Automotive Results from AMR Research ERP B2B Study
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This presentation discusses the automotive related results from a study conducted in late 2009 by the analyst firm AMR Research. The study looked ERP/B2B integration and the importance of having these two environments seamlessly integrated together. Updated April 2013
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Automotive Results from AMR Research ERP B2B Study
- 1. Review of Automotive Related Results From AMR Research ERP/B2B Study Mark Morley, Industry Marketing Director
- 2. The Need for ERP to B2B Integration • There are a number of key drivers for integrating ERP and B2B systems – Significant amounts of ERP data is sourced from outside a company – Data quality compromises ERP value – Poor B2B integration limits visibility into business processes – High Availability in B2B is critical Slide 2 | © 2013 GXS, Inc.
- 3. ERP & B2B Integration Study Program Goals – Build awareness of the importance of B2B outsourcing with respect to the success of ERP related projects – Understand why B2B integration is so critical to the success of ERP projects – Find out why B2B outsourcing is such a compelling proposition for manufacturers Study Topics – ERP systems cannot function properly if B2B systems are down and no information can come in from external trading partners – ERP is handicapped if external data is of poor quality – ERP ROI is limited if ERP projects are delayed Jim Shepherd Dennis Gaughan Slide 3 | © 2013 GXS, Inc.
- 4. AMR Research ERP/B2B Study Responses from Automotive Participants • 89% of respondents said they had experienced delays with ERP projects due to B2B integration issues • 61% said they were consolidating multiple disparate B2B gateways on to a common integrated platform • 32% of respondents said B2B integration staff were supporting ERP related projects • 40% of the data feeding ERP systems is sourced externally • 79% of respondents said they had lost B2B connectivity • 82% of respondents had a no ERP downtime policy • 79% of respondents have exceptions or problems on more “As management teams focus on the than 1% of inbound B2B transactions need for systems and processes to support an integrated global • 75% of respondents said they would be enforcing higher business, the importance of the relationship between ERP and B2B levels of data quality from their trading partners becomes critical” AMR Research 2009 Responses in red were the highest of the industry sectors surveyed Slide 4 | © 2013 GXS, Inc.
- 5. ERP Deployment Responses from Automotive Participants Q. Which of the following best describes your current ERP deployment? Q. Which of the following best describes what your ERP deployment will look like in 3 years? Today In 3 Years 2 to 4 regional 43% 46% systems Single global 11% 21% instance Multiple instances across business 21% 21% units and subsidiaries One global instance per line of 21% 14% business N = 28 Automotive Respondents Slide 5 | © 2013 GXS, Inc.
- 6. Externally Sourced ERP Data • ERP uses information from various external sources • Information can be sourced from customers, logistics providers and financial service institutions • Information derived from different global standards can be difficult to manage • Integrating trading partners to remote manufacturing plants can be difficult Slide 6 | © 2013 GXS, Inc.
- 7. Data Feeding ERP Systems Responses from Automotive Participants Q. What percent of the data feeding your ERP system is generated internally vs. externally? Q. What are you plans for technologies to support workforce management and procedures in the next 2 years? Data feeding ERP systems* External data feeding ERP system Supplier/ contract manufacturers Generated internally 60% 38% 3PLs 19% Generated externally 40% Other Customers/ 9% distributors 34% N =28 Automotive Respondents Slide 7 | © 2013 GXS, Inc.
- 8. External Transactions Requiring Exception Handling or Rework Q. What percentage of the transactions originating from external trading partners which are processed directly into your ERP system require exception handling or error processing? Less than 1% 21% Extensive Rework 79% of respondents said that more than 1% of 1-2% 33% transactions needs reworking If a company processes 1 Million transactions per 3-4% 26% year this represents 10,000 transactions that will need reworking More than 5% 20% N = 121 Total Respondents Slide 8 | © 2013 GXS, Inc.
- 9. High Availability in B2B is Critical • Ensuring that B2B information is available 24/7 is crucial to the operation of an ERP environment • B2B platforms ensure that externally sourced information can be used by internal business applications • Lack of B2B information could lead to production line stoppages • Business critical decisions need to be made in real time to allow operations to run smoothly Slide 9 | © 2013 GXS, Inc.
- 10. Loss of B2B Connectivity Responses from Automotive Participants Q. Has your company every experienced a loss of B2B connectivity that has impacted your manufacturing operations? Q. How important/effective is your company’s contingency plan for mitigating risk of losing B2B connectivity to manufacturing operations? Loss of B2B connectivity Importance/Effectiveness of Contingency Plan Yes Importance 71% 79% Gap = 28% ! No 21% Effectiveness 43% N =28 Automotive Respondents Slide 10 | © 2013 GXS, Inc.
- 11. Policy for no Scheduled ERP Downtime Q. Does your company currently have a policy for no scheduled ERP downtime for the end of quarter sales periods? Industry 18% 23% 26% 38% Yes 74% No 82% Yes 77% 74% No 63% 26% Auto (n=28) CPG (n=32) High Tech (n=39) Food & Beverage (n=32) N =121 Total Respondents Slide 11 | © 2013 GXS, Inc.
- 12. Program Management • Integrating ERP and B2B requires constant monitoring to ensure that any problems are resolved efficiently • Changes made to an ERP system may need to be incorporated into the B2B platform as well, or vice versa • Must ensure that the ERP/B2B integration platforms is tested and deployed correctly Slide 12 | © 2013 GXS, Inc.
- 13. Testing Approach on ERP Projects with B2B Integration Q. During the course of your ERP projects that included significant B2B integration, which of the following best describes the testing approach performed with internal participants and external trading partners? Internal Participants External Trading Partners Basic testing of most 36% obvious, common 35% tasks Robust testing of common and 48% 35% obscure, less- used functions Testing efforts were terminated prematurely to 17% 29% meet externally imposed go-live deadlines N =121 Total Respondents Slide 13 | © 2013 GXS, Inc.
- 14. Severity of Delays in ERP Projects Caused by B2B Integration Issues Slide 14 | © 2013 GXS, Inc.
- 15. Research Study Conclusions • Most of the companies in the survey base have major ERP projects planned or in progress • B2B Integration is frequently the cause of expensive delays in ERP implementation projects • ERP projects often drive new B2B initiatives and significant changes in strategies and vendor preference • B2B components receive less rigorous testing than internal ERP functions and during project delays B2B integration testing is frequently cut short to facilitate go-live dates • ERP consolidation/upgrade projects create disruption and consolidation opportunities for B2B Slide 15 | © 2013 GXS, Inc.
- 16. Thank You GXS web sites Phones US: www.gxs.com US: 1-800-334-2255, option 3 EMEA: www.gxs.eu EMEA: +44 (0) 1932 776047 Slide 16 | © 2013 GXS, Inc.
Editor's Notes
- Many companies under estimate why they should consider integrating their ERP and B2B platforms. This could be due to the fact that traditionally, ERP and B2B systems have been implemented by different IT teams.As you will see later when I go through the AMR study, as much as a third of ERP related information is sourced from outside the organisation. This could be from a variety of suppliers, logistics partners and other third parties.Information fed into an ERP systems, especially when sourced from outside the organisation, is often inaccurate. This could lead to further downstream problems once this inaccurate data starts to spread across the extended enterprise.Management teams require up to date, real time information on the performance of their business in order to make operational decisions. Finally, having access to a highly available B2B infrastructure is important in order to allow an ERP system to operate as smoothly as possible
- So coming to the study itself, there were a number of goals that we were looking to achieve with the research.Firstly we wanted to build awareness of the importance of B2B outsourcing with respect to the success of ERP related projectsWe wanted to understand why B2B integration is so critical to the success of ERP related projectsAnd finally to find out why B2B outsourcing is such a compelling proposition for manufacturers.In terms of the topics covered by the study.....We wanted to test threekey hypothesesFirstly to understand the importance of external connectivity to trading partners, if there is an interruption in the B2B infrastructure, how does this impact their ERP system?Secondly we wanted to confirm that ERP systems can be handicapped if they are fed with poor quality information from external trading partnersFinally, if B2B projects are delayed due to resources being diverted towards ERP projects, how will this impact both the ERP and B2B environments and what impact will this have on the ROI of the ERP system
- So before I go into the study in more detail, I thought it might be worth pulling out some of the key findings from the automotive participants89% of respondents said they had experienced delays with ERP projects due to B2B integration issues61% said they were consolidating multiple disparate B2B gateways on to a common integrated platformAnd 40%of the data feeding ERP systems is sourced externally
- In terms ERP deployment the survey found that 46% of those surveyed said they had between 2 and 4 regional systems but over the next three years they were looking to consolidate onto one single ERP instance.We found that ERP consolidation is one of the key drivers for companies looking to outsource the management of their B2B infrastructures.
- ERP systems use information from a variety of external sources, for example distributors, logistics providers and financial services institutions. This information could originate in numerous business systems and could have been created using different industry related standards.Due to the global nature of many companies there are constant challenges with on boarding suppliers and getting them integrated to a company’s ERP platform.
- The survey showed that up to 40% of information feeding an ERP system actually comes from outside the organisation, this is a significant number and unchecked this information could then find its way into many other business systems that feed off of the ERP system and cause significant downstream problems.The figure of 40% is the highest seen across the industries surveyed as part of this research.
- In terms of exception or error handling , 79% of all respondents said that more 1% of transactions needed re-working. Now 1% does not seem like a large number but if an ERP system is accepting 1 million transactions per year from outside trading partners then this would represent 10 000 transactions that would need reworking before they could enter the ERP system.This is a significant number and it helps to demonstrate the importance of B2B as a way of validating the accuracy of information from external trading partners.
- For many companies, having access to real time information from outside the enterprise and ensuring that the platform is available 24/7 is crucial to the operation of their business. B2B platforms ensure that information from outside the organisation can be used efficiently by internal business applications such as ERP systems. If there is an interruption to the flow of transactions from outside an organisation then the internal business systems can be severely affected.
- So we asked the question, how many respondents had experienced a loss of B2B connectivity with trading partners which had impacted their manufacturing operations. 79% of respondents had experienced an outage within their B2B environment. From an industry point of view the automotive sector had the highest number of companies who had experienced an outage.We then asked how important having a contingency plan was within their company and of those that had a plan, how effective it was, there was a 28% gap in importance versus effectiveness which demonstrates that this is a key area that companies need to address, ie improve the availability of their respective B2B infrastructures.
- This next question asked whether a company had a policy for no scheduled downtime for the end of quarter sales periods. You can see that nearly three quarters of the respondents said yes. Downtime could occur when having to rework external data or trying to re-establish communication links with external trading partners.Once again having a no down time policy was most important amongst the automotive companies, in order to support ‘Just in time’ type production processes.
- Having a dedicated program manager look after the implementation can be a worthwhile investment, they not only ensure that valuable IT related resources are being used effectively, they will also ensure that the project comes in on time and more importantly to budget.Program managers will undertake a number of roles to ensure that ERP to B2B integration projects go as smoothly as possible. Their role will include looking after the day to day communication with a community of trading partners and ensuring that trading partners can support new transaction types, data quality rules or KPIs to measure performance. Finally, they also offer support for testing and looking after the overall release and deployment of the newly integrated platform with the customer.
- One of the main impacts of diverting resources away from B2B projects to help ERP implementations was that up to 29% said that their testing efforts for external trading partners was severely affected.Not being able to check whether external trading partners can even connect to an ERP/B2B integration platform or exchange the correct documents with the ERP platform can have a major impact on both the ERP implementation project as a whole and of course any downstream applications that could be relying on the information from the trading partners concerned.
- So in closing, from a study review perspective, 89% of the respondents said that B2B integration issues had caused delays to their ERP projects.It is worth noting that in a conversation with the AMR researchers they said that such delays in both B2B planning and integration can cost companies in excess of $45,000 a day or more than $1million per month.
- Most of the companies in the survey base have major ERP projects planned or in progressB2B Integration is frequently the cause of expensive delays in ERP implementation projectsERP projects often drive new B2B initiatives and significant changes in strategies and vendor preferenceB2B components receive less rigorous testing than internal ERP functions and during project delays B2B integration testing is frequently cut short to facilitate go-live datesERP consolidation/upgrade projects create disruption and consolidation opportunities for B2B