Few other large-scale technology projects have the potential to deliver more value-adding insight for procurement than integrating with your company’s Enterprise Resource Planning system (assuming, that is, you’ve already mastered your digital transformation and have great data).
Integrating procurement systems with an ERP can deliver massive wins for your team, including helping to:
But there also can be several potential stumbling blocks along the way. So, what’s the secret to successfully integrating your procurement systems with an ERP?
Most procurement teams use legacy systems—a variety of different source-to-pay tools, systems support, invoicing, and many more. The information stored in these various tools is often siloed and can be difficult to access, which means inevitably there’s a lot of business capability and potential being lost because it’s stuck someplace where nobody can get to it.
So it’s important to identify early on why an ERP integration is necessary. What are you trying to achieve? Is it better demand planning? Is it inventory optimization? Is it production planning and line scheduling, replenishment planning, PO management, fulfillment and transport optimization, supply chain analytics, supply chain visibility… or perhaps it’s all of the above?
Whatever your goals, they need to be front-of-mind when selecting the technology you’re going to use in your integration. There are plenty of innovative products out there making a lot of promises, but unless you’re clear on your needs, none of it is likely to deliver what you truly want.
There are several methods for implementing ERP integration—including point-to-point for a quick fix, building a custom application, or using an Enterprise Service Bus (ESB). Yet these have the potential to add complexity to the system. Increasingly, experts recommend taking a more holistic approach—treating the ERP ecosystem as a single entity and incorporating data sources as well as applications. Considering your data in a holistic way, rather than just the applications using the data, will give organizations a much more comprehensive integration. This will lead to more control and greater flexibility in data outputs and insights.
Another key to a successful ERP integration is proving the value of the solution quickly, then being able to scale. So, whether you use an ecosystem approach, point-to-point, or any other, make sure you bring in your IT and business teams early to help thoroughly vet vendors. Once you have a vendor, don’t try to do the entire integration all at once. Start with a pilot project to prove that the integration will deliver what you want it to.
Consider using the Minimum Viable Product (MVP) approach to your pilot: Develop your initial ERP integration with the least amount of functionality required. This way, you can quickly develop a basic version of the working product and quickly prove its effectiveness to stakeholders. You can then add features after testing and feedback from users. The point of the MVP technique is to focus on the core objectives of the ERP integration and quickly get it up and running. In short, it creates short-term value with a low-risk profile and sets you up for success when you tackle the full integration.
ERP integration represents a massive change for any organization, so getting everyone on board is crucial to its success. Identify different user types early, map their processes, and ask them for feedback constantly. Among the various teams and users, look for the people that will become fans of the integration. You want them to be your first champions. But don’t stop there. You want everyone involved—the keen, the not-so-keen, and the outright obstinate. If the integration truly will help staff with their work, you could see the biggest opponents turning into the biggest champions once they see the truth in your message. It’s important to allow them to help shape the outcomes that will impact the way they do their job. Your goal is to provide an ERP integration that will work for everybody, so all opinions within the organization need to be addressed thoroughly.
All the while, keep in mind the training materials and sessions you will need to deliver—and start planning them early. People learn in different ways—visual, auditory, reading/writing, kinesthetically, in groups or by themselves. Try to cater to all learning types in your documentation and sessions. And remember, training isn’t a one-and-done affair. Be sure to have follow-up sessions and resources available throughout your organization.
Set yourself up for success by choosing an approach that matches your needs, focusing on delivering the business value first and fast, and providing staff with the right resources and training.
Like any massive organizational tech overhaul, several things can go wrong—leading to wasted time, energy, and money.
We hosted a webinar packed with tips and advice on how to successfully plan and deploy an ERP integration while avoiding the pitfalls (you can watch it here). It turns out that most problems with ERP integrations can often be traced back to two main causes:
That’s right… Most problems originate before the contract with your supplier is even signed.
Before you begin writing any project specs, you need a true understanding of what value your ERP integration is supposed to deliver for your organization. Then, it’s important to match those requirements to your product selection. How will this solution provide value? Will the people and teams in your organization put it to use? How will the solution be used?
A successful integration project needs your procurement processes and workflows mapped out and documented in the finest detail. You absolutely must understand your own organization—its people, processes, needs, and goals—to articulate to your stakeholders your needs, aims, and objectives. If you’ve done the hard work beforehand to truly understand your organization, you’re more likely to find a solution that fits your needs and delivers the value you want out of an ERP integration.
Without a firm understanding of your needs, it will be difficult to choose the right product and a provider. Use the information you gather in your planning stage to educate providers about your company and your needs. And pay attention to how they answer. It will tell you a lot about the way they think about an integration project. Which brings us to our next big pitfall…
Now, there’s always a chance that you’ll choose the wrong vendor—perhaps one that doesn’t understand your specific needs, or one that cannot truly integrate your particular procurement systems with their specific ERP. If you do make the wrong choice, you may end up with buyer’s remorse, having shelled out big money for an integration that never truly…integrates.
But there is one way to avoid this possibility. When you start talking to potential providers, you need to grill them. Hard. When you ask if they can integrate your particular systems, listen carefully to their answer. Are they saying they can do this sort of integration (implying it could be done, theoretically), or are they saying they really do have experience integrating your specific kit? There’s a difference between being able to provide genuine systems integration versus the integration being handled by transferring Excel spreadsheets or exporting flat files. Pay attention to the words they use and involve your technical team before signing anything.
Also, make sure you follow through with checking customer references. It’s a simple step that often gets overlooked. Does your prospective provider have other customers—especially customers in your sector or who use your particular systems? Are the suppliers willing to put you in touch with them? Learn as much as you can from the experience of other customers before signing any contracts, and ask them about the return on investment and value they received from their own integration projects.
This isn’t to say that betting on a smart startup (that has super-innovative kit but no customers) isn’t worth a shot sometimes. But it does mean buyer beware.
Few other projects have the potential to deliver value-adding insight for procurement than ERP integration. Yet few other technology implementations have the potential for big disruption to your organization and staff. Avoid the two biggest pitfalls. Do you best to gain a true—and comprehensive—understanding of what your choices mean for your ERP integration and its ultimate success.