ERP Projects Create B2B e-commerce Opportunities


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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.

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ERP Projects Create B2B e-commerce Opportunities

  1. 1. ERP Projects and B2B E-Commerce Session B06 – April 19th 4:00PM Steve Keifer Vice President Product & Industry Marketing GXS WELCOME to the FORUM
  2. 2. Agenda ERP is Running the Business ERP Projects – Consolidation & Standardization – Upgrades & Extensions ERP & B2B e-Commerce Relationship ERP Project Delays ERP & B2B Technology Strategies ERP Data Quality Issues Questions & Answers 2 WELCOME to the FORUM
  3. 3. ERP – Running the Business 3 WELCOME to the FORUM
  4. 4. ERP Market Growth $60,000 $50,000 US Dollars Millions $40,000 Services $30,000 Maintenance $20,000 License $10,000 $- 2007 2008 2009 2010 2011 2012 WELCOME to the FORUM Source: Forrester Research - ERP Applications 2008 – The Battle Goes Vertical (June 2008)
  5. 5. Top 10 ERP Vendors SAP Oracle Infor* Sage Microsoft Business Solutions* Lawson Software Agresso Epicor Software Analysis based upon IFS 2007 Revenues Exact Software Millions $- $4,000 $8,000 $12,000 $16,000 USD Notes: Revenue is expressed in millions. Revenue is for the vendors' fiscal quarters that most closely correspond to calendar year 2007. Vendor revenues calculated in currencies other than USD have been converted to USD using the average daily exchange rates. * Infor and Microsoft Business Solutions Revenues are not reported publicly and are based on vendor guidance. WELCOME to the FORUM Source: Forrester Research - ERP Applications 2008 – The Battle Goes Vertical (June 2008)
  6. 6. Types of ERP Projects 6 WELCOME to the FORUM
  7. 7. 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 WELCOME to the FORUM
  8. 8. 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 8 WELCOME to the FORUM
  9. 9. 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 9 WELCOME to the FORUM
  10. 10. Oracle’s Acquisitions 10 WELCOME to the FORUM Source: Wall Street Journal – February 2009
  11. 11. Why Upgrade ERP? Six Drivers for ERP Upgrade & Extension End of Leverage Latest Maintenance Technology Functional Standardize or Requirements Consolidate Improve Legal Usability Compliance 11 WELCOME to the FORUM
  12. 12. 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 12 WELCOME to the FORUM Source:
  13. 13. ERP & B2B e-Commerce 13 WELCOME to the FORUM
  14. 14. 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 14 WELCOME to the FORUM
  15. 15. 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
  16. 16. 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 WELCOME to the FORUM
  17. 17. 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 WELCOME to the FORUM
  18. 18. AMR Research Study Relationship between ERP and B2B Survey of 120 Discrete Manufacturing Companies 18 WELCOME to the FORUM
  19. 19. 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 WELCOME to the FORUM
  20. 20. ERP Project Delays 20 WELCOME to the FORUM
  21. 21. 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 21 WELCOME to the FORUM Source: Panaya – 2009 SAP Upgrade Benchmark Survey (
  22. 22. 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 WELCOME to the FORUM Source: GXS – Hypothetical Analysis
  23. 23. 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 WELCOME to the FORUM Source: GXS – Hypothetical Analysis
  24. 24. 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
  25. 25. 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 WELCOME to the FORUM
  26. 26. 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
  27. 27. 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 27 WELCOME to the FORUM
  28. 28. 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
  29. 29. ERP & B2B Technology Strategies 29 WELCOME to the FORUM
  30. 30. 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 WELCOME to the FORUM
  31. 31. 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 31 WELCOME to the FORUM
  32. 32. 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
  33. 33. 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) WELCOME to the FORUM
  34. 34. ERP Firewall Blocks Bad Data from Internal Systems WELCOME to the FORUM Source: GXS
  35. 35. 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 WELCOME to the FORUM
  36. 36. 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
  37. 37. Closing Remarks 37 WELCOME to the FORUM
  38. 38. 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 38 WELCOME to the FORUM
  39. 39. For More Information Download the full study results at: Steve Keifer Vice President Industry & Product Marketing GXS E-Mail: Follow me on Twitter: @smkeifer EDInomics Blog: 39 WELCOME to the FORUM