The Key to Successful ERP Modernization: Data Quality and Data Management

Last Published: May 17, 2024 |
Marielle Verschoor
Marielle Verschoor

Community of Practice Leader for ERP Modernization

Enterprise resource planning (ERP) modernizations deliver big benefits but also come with big challenges and risks. These risks are often overlooked and underestimated, but they are also easy to mitigate with timely planning and the right approach.

In this first blog of a three-piece series, you will learn about the challenges poor data quality and lack of data management can pose for ERP modernizations. Poor data quality can result from migrating outdated, duplicate, incomplete or siloed data to a new application or ineffective data governance at any point in the process. 

In this blog, you will learn how planning can help you mitigate some of these risks. In future blogs, we will provide practical strategies to navigate the challenges of your ERP modernization.

Migrating Without Interrupting Processes

Many companies are modernizing their ERP systems to reduce costs, streamline operations and drive innovation. As part of these modernizations, companies often consolidate multiple ERPs or other legacy systems into one new central ERP system to increase efficiency and reduce costs.

However, ERP modernizations are inherently complex, costly and lengthy projects that often span between one and five years. Given your heavy reliance on your ERP systems, the challenge lies in ensuring your business operations continue uninterrupted throughout the extended migration process.

Processes Determine the Approach

Typically, when determining the modernization approach and strategy, your business processes are the leading factor in establishing the migration plan and each phase of the migration through to completion. Before technical work can begin, you must analyze how your company operates, evaluating your workflows, data management practices and system integrations. 

When consolidating multiple legacy ERP systems into one new ERP system, you need to define an initial common kernel of processes. The idea is to start with a solid base of common processes to ensure your new ERP system can support the core, shared needs of the entire organization. 

Often, modernization will be implemented in a phased roll-out, adding specific features or functionalities as each location, product line or business unit is rolled out. This allows for a more rapid delivery of value with each phase of the roll-out delivering benefits as the project moves forward.

Modernizations Are Also About Data

However, ERP modernizations are not just about business processes. They are also about migrating data from your legacy system to your new system. Data migrations can be complex for several reasons. It becomes challenging when data needs to synch between legacy and new systems over an extended period of time. 

Complexity also increases when you are combining data from multiple legacy systems into one new ERP system. Additionally, if your legacy systems have been used for many years, the accumulated data may need to be cleaned or corrected before it can be moved to the new system. Data migration complexity can impact the cost and timeline of modernization projects. 

A recent study by Panorama Consulting found that 33% of projects were over budget, with 35% of respondents stating that budget overruns were due to data issues.1

Figure 1: Budget Adherence and Overruns, 2024 ERP Report, Panorama Consulting Figure 1: Budget Adherence and Overruns, 2024 ERP Report, Panorama Consulting

In that same study, they found that 31% of projects exceeded timelines, with 46% of the respondents stating that data issues were a reason for the timeline overruns.

Figure 2: Timeline Adherence and Overruns, 2024 ERP Report, Panorama Consulting Figure 2: Timeline Adherence and Overruns, 2024 ERP Report, Panorama Consulting

Data Migration Planning Will Minimize Budget and Timeline Overruns

The effort required for data migration during ERP modernization is often underestimated. Preventing budget and timeline overruns requires an advanced understanding to enable better planning and budgeting of resources. 

A complete understanding of the effort involved requires understanding the current state of your data. This means knowing where your data resides and the quality of data in each location. Moreover, when multiple legacy ERP or other systems are involved, you must understand the quality and location of data across those systems. This can be tricky to manage because the same types of data might be called by different names in different systems. Also, the place where data is stored (fields) can vary, or the data might even be labeled incorrectly in various systems.

The seemingly simple endeavor of understanding the current state of your data can be an intricate, time-consuming and even tedious task. When your modernization spans multiple phases across multiple years, you must continuously update this understanding as the state of data may change over time, the quality of your data may deteriorate, or your requirements for the data may change.

In the next two blogs of this three-part series, we’ll explore how including a data management strategy during the planning phase of your ERP modernization will help mitigate risks associated with the process. It will also speed up the execution phase of your modernization and provide many additional benefits after completion.

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First Published: Apr 23, 2024