Streamlining ERP Modernization: Leveraging Data Management to Mitigate Operational Risks
Enterprise resource planning (ERP) modernizations deliver significant benefits but also come with considerable challenges and risks. In this second blog of our three-part series, you’ll learn how effective data management reduces the risks of disrupting your operations while modernizing your ERP. You’ll also gain insights into how focusing on data management empowers you to mitigate inherent risks while streamlining the execution phase of your ERP modernization project.
Operational disruptions have severe consequences because your ERP system is at your organization's core. Although you may not immediately recognize the impact as severe, data management issues often are the root cause of organizational operation problems. The inability to find and understand historical data can lead to discrepancies in your financial reporting or errors in your regulatory reporting, possibly causing regulatory compliance challenges.
Inaccurate or incomplete data in your new ERP system can lead to uninformed or misinformed decisions with poor outcomes, potentially harming your business performance and stakeholder relations. Perhaps the biggest drawback is that data errors and duplicate data can cause a lack of trust and poor customer relations, often leading to customer dissatisfaction and potential reputational damage.
Using Data Management Capabilities to Reduce the Risk of Operational Disruption During Your ERP Modernization
After completing the planning phase of your ERP modernization, actual migration will start. During execution, making accurate and complete data available to the new system is vital to support the new business processes. Modernizing while consolidating multiple legacy ERP or other systems into one new system adds additional complexity as similar data might reside in multiple systems, which all need to be kept in sync. This transitional challenge typically leads to a phased migration, meaning that your users in the legacy and new systems could access or modify the same information simultaneously.
When migrating your data, you need to differentiate between master data and transactional data. Transactional data is typically a one-off instance, such as an order or a service request that is not accessed or modified regularly. However, master data, such as a customer or a supplier, is used and changed regularly by multiple business processes.
In a phased migration, keeping master data in sync between the legacy and the new system for the duration of your modernization is crucial. Challenges to address in this phase include:
- Having master data that needs to be available and possibly modified in legacy and new systems simultaneously.
- Resolving conflicts and ensuring that data quality remains high for the duration of the modernization while simultaneously limiting the effort involved and reducing the risk of operational disruption.
Data Quality and Deduplication in ERP Upgrades
Hurdling these potential barriers requires a mechanism for data deduplication and data quality improvement, not just before your modernization begins but specifically during the execution. A phased migration approach results in the need for continuous data synchronization, deduplication and quality control processes. You can only address this need by using an automated solution with as many prepackaged capabilities for deduplication and data quality as possible. This will enable you to lower costs, streamline efficiency and reduce the risk of errors or disrupted operations.
The need to persist the master data grows more pressing as data synchronization, deduplication and quality improvement become continuous for a longer time. Doing this in a fit-for-purpose master data management system provides many benefits as no changes will need to be made to either the legacy systems or the new system, a convenience that limits dependencies. It also adds a substantial additional benefit. Legacy systems often are kept running long after modernization has been completed. This could be for various reasons. For example, you may need the data they contain for multi-year or consistent reporting, or you may not know if you will need it again. By persisting the master data outside the legacy systems, it becomes less risky to turn off legacy systems and deliver on the benefit of reducing costs.
Specifically, with ERP modernizations, you must consider the changes in the data model between legacy and new systems. When executing the changeover, your old data model must be mapped to your new one, allowing for a smooth transition. An excellent example of this data mapping challenge is introducing the business partner concept in SAP S/4HANA, a feature you may not have used in SAP ECC. To guarantee a smooth transition, your suppliers, customers and employees must already be consolidated into a business partner record — corresponding to a person, organization or group of organizations — before migration. This requires matching capabilities and preferably a prepackaged solution for this consolidation.
Next Steps
Including automated data quality and master data management capabilities in your ERP modernization will help you de-risk and potentially speed up the process. Following these best practices will also bring you many post-modernization benefits. We’ll explore these advantages in our third blog of this three-part series.
To learn more, check out our resources on ERP Modernization:
