturing Companies
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WELCOME to the FORUM Source: AMR Research – ERP and B2B Integration Study 2009
16. AMR Survey Demographics
Vertical Industry
Food & Primary ERP Vendor
High Beverage
Tech OEM & – 26%
Supplier – SAP 42%
32% Oracle 24%
Microsoft 13%
Consumer Infor
Automotive Packaged
OEM & Goods – 23% Lawson
Suppliers –
23% Deltek
Exact
Size of Company Epicor
Less than
$1B – 9% CDC Software
$20B+ Glovia
35%
$1B to Other
$5B -
29%
0 10 20 30 40 50
Other
$10B to
$5B to $10B - • 62% IT and 38% Line of Business
$20B - 15%
12% • 12% Based outside of US
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Source: AMR Research – ERP and B2B Integration Study 2009
18. ERP Project Time Frames
Duration of ERP Upgrade Projects
20000
Average ERP
Effort in Person Days
15000 Project for
10,000 Users
is 63 Weeks
10000
5000
0
1-100 101-1,000 1,001-10,000 Over 10,000
No Solutions With Industry Solutions
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WELCOME to the FORUM Source: Panaya – 2009 SAP Upgrade Benchmark Survey (www.panayainc.com)
19. IT Cost of ERP Delays
USD
Thousands
$80K
$70K Cost of Delay is
$45K per Day
IT Cost per Day
$60K for $1M per
month project
$50K
$40K
$30K
$20K
$10K
$250K $500K $750K $1.00M $1.25M $1.50M
Monthly ERP Budget
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Source: GXS – Hypothetical Analysis
20. Launch Windows for ERP
Small Delays Can Lead to Multi-Month Extensions
Peak End of End of
Holiday Quarter New Quarter
Order Period Product Period
Processing Begins Launch Begins
Upgrade
Period
Possible
October November December January February March
Upgrade
New System Possible
Product Lockdown
Launch for Holiday
Preferred
Period
Risk
Lock Down
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Source: GXS – Hypothetical Analysis
21. Unforeseen B2B Delays
B2B Issues Encountered
Major Issues & Significant Delays
Minor Issues & Short Delays
Minor Issues & No Delays
84% - Delays
Experienced
No Issues & No Delays
0 10 20 30 40 50 60
WELCOME to the FORUM Source: AMR Research – ERP and B2B Integration Study 2009
22. Mapping Changes
3PLs & US/Canada European Large Mapping is
Carriers Accounts Accounts Suppliers required to
multiple external
Customized Customized e-commerce
850 856
850
856
210
310
852
850
832
820
PRODAT
ORDERS
PRICAT
PAYMUL 860 810 standards
214 315 856 810 DESADV INVOIC 824 820
New or
consolidated ERP
B2B Integration Platform applications will
require new
POS Transactions
Proof of Delivery
Freight Invoice
Sales Forecast
Order Change
Confirmation
Sales Order
Credit Note
Remittance
Ship Notice
mapping to
Inventory
Invoice
external formats
Upgrades will
Supply Order Transport Accounts impact data fields
Chain Manage Manage Receivable
ment
and potential
Planning ment
business process
flows
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23. On-Boarding New Suppliers
Trading Partner Policy Changes from ERP Projects
Higher Levels of
Data Quality 69%
New Transaction
47%
Types & TPs
New KPIs & Penalties for 38%
Non- Compliance Most ERP Projects
Extend B2B
No Scope Functionality
11%
Changes Planned
0 20 40 60
WELCOME to the FORUM Source: AMR Research – ERP and B2B Integration Study 2009
24. New Transaction Types
Financial Customers &
Institution Distributors
ERP
Applications
Purchase Order
ACH Payment Ship Notice
Wire Transfer Invoice
Bank Statement Remittance Advice
FX Confirmation PO Change
Intra-Day Statement
PO Change
Shipment Status Invoice
Freight Tender Purchase Order
Freight Invoice Ship Notice
Remittance Advice
Logistics & Suppliers &
Carriers Contract
Manufacturer 24
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25. Testing Approach
Testing with External Partners
Testing ended Robust
prematurely for testing, less
go-live used functions
(35%) (35%)
Only 1 in 3
Test
Basic testing, most Adequately
used functions
(36%)
WELCOME to the FORUM Source: AMR Research – ERP and B2B Integration Study 2009
26. ERP & B2B
Technology
Strategies
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27. Modernization of B2B Platform
Modern B2B Platform
Mainframe Based
Translator & Mailboxing
IP Comms
Gateway with Service Oriented
Architecture
Biz Process SOA Integration Platform Managed File
Management On Blade Servers Transfer
DASD Storage Web Portal
Biz Activity
Monitoring
Mainframe-Based
Legacy B2B e- Biz Intelligence Storage Area Network Web Forms
Commerce Platform
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28. When to Upgrade B2B?
ERP Upgrade B2B Gateway Upgrade
Trading Partners Trading Partners
New TPs Test Migrate Rewrite
& Transactions Interfaces TPs Maps
B2B e-Commerce Gateway B2B e-Commerce Gateway
Rewrite Test Test Rewrite
Maps Interfaces Interfaces Maps
ERP Applications ERP Applications
Functional Physical Map Regression Deployment & Change
Specifications Development Testing Production Management
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29. Data Quality is a Top Problem
Trading Partner Policy Changes from ERP Projects
Higher Levels
of Data Quality 69%
New Transaction
Types & TPs 47%
New KPIs & Penalties for
Non- Compliance 38%
Data Quality is a
Significant
No Scope Changes Challenge
Planned 11%
0 20 40 60
WELCOME to the FORUM Source: AMR Research – ERP and B2B Integration Study 2009
30. Data Quality Challenges
– Out of date SKU/GTIN
Purchase
– Inaccurate price
Order – Requires split to feed multiple ERP systems
– Ship to multiple delivery addresses in one ASN
Ship – Multiple POs consolidated into one ASN
Notice – Shipment +/- 5% of quantity ordered
– Weight missing unit of measure
Shipment – Back-dated shipment
Status – Invalid carrier code
Supplier – No remit to address
– No general ledger code
Invoice – Invoice, receipt, PO do not match
– Split into different files for check, ACH, wire
Payment
– Bank specific data required for processing
Instructions – Missing International Bank Account Number (IBAN)
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31. ERP Firewall
Blocks Bad Data from Internal Systems
WELCOME to the FORUM Source: GXS
32. Examples of Time Critical B2B
From Batch to Real Time
Point of Sale
Daily replenishment of
Sales vendor managed
Results inventory determined
Physical Shipment by nightly retail POS
feed
Ship Notice
Receipt of goods at
Customer manufacturing plant
only allowed if
Logistics advanced ship notice
Physical Shipment
has been received
Purchase Order Receipt of last-
Financial minute, end-of-
Reporting quarter orders from
Order Acknowledgement distributors
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33. ERP and B2B Connectivity
Experienced Manufacturing No ERP Downtime Policy
Impact due to Loss in B2B for End of Quarter Sales
Connectivity
No – 26%
Yes 57%
No 43%
Yes – 74%
0 20 40 60
WELCOME to the FORUM Source: AMR Research – ERP and B2B Integration Study 2009 – Line of Business
Executives – 45 responses. Overall responses – 48% experienced impact
35. More than Technology
People & Process Required for ERP Project Success
• ERP Platform
Connectivity Adapters
• Exception Management
• Business Process
Technology Management
ERP • Scale Resources Up
and Down Quickly
• Trading Partner
Project People Willingness to Test
• Experience with ERP
Success Testing & Upgrades
• Regression Test
Under Budget Planning & Execution
On Schedule
Process • Change Management
with Trading Partners
No Interruptions
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36. For More Information
Download the full study results at:
http://www.gxs.com/resources/insights/
Steve Keifer
Vice President
Industry & Product Marketing
GXS
E-Mail: steve.keifer@gxs.com
Follow me on Twitter: @smkeifer
EDInomics Blog: http://blogs.gxs.com/keifers
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