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High Tech Results from AMR Research ERP B2B Study

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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 …

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

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  • 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

Transcript

  • 1. Mark Morley, Industry Marketing DirectorReview of High Tech Related ResultsFrom AMR Research ERP/B2B Study
  • 2. Slide 2 | © 2013 GXS, Inc.The Need for ERP to B2B Integration• There are a number of key drivers forintegrating ERP and B2B systems– Significant amounts of ERP data issourced from outside a company– Data quality compromises ERP value– Poor B2B integration limits visibilityinto business processes– High Availability in B2B is critical
  • 3. Slide 3 | © 2013 GXS, Inc.ERP & B2B Integration StudyDennis GaughanJim ShepherdProgram Goals– Build awareness of the importance of B2B outsourcingwith respect to the success of ERP related projects– Understand why B2B integration is so critical to thesuccess of ERP projects– Find out why B2B outsourcing is such a compellingproposition for manufacturersStudy Topics– ERP systems cannot function properly if B2B systemsare down and no information can come in from externaltrading partners– ERP is handicapped if external data is of poor quality– ERP ROI is limited if ERP projects are delayed
  • 4. Slide 4 | © 2013 GXS, Inc.AMR Research ERP/B2B StudyResponses from High Tech Participants• 90% of respondents said they had experienced delays withERP projects due to B2B integration issues• 56% said they were consolidating multiple disparate B2Bgateways on to a common integrated platform• 37% of respondents said B2B integration staff weresupporting ERP related projects• 30% of the data feeding ERP systems is sourced externally• 46% of respondents said they had lost B2B connectivity• 74% of respondents had a no ERP downtime policy• 79% of respondents have exceptions or problems on morethan 1% of inbound B2B transactions• 74% of respondents said they would be enforcing higherlevels of data quality from their trading partners“As management teams focus on theneed for systems and processes tosupport an integrated globalbusiness, the importance of therelationship between ERP and B2Bbecomes critical”AMR Research 2009 Responses in red were the highest of the industry sectors surveyed
  • 5. Slide 5 | © 2013 GXS, Inc.ERP DeploymentResponses from High Tech Participants44%28%15%13%2 to 4 regionalsystemsSingle globalinstanceMultiple instancesacross businessunits andsubsidiariesOne globalinstance per line ofbusiness21%51%15%13%Today In 3 YearsQ. Which of the following best describes your current ERP deployment?Q. Which of the following best describes what your ERP deployment will look like in 3 years?N = 39 High Tech Respondents
  • 6. Slide 6 | © 2013 GXS, Inc.• ERP uses information from variousexternal sources• Information can be sourced fromcustomers, logistics providers andfinancial service institutions• Information derived from differentglobal standards can be difficult tomanage• Integrating trading partners toremote manufacturing plants canbe difficultExternally Sourced ERP Data
  • 7. Slide 7 | © 2013 GXS, Inc.Data Feeding ERP SystemsResponses from High Tech Participants70%30%Generated internallyGenerated externallyCustomers/distributors45%Supplier/ contractmanufacturers30%3PLs14%Other11%Data feeding ERP systems* External data feeding ERP systemQ. What percent of the data feeding your ERP system is generated internally vs. externally?Q. What are you plans for technologies to support workforce management and procedures in the next 2 years?N = 39 High Tech Respondents
  • 8. Slide 8 | © 2013 GXS, Inc.External Transactions RequiringException Handling or Rework21%33%26%20%Less than 1%1-2%3-4%More than 5%79% of respondents saidthat more than 1% oftransactions needsreworkingIf a company processes 1Million transactions peryear this represents10,000 transactions thatwill need reworkingQ. What percentage of the transactions originating from external trading partners which are processed directly intoyour ERP system require exception handling or error processing?Extensive ReworkN = 121 Total Respondents
  • 9. Slide 9 | © 2013 GXS, Inc.High Availability in B2B is Critical• Ensuring that B2B information isavailable 24/7 is crucial to theoperation of an ERP environment• B2B platforms ensure that externallysourced information can be used byinternal business applications• Lack of B2B information could leadto production line stoppages• Business critical decisions need tobe made in real time to allowoperations to run smoothly
  • 10. Slide 10 | © 2013 GXS, Inc.Loss of B2B ConnectivityResponses from High Tech ParticipantsNo54%Yes46%Loss of B2B connectivityQ. Has your company every experienced a loss of B2B connectivity that has impacted your manufacturingoperations?Q. How important/effective is your company’s contingency plan for mitigating risk of losing B2B connectivity tomanufacturing operations?67%44%ImportanceEffectivenessImportance/Effectiveness ofContingency PlanGap = 23% !N = 39 High Tech Respondents
  • 11. Slide 11 | © 2013 GXS, Inc.Policy for no Scheduled ERP DowntimeNo26%Yes74%Q. Does your company currently have a policy for no scheduled ERP downtime for the end of quarter sales periods?63%74%77%82%38%26%23%18%Food &Beverage (n=32)High Tech (n=39)CPG (n=32)Auto (n=28)NoYesIndustryN = 121 Total Respondents
  • 12. Slide 12 | © 2013 GXS, Inc.Program Management• Integrating ERP and B2B requiresconstant monitoring to ensurethat any problems are resolvedefficiently• Changes made to an ERP systemmay need to be incorporated intothe B2B platform as well, or viceversa• Must ensure that the ERP/B2Bintegration platforms is testedand deployed correctly
  • 13. Slide 13 | © 2013 GXS, Inc.35%48%17%Basic testing ofmostobvious, commontasksRobust testing ofcommon andobscure, less-used functionsTesting effortswere terminatedprematurely tomeet externallyimposed go-livedeadlinesTesting Approach on ERP Projects withB2B IntegrationQ. During the course of your ERP projects that included significant B2B integration, which of the following bestdescribes the testing approach performed with internal participants and external trading partners?36%35%29%Internal Participants External Trading PartnersN = 121 Total Respondents
  • 14. Slide 14 | © 2013 GXS, Inc.Severity of Delays in ERP Projects Causedby B2B Integration Issues23%67%8%3%Major issues were encountered which causedsignificant delaysMinor issues were encountered which causedsmall delaysMinor issues were encountered, but caused nodelaysNo issues were encounteredQ. Which of the following best describes the issues you may haveencountered with B2B integration which caused a delay to ERPprojects currently underway or previously performed?Delays in both B2B planning and integrationcan potentially cost companies in excess of$45K a day or $1Million per month…..N = 39 High Tech Respondents
  • 15. Slide 15 | © 2013 GXS, Inc.AMR Research Study Conclusions• Most of the companies in the survey base have major ERP projectsplanned or in progress• B2B Integration is frequently the cause of expensive delays in ERPimplementation projects• ERP projects often drive new B2B initiatives and significant changes instrategies and vendor preference• B2B components receive less rigorous testing than internal ERPfunctions and during project delays B2B integration testing isfrequently cut short to facilitate go-live dates• ERP consolidation/upgrade projects create disruption andconsolidation opportunities for B2B
  • 16. Slide 16 | © 2013 GXS, Inc.Thank YouPhonesUS: 1-800-334-2255, option 3EMEA: +44 (0) 1932 776047GXS web sitesUS: www.gxs.comEMEA: www.gxs.eu