5 Costly Mistakes to Avoid During an ERP Migration
Aaron Keeports
What is ERP Migration?
Simply put, an ERP migration occurs when data is transferred from your current software systems to a new enterprise resource planning (ERP) system.
Enterprise Resource Planning (ERP) software is integral to modern business operations, especially in B2B environments where seamless data flow and sharing are constant. In a world where ERPs can be used to manage everything from financials and supply chains to customer relationships, many businesses still rely on outdated solutions and legacy ERPs that can’t handle today’s complex integration needs.
And while migrating to a modern ERP can offer businesses a variety of impactful benefits, it does come with risk—particularly regarding integration.
For example, in B2B environments, ERP systems must integrate with external partners (suppliers, customers, logistics providers, etc.) and systems to enable real-time data sharing via EDI and API. Any disruption in these integrations can lead to lost orders, delayed shipments, supply chain breakdowns, and frustrated trading partners.
A successful ERP migration requires recognizing and addressing these integration challenges early on and having an ERP migration checklist to follow the correct steps. Here are five common pitfalls companies face during ERP migration, highlighting why ERP system integration should be a top priority from the project’s onset.
1. Customization Challenges
Some ERPs are customizable and others are not. Customization capabilities are often necessary to meet an organization’s unique needs, but they come with a significant price tag—potentially increasing project costs by more than 50%. If the core ERP system is not customizable and lacks the native features and integration capabilities required for modern business functions, companies are forced to pursue complex, manual, and error-prone workarounds.
These janky integrations can create bottlenecks and impact the flow of data between various systems, such as EDI solutions, eCommerce platforms, TMS, WMS, etc. This results in fragmented and missing data, inefficient processes, and missed SLAs. Planning integration strategies early on and identifying the capabilities your business needs from an ERP will minimize these issues.
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2. Siloed Project Teams
ERP migrations often involve large, cross-functional teams. However, these teams frequently work in isolation, focusing only on their respective areas of expertise. This siloed approach can be disastrous for integration, as different systems and customizations are not always aligned across departments.
Without proper collaboration, teams may overlook critical aspects of existing ERP customizations, making it difficult to replicate or incorporate them into the new system. Additionally, team members may not fully understand the scope of integration requirements until it’s too late, leading to rushed workarounds, rework, and missed deadlines.
Lastly, teams may set up an ERP to collect data specific to their needs, without realizing that other departments could benefit from access to this information. Engaging all departments early in the planning process helps ensure that integration requirements are addressed holistically and valuable data is shared effectively across the organization.
3. High Risk of Failure
ERP migration projects are notorious for high failure rates. In fact, about half of all ERP implementations fail the first time around. This is often due to underestimating integration complexities. Since ERP systems are critical to a number of day-to-day business operations, any hiccup in data flow between systems can lead to significant disruptions.
Moreover, ERP projects can suffer from scope creep, where the integration strategy changes as new requirements emerge. When companies fail to account for these evolving needs and do not fully consider the breadth of functionalities required, integration becomes disjointed, causing delays, budget overruns, and ultimately a failed implementation. Maintaining flexibility in the integration strategy can help mitigate these risks.
Four Hands Leverages Cleo Amidst ERP Migration
After facing challenges with its legacy ERP system, Four Hands recognized the need for digital transformation which required an integration solution that could fully automate their business processes from start to finish.
4. Phased Implementation Complications
ERP migrations are typically rolled out in phases, which can span multiple years. While this deliberate approach helps businesses minimize disruptions, it also adds complexity to the integration process. While the migration is happening, businesses are often adding new applications or modifying existing ones, requiring constant updates to the integration project.
These updates and additions make it difficult to maintain a unified integration plan. Companies that don’t anticipate these changes may experience ballooning costs as they scramble to keep the project on track. Or they might need to hire additional staff or consultants to manage the integration, further increasing expenses. By preparing for evolving integration needs from the outset, businesses can avoid unexpected costs and delays.
5. Using the ERP’s Built-In EDI Capabilities
While it might seem convenient and cost-effective, using an ERP’s built-in EDI capabilities can significantly limit your business. Built-in EDI solutions are often tightly integrated with the ERP, making ERP migrations or upgrades disruptive and costly. These solutions also typically lack the flexibility to handle various communication protocols and data formats, restricting the ability to adapt to trading partner evolving requirements.
Additionally, built-in EDI offers limited visibility and tracking for business-critical processes like order-to-cash, procure-to-pay, and load tender-to-invoice. Lastly, companies often add built-in EDI capabilities to an ERP as an afterthought to make the system more marketable. Therefore, the EDI features and performance are subpar since they are tacked on in an effort to increase interest in the product.
On the other hand, a standalone EDI solution is specifically created to perform EDI, leading to a powerful and seamless experience. Innovative, standalone EDI solutions like Cleo Integration Cloud provide:
- EDI, API, and non-EDI support (XML, JSON, flat file, CSV, etc.)
- End-to-end business process automation
- Real-time visibility into all EDI transactions and integrations in a centralized dashboard
- Pre-built, customizable integrations to popular trading partners
- Flexible service offerings such as managed services, self-service, and a blended model
- Widespread protocol support to ensure table and secure data communication… and more.
Common Dilemmas and Regrets in ERP Migration
Upon completing an ERP migration project, many businesses reflect on the process and realize what they could have done differently. Four common regrets include:
- Not Considering Integration Earlier: Many companies overlook integration requirements until later in the process, leading to last-minute solutions that drive up costs, increase complexity, and compromise the system’s efficiency.
- Not Hiring More People: As the integration grows more complex, organizations often find themselves suddenly needing to bring on additional staff to manage the workload—something they could have anticipated with better planning.
- Deploying Risky Workarounds and Custom Code: In an attempt to meet deadlines, some companies resort to creating quick workarounds and custom code to handle integration issues. These shortcuts often introduce vulnerabilities, increase maintenance costs, and reduce the long-term viability of the ERP system.
- Not Planning for Unexpected Costs: The integration phase frequently introduces unforeseen costs, from additional staffing to software licenses or extended project timelines. Careful planning and budgeting for integration from the start can help prevent cost overruns.
Start Integration Planning Early for Success
ERP migrations are inherently complex, and integration is the most critical component to ensure success. Customization challenges, siloed project teams, high risk of failure, and phased implementations can all lead to setbacks if integration is not addressed from the start. By considering integration early, aligning teams, and preparing for evolving needs, businesses can significantly improve their chances of a successful ERP migration.
Addressing integration early in the migration process is key to avoiding the common pitfalls that plague many projects, leading to a more efficient, cost-effective, and sustainable ERP solution.
If you have questions about ERP migration or integration, or Cleo's products and services, contact us at sales@cleo.com, +1.815.282.7695, or by completing our brief form fill. And be sure to explore some of our educational resources through our content hub.
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