ERP project delays costing manufacturers millions

London -Manufacturing companies with multi-million dollar enterprise resource planning (ERP) deployments are losing in excess of $45,000 a day or more than $1 million a month because of delays due to lack of B2B planning and integration, according to B2B e-commerce company GXS.

Citing the results of an AMR Research study of the tie between B2B e-commerce deployments and ERP system upgrades, GXS said nearly 85% of the companies surveyed experienced delays in ERP rollouts due to B2B integration issues.

Some 121 companies participated in the survey ranged in size from approximately $750 million in revenue to more than $10 billion. The respondents most frequently held IT roles within their organisation (62%) with the remainder holding various line of business positions. The high tech industry (32%) was the largest vertical represented in the survey, followed closely by food % beverage (27%), automotive suppliers and OEMS (23%) and consumer products (18%).

Among these respondents, AMR Research found a strong relationship between ERP projects and new B2B e-commerce needs.

According to the study:

-65% of respondents performed inadequate testing of B2B prior to new ERP launches;

- 47% of companies expanded the scope of their B2B efforts (e.g. new transaction sets or trading partners during ERP projects);

- 79% of companies have a greater than 1% error rate for B2B data; and

- 57% of companies have experienced a production outage due to lack of B2B connectivity.

Importantly, the AMR Research survey also found 34% of data in ERP systems originates from outside the enterprise(e.g., from customers, suppliers, 3PLs, etc.). This, said the study, demonstrates the importance of integrating external trading partner transactions and data with ERP systems.

While many companies are focused on managing data inside the corporate eco-system, that approach addresses less than two-thirds of the data typically feeding an ERP system, making it costly and incomplete. By addressing the external data feeding their ERP systems, companies can get more out of their investment and ensure the accuracy of their trading partner transactions.

Similarly, 34% of respondents said that B2B integration staff are supporting ERP-related projects. A lack of resources to manage both B2B and ERP related integration projects means that B2B projects could be vulnerable to implementation delays and relationships with trading partners could be compromised.

In an article on the study, AMR Research said, "Changes to an organization's ERP system often drive significant changes to B2B integration strategies. As a part of the ERP project, many companies will reexamine their entire ITarchitecture strategy and attempt to modernize their infrastructure while reducing the number of IT suppliers. Almost 60% of respondents said they were consolidating multiple, disparate B2B gateways onto a common platform."

GXS helps companies manage their B2B/ERP integration projects most often through its B2B outsourcing portfolio, GXS Expert Outsourcing through direct integration with a variety of ERP planning software and services including Oracle, SAP, Ariba and Microsoft Dynamics.

By outsourcing the management of their B2B environments, businesses can be sure that their B2B networks benefit from the most advanced B2B technologies and that they can achieve 100% trading partner participation. In fact, according to AMR Research, "The topic of managed services comes up in every B2B discussion we are having today, and we expect that trend to continue as customers look to get leaner and better at managing B2B integration."

"The symbiotic nature of B2B and ERP is often overlooked, as many manufacturing companies tend to focus design, development and testing efforts on business processes within the four walls of their enterprise. Project leaders often forget the critical supply chain links and external data flows needed to power ERP applications," said Steve Keifer, vice president of product and industry marketing at GXS. ³

"Too many companies get half-way through a new ERP roll-out to discover that they are not staffed to support the massive mapping, testing and trading partner management activities necessary for ERP upgrades. Our goal is keep ERP projects on-schedule and under budget with a best-in-class approach to B2B integration."