“If you can’t count the number of ERP applications in your company on one finger,” grumbled an ETL-weary friend, “you’re running too many.” While I suspect that a number of CIOs would probably agree, many companies still run their businesses through a tangle of multiple ERP systems. And often these tangles get more tangled each year.
How they all ended up with a bunch of ERP licenses is pretty common. For many businesses, an over-population of ERP systems is the legacy of mergers and acquisitions. In an effort to ruffle as few feathers as possible, management often lets merging organizations hold on to the technology they know. That may keep things moving in the short term. But down the road, it’s a decision that managers begin to regret, especially if some of the systems were already past their prime.
And, whenever there is a plethora of seemingly innumerable systems, it’s not unusual to find departments running pre-millennium solutions. Even if they can be upgraded, they’re still running on architectures that don’t meet modern demands and often trace their roots to systems from the 1990s, '80s and even the '70s. Add in the complexities and costs of disparate hardware scattered across an enterprise and the expense becomes staggering, if it can even be calculated.
Another common cause of “multiple ERP syndrome” is allowing departments within a company to choose their own software. Point solutions for HR, sales, marketing, procurement and a bunch of other teams can help each of them do their jobs. But at the end of the quarter, reconciling all of that data so senior management can get a reliable look at the numbers requires a lot of massaging.
IT teams often use a technique called ETL (extract, transform and load) to pull data from multiple systems and consolidate it into a central reporting tool or spreadsheets. This process can be labor-intensive; it’s not unusual for some companies to spend more time managing the exchange of data than actually studying and analyzing it.
Every time the ETL team goes through the process, they introduce the risk of missing something, or normalizing it in a manner that ends up analyzing it in an inconsistent manner. In these tangled environments, a common data schema is just a dream and any concept of a data dictionary looks like a polyglot production at best.
And while the IT guys might be able to customize an application that manages the integration of the systems into a repeatable and reliable process, if a piece of the ERP puzzle is upgraded, there’s a chance those connections need to be rewritten before they break. It all adds up to more time, more costs and often more problems.
It really comes down to this. If a company is spending more time doing ETL than using the information to create value—it has an ERP population problem.
Multiple ERP syndrome is not a problem companies should tolerate, considering how quickly an organization can see the benefits of consolidation. Hub International, an insurance broker, is a great example. Because the company used multiple general ledgers, the finance team struggled to gain consistent reports from multiple expense reporting systems. Closing and reporting was a major headache. Investigating issues was no picnic either.
The company was able to establish a shared-services model to centralize accounts payable—as well as travel and expense reporting—across 16 different account centers. In just two month, the company was able to realize a 25% to 40% cost reduction.
With its cloud solution, Hub is benefitting from more insight into information and better controls. Plus, it’s realizing even more opportunities for share services—the kind that trim away even more ERP systems.
As we work with companies that want to trim down their number of ERP systems, we recommend a similar incremental approach. We generally suggest that companies begin with the systems that focus on the most critical part of their business. If you’re primarily a manufacturer struggling to improve supply chain processes, your focus should be there.
But like Hub International, many of our clients focus on financials first. When IT organizations deliver cloud-enabled solutions that help the finance team get their house in order, news about the benefits of supporting teams with an integrated ERP solution travels fast.
An incremental approach to consolidating ERP solutions allows you to kick off projects that can be completed quickly—certainly in less than a year. These are the projects that become infectious—the ones that catch the attention of people and get them to climb on the bandwagon. When colleagues realize that they can benefit from new technology sooner rather than later, they get excited to get behind it.
Of course, quick deployment is a hallmark of cloud technology. With on-premises solutions, companies generally have to make up-front investments in hardware that won’t be needed in the near-term. With the cloud, companies can build out a system that supports all of the immediate users, and can quickly scale up as needed.
It’s important to point out that replacing multiple aging ERP applications with cloud-enabled technology will be appreciated by millennials and even younger employees. These generations of tech-savvy workers are energized by modern solutions, and they expect to find them at success-driven companies.
If you’re interested in consolidating your collection of ERP applications with a cloud-powered solution, we can help. Learn more Oracle Cloud solutions for finance can help you consolidate mission critical processes into a reliable and affordable integrated system—one that can scale to meet your needs as your business grows.