ERP Myths & Misconceptions: Business Data

A common ERP myth lies in the expectation of when and to what extent of the much-promised improvements in business information and analytics will occur. There is absolutely no question that ERP systems contain business data which is broader and deeper than what existed before. There is no question that ERP begins generating that data in real time on day 1 of go-live. There is no question that end users are hungry for the information that exists. Why, then, does this myth persist?

The first reason is that when an organization does an abrupt changeover from one system to another - as is the case with ERP - there is no chance to perform thorough information reconciliations in parallel. On day 1 of ERP go-live, it is up to the functional and information management teams to define how the tens of thousands of data fields should be assembled into information. Some amount of this will be done in pre-implementation testing, but testing proves out a small subset, and never the total. Also, changes in personnel over time can result in philosophical differences. When you look at revenue on Day One, you can be pretty certain it contains all of the invoices you generated on Day One. What else does it contain or not contain relative to your legacy information? Sales tax? Prepaid freight? Are credits and allowances negative revenue, or do they show up as an expense? How about customer rebates? The list goes on. When a senior executive comes to you with a poor financial performance number after the first financial closing and says, “This number has to be wrong,” how are you going to proveor disprove that statement?

Migrating Mountains

The second reason business information is overpromised and under-delivered on day one is the idea that a world class ERP system will – by definition - contain a world class business information system. This is another ERP myth. ERP vendors – who have incredible depth and experience at automating business processes and integrating transactional flow – rarely have a similar amount of depth and experience with business analytics. A mediocre tool is going to yield mediocre results. Companies would be ahead in the long term, to make the business analytics tool decision independent of the ERP software decision.

Another reason is that the technology of building ERP data structures which can be accessed by an analytics tool is completely new to the organization, and requires a learning curve. Again, this is not something that is easy to learn in test mode, where the data is often made up, and there is not enough of it to do volume testing. Migrating mountains of ERP data into a format that makes it easily accessible is not sexy, but it is absolutely essential, and it takes time.

Companies can minimize this misconception by recognizing these challenges at the outset, and adjusting expectations accordingly. Otherwise, six months after go-live the organization is liable to conclude that the promised ERP ROI on improved business information was a myth.

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Richard Barker

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Richard Barker