ERP Replacement and The Apps Ecosystem
If you are replacing your ERP, related systems quickly come up for replacement as well. Should you isolate the change or “clean house?”
Replacing major systems brings high anxiety to a campus. This anxiety is spawned from concerns about spending vast amounts of money, bringing such a major change to the constituents of your institution, disruption of strategic initiatives and regular business, and more.
Many decision points arise, including: how broadly should processes be redefined or reengineered; should I shift my organizational structure to take advantage of these changes; how will I prepare everyone to use these new processes and systems?
So many questions! As you prepare for the journey ahead, you will also discover many systems that integrate with your core ERP systems. Finance systems require the chart of accounts to be recorded correctly to source financial transactions. Information about employees, faculty and students needs to flow to many other systems.
Since very few processes begin and end in a single system, your team will be forced to think more broadly about your scope on a regular basis. This process focus will inevitably bring up questions about replacing some of these ancillary systems while you are replacing the ERP systems. Why spend money on integrating an antiquated system with your new ERP and changing business processes, when you could replace this old system with a modern alternative?
You’ll be faced with multiple choices with some systems that are not explicitly part of your ERP scope on day one. It will be important to define a strategy and process to work your way through these systems. At Ohio State, we’re replacing our HR/Payroll, Finance and Student systems as part of a single project. There are over 600 related systems that need to be reviewed and a disposition decided. A question that comes up often is “how can you spend so much money and not solve this (insert system in question) issue?”
On one end of the spectrum, you can limit your ERP project scope very strictly and not replace anything else. If you are not reengineering a significant number of business processes, this can save project cost and lower execution risk—but don’t be surprised about finding a few exceptions along the way. Two side effects of this strategy are that 1) it will inherently limit some broad business process changes that you may wish to pursue and 2) reintegration of these systems can be risky and costly.
The other end of the spectrum is to replace many related systems that can move your overall strategy and business processes forward together. By heading down this road, you can expect many closely-related systems to be on the table for replacement, but increased scope brings increased cost and risk. Discipline will be needed to not take on scope too expansive for your budget and timeline. In addition, there is some level of chaos in multiple system choices and replacements occurring simultaneously. Even if your ERP vendor has close partners in these spaces, you are likely to be working through these scope decisions farther into your project than is optimal.
I have found multiple systems that are difficult to retrofit. The most difficult are custom built systems, which were often not engineered for multiple types of financial or person data, so the retrofits can be costly and risky. This may lead to requests for an intermediate translation tool that can bridge the gap, reducing or eliminating the need to retrofit the older system. The most common use case is in chart of accounts translation, but other cases exist as well (ID numbers, procurement category codes, HR action codes, etc.).
Beware! These translation systems are deceptively simple to start with but contain major risks as you move forward. They can bring increased complexity over time as the nuances of the translation become clear, and they do not age well past go-live, as the legacy side of the translation does not exist for new values you create after go-live. In this scenario, you can end up essentially maintaining your new codes AND legacy codes at the same time. Not operationally efficient, right?
We have many custom systems that we’ve decided to replace in our project—in many cases due to the ability of our new ERP to accommodate the functionality. This may be the easiest sell for replacement you’ll find!
Another difficult system type to reintegrate is aging vendor systems. Some of these systems do not have code or configuration available, nor staff knowledgeable on how to change them. They are also prime candidates for replacement. Modern cloud functionality can often be found to accommodate the functions of these systems.
As an institution, you will also need to decide how to pay for the retrofitting work that needs to be done. Will budget be included in the ERP project to support these changes? If not, how will the costs be accounted for? It is often a controversial topic on every campus with no perfect answer.
Planning for Success
A critical step in your planning will be to decide on an approach, decision criteria and a mechanism to track and disposition these systems. The work coming out of this effort will be mainly made up of integrations, conversions and system decommissions.
Of the over 600 systems involved in our program in some way, we have successfully dispositioned approximately half, though we expect to find more as we move ahead. I spoke to another large institution recently that had cataloged over 1400!
Here is our status as of early July (none = unresolved):
We have found some patterns beginning to emerge, for example:
- Accounts receivable—As we work to centralize this function, we see the retirement of many small AR systems that departments are running today in lieu of the new central system.
- Person data—We have been working over the last few years to provide key web services from our central integration platform. One of the most successful has been the Person Service, which can deliver basic demographic information on faculty, staff, and students to other systems with a lightweight service call. This has started to pay off in reducing future intermediate data stores and heavy batch integrations for web sites, systems and reports. Many of these areas can move to services now and face a much smaller change at go-live.
Summing It Up
There is a significant amount of work here, regardless of your ERP platform choice and regardless of on-premises or cloud options. Planning and budgeting for this effort is a critical task in your preparations, knowing that early estimating for it can be a challenge. The sooner you can gather your inventory from all system owners at your institution, the better you can get your arms around your actual scope.
With the expanding functional footprint of new platforms, you will likely find future operational savings in the opportunity to decommission some of these systems; but you must watch for hidden costs in decommissioning, data conversion and archiving requirements.
With any major system replacement, there are many strategic decisions to make. How to deal with the surrounding systems is a major, often neglected conversation in the early stages of a project. Get organized—take your inventory early, make a strategic plan related to ancillary systems, and move forward!
For some additional insight on application decommissioning, check out this video!
The Tambellini Group is the world’s leading independent analyst and advisory firm dedicated exclusively to higher education. Tambellini offers direct interaction with the top industry analysts and access to custom advisory services based on verified data and unbiased research. Tambellini just released the 2018 Student Systems U.S. Higher Education Market Share, Trends, and Leaders Report on July 2, 2018, with an earlier accompanying report on Human Resources and Finance Systems in May 2018. Do you need expert advice and data on peer trends for an ERP replacement? Contact Tambellini to learn how to get access to Tambellini’s reports and analysts today.
The views and opinions expressed in this article are those of the author and do not necessarily reflect the official policy or position of The Tambellini Group. To express your views in this forum, please contact Katelyn Ilkani, Vice President, Client Services and Cybersecurity Research, The Tambellini Group.