How to achieve a cost and time reduction:

Project Team: The Integration / Migration Project is handled by a team which has experience in both QAD and SAP. This knowledge enables them to understand the requirements of both ERP’s and to map the requirement of the customer

Stage 1 – Master Data and Modeling: A focused Implementation / Migration Approach is adopted for execution. Key workshop is held onsite for key functional requirements and master data management. Models are built on QAD and SAP based on existing schema, processes and key functional requirements with revised master data and key reports. Both master data and system models are done from offsite. This considerably reduced the time taken and the model is identifiable readily by the business.

Stage 2 – Migration and Integration: Pre build connectors and utilities are used for migration and integration. For example, in P2P (Procure to Pay) process, PO is raised in SAP, Receipt is made in QAD, Matching and Payment is done in SAP. Prebuilt connectors are used for integrating PO (SAP), Inventory (QAD) and Payables (SAP) modules. This significantly reduces the time and effort taken for migration, integration and Go Live.

Stage 3 – Roll Out: Roll Out is handled through identification and handling of repeatable tasks through separate teams. Tasks like User security management, Data conversion & Migration and Configuration Management are handled offsite through specific teams with SLA.

Results: Company ABC achieved a 30% reduction in the overall time and cost in moving over to a structured dual ERP. It also achieves common Shared Services, Master Data Management, streamlined processes and elimination of BI for financial consolidation.

Lets now make a case for single ERP in ABC Inc using the same hypothetical situation…….. (to be continued)

Decision: Go for Option-A – Retain both QAD and SAP but leverage them in an effective way.

What is the business case for existence of dual ERP here?

ABC Inc has inherited QAD and SAP across plants and divisions. Both the ERP’s are in different states in terms of maturity and life cycle.

ABC Inc, after due analysis of (1) Cost & Time and (2) Optimum TCO, presents the following compelling arguments.

1.    Take advantage of the inherent strength of QAD and SAP to meet company’s long term requirements.

2.    Realign the current model to provide best of breed business process solution across the enterprise

3.    The cost of realigning the solution in their case is more effective than complete replacement.

4.    Incorporate and implement Shared Services, Master Data Management and Best of Breed processes.

Dual ERP architecture

However, ABC will have to address the following issues:

1. Since BI / DW will be receiving data from 2 ERPs – e.g. GL coming from SAP and operational data coming from QAD, it will have to eliminate any possible reconciliation issues.
2. Introduce a MDM system which will interface with QAD and SAP to effectively address data model issues. This will address data duplication, data integrity and data enrichment requirements.

ABC Inc arrives at a revised IT ecology of

QAD for Manufacturing, Inventory, Sales and Distribution and

SAP for Purchasing and Financial incl consolidation.

ABC achieves the dual structure with 30% reduction in cost and time for execution. But how does ABC plan to achieve 30% reduction in cost & optimum TCO in this approach? It has to contend with implementation of both QAD & SAP and yet attain cost balance.

Does a multi ERP environment make sense in an SME? Or should companies move to a single ERP only?  There are pro’s and con’s to both the approaches and much of it would depend on the business strategy of the company.

Lets first take a case of living with dual ERP’s with a hypothetical case study?

ABC Inc has eight plants: Plants 1 to 5 are on QAD and Plants 5 to 8, which were recently acquired, operates on SAP (Figure-1 below). Financial Consolidation is achieved through Hyperion.

Dual ERP

The issues facing the company are (1) ability to scale to future requirements (2) cost of multiple support (3) disparate master data and (4) disparate processes. All these anomalies are (1) increasing the total TCO and (2) questioning the ability to handle future growth.

ABC Inc has two options. Option-A leverage the current dual ERP i.e., QAD and SAP or Option-B move to a single ERP i.e., either QAD or SAP.

Lets make a business case for both the options. In a real life scenario other factors like availability of budget, extent of implementation complexity etc may make the decision more individual and unique. For our purposes, let see the pro’s and con’s of both the options.

(To continue)