Matt Florian
Practice Director, SAP Delivery at Hakkoda
David Millman
Lead Partner Sales Engineer at Fivetran
Following a successful S/4 implementation, it is remarkable how many organizations choose to defer integrating their historical legacy ERP data (e.g. SAP R/3 ECC) with their S/4 HANA data. It’s a risky move they make hoping to save money with their global systems integrator, but the gamble is based on the flawed assumption that business users can visually integrate their historical data on the fly as they wait for their new SAP investment to aggregate the information it will need to run their analytics independently.
In 10 years of working with SAP migration clients, I have never seen this strategy work. On the contrary, the result is that the business ends up flying blind for three to five years. During that time frame, they are failing to effectively plan demand, and the impact is both significant and cumulative. The hidden costs of the swivel chair approach to SAP migration analytics are many, and include the loss of stock value for publicly traded companies, cost overruns due to excess material supplies, and lost revenue due to insufficient products. In addition, this decision results in secondary project costs as the business races to fill the insight gap.
So many data consultants will tell you they do SAP work, and in a certain sense, that’s true. But you can think about data consultants the way you would a blacksmith: anyone can beat on a piece of metal, but it takes finely honed craftsmanship to turn that metal into a well-balanced sword. Organizations looking to do more with their ERP data don’t want a consultant who can beat on metal. They want a partner that will build a balanced sword that can help them cut through to their revenue goals.
The Pitfalls of Global System Integrators (GSIs)
Global System Integrators (GSIs) play a pivotal role in guiding organizations through complex ERP implementations. While their expertise in process implementation is invaluable, their approach to integrating analytics often leaves much to be desired. The “Swivel Chair Strategy,” frequently advocated by GSIs as a temporary fix, is a clear example of this shortfall. This strategy involves manual data integration efforts by business users until the new system is fully operational, which is inherently problematic for several reasons.
Underestimating the Intricacies of Data Integration
GSIs, focused on timelines and deliverables, may underestimate the complexities involved in data integration. Data within an organization is often siloed, inconsistent, or formatted differently across systems, making integration a challenging task that requires sophisticated strategies and tools beyond mere manual efforts. The assumption that business users can temporarily manage these discrepancies through ad-hoc methods ignores the potential for errors and the inefficiencies that arise from not having a unified data architecture.
Overestimating Team Capabilities
While teams within organizations are typically knowledgeable about their domains, expecting them to manually manage data across disparate systems is unrealistic. This not only puts undue strain on employees but also distracts them from their core responsibilities. Moreover, it assumes a level of cross-system visibility that is often not present without advanced data integration tools, leading to decisions made on incomplete or inaccurate data.
What is a TRE’s Key Function for Healthcare Researchers
1. Delayed Timelines
ERP migrations and integrations are complex projects that often encounter unexpected challenges and delays. These delays can be exacerbated by the Swivel Chair Strategy, where manual processes are initially thought to be temporary but become semi-permanent solutions due to extended timelines. Each delay not only impacts operational efficiency but also deepens the disconnect between old and new systems, making it harder to achieve a cohesive operational state once the new system is finally in place.
2. Complex Analytics
Today’s businesses operate in dynamic environments where decisions need to be based on real-time, comprehensive, and predictive analytics. The Swivel Chair Strategy falls short as it cannot support the depth and breadth of analytics required for effective operations. Businesses rely on forecasting, trend analysis, and strategic planning that require detailed and integrated data models. When data is fragmented or manually compiled, it leads to inaccuracies that can mislead decision-making and strategic planning.
3. Financial Overrun
The initial cost savings anticipated from delaying full integration are often illusory. Organizations frequently fail to recognize the severity of their data integration gaps until significant issues arise, leading to rushed and expensive projects to address these gaps. The longer the delay in proper integration, the higher the costs in both rectifying the integration and dealing with the consequences of operational inefficiencies. Extended implementation times not only increase direct costs but also accumulate technical debt that can stifle future innovation and adaptability.
A Better Approach: Avoid the Swivel Chair
The “Swivel Chair Strategy”—a term used to describe the manual process of toggling between disparate systems to manage data—is not just a temporary inconvenience; it represents a significant risk to an organization’s financial health and operational integrity. Rather than defaulting to this risky and costly approach, a more strategic and forward-thinking strategy involves planning for a robust modern data platform for the integration of ERP systems from the outset. This proactive approach minimizes risks and sets a solid foundation for future growth and efficiency.
The Importance of Early and Comprehensive Integration
When ERP systems such as SAP R/3 ECC and S/4 HANA are fully integrated from the beginning, organizations benefit in several critical ways:
- Data Consistency: Integrated systems ensure that data flows seamlessly between old and new platforms, maintaining consistency, reducing errors, and eliminating data silos.
- Enhanced Decision-Making: With a unified data source, decision-makers have access to comprehensive insights, enabling more accurate forecasting, inventory management, and strategic planning.
- Operational Efficiency: Streamlined data processes reduce the need for manual intervention, thereby enhancing productivity and allowing employees to focus on higher-value activities.
Cost Advantages of a Unified Data Platform
The initial investment in integrating ERP systems might seem substantial, but when considering the long-term implications, the benefits far outweigh the costs. Using a unified data platform like the Snowflake AI Data Cloud can be particularly advantageous:
- Scalability: Snowflake’s architecture allows organizations to scale their data storage and computing needs dynamically without significant upfront costs. This flexibility is crucial during ERP integration, as data volumes and processing needs can fluctuate.
- Performance: With high performance and concurrency, Snowflake supports complex data analytics across integrated ERP data, providing real-time insights that are essential for agile business operations.
- Cost Efficiency: Snowflake’s pay-as-you-go model ensures that companies only pay for the storage and compute they use. This can be significantly more cost-effective than maintaining multiple legacy systems or investing in expensive hardware for native SAP solutions and data processing.
Reducing Long-Term Financial and Operational Risks
The financial and operational turmoil associated with the Swivel Chair Strategy—from delayed reporting and poor decision-making to increased technical debt—can be severe. By investing in a unified data platform and ensuring comprehensive integration at the outset, organizations can:
- Avoid Cost Overruns: With integrated systems, companies are less likely to incur unexpected costs related to data reconciliation, additional software needs, or emergency interventions to fix integration issues.
- Minimize Disruption: A well-planned integration strategy reduces the risk of operational disruptions that typically arise from system incompatibilities or data inconsistencies.
- Future-proof the Business: An integrated, scalable ERP system equipped to handle evolving business needs and technological advancements positions a company for long-term success.
The Art of ERP Analytics Integration
Creating an ERP analytics data platform is far more than a mere technical exercise; it’s a craft that requires a deep understanding of both the tools at hand and the broader business landscape. Just as a blacksmith transforms raw metal into a finely balanced sword through precision and skill, a skilled SAP data consultant meticulously crafts a seamless SAP-centric data platform from various and often complex data sources. This process involves not only aligning different data types and sources but also harmonizing them in such a way that they enhance the company’s operational workflows and decision-making capabilities.
It must integrate seamlessly into the new enterprise operating model.
Beyond Technical Execution: Crafting a Strategic Asset
The true art of ERP analytics integration lies in going beyond mere technical implementation— it’s about envisioning how disparate pieces of data can interlock to create a cohesive whole that drives business forward. Consider the following aspects:
- Holistic View: A well-integrated ERP analytics system provides a panoramic view of the enterprise, linking everything from supply chain logistics to customer engagement metrics. This comprehensive visibility enables more informed strategic decisions and can uncover hidden efficiencies.
- Customization and Flexibility: Each business has unique needs and challenges, so ERP analytics integration must be tailored. A crafted, customized approach ensures that the data platform solution flexibly adapts to the business’s specific rhythms and requirements.
- Future Scalability: As businesses grow and evolve, their data systems must grow with them. An expertly integrated SAP-centric data platform is built with scalability in mind, designed to accommodate future expansion in both volume and complexity without requiring a complete overhaul.
Choosing the Right Blacksmiths in the Modern Data Stack with Fivetran and Hakkōda
Undergoing an ERP analytics integration into a modern data platform such as Snowflake is a pivotal transformation for any company, and choosing the right partner for this journey is crucial. The ideal partner is more than a service provider; they are collaborators and guides through the complex landscape of the modern data platform.
Qualities of an Ideal ERP Integration Partner
- Deep Industry Knowledge: Look for a partner with proven expertise not just in ERP systems but also in your specific industry. This depth of knowledge is crucial for anticipating needs and challenges specific to your business context.
- Commitment to Quality: Your chosen partner should have a demonstrable track record of successful integrations, highlighting a commitment to quality and attention to detail.
- Strategic Insight: Beyond technical skills, the right partner offers strategic insights that align with your business goals. They should be able to foresee potential issues and provide solutions that not only fix immediate problems but also position your business for long-term success.
- Support and Training: Post-integration support and training are crucial. Your partner should provide the necessary training to your staff and offer ongoing support to help you navigate any challenges as you adapt to the new system.
Ensuring Success
Business limitations and swivel chairs are eliminated by building a single pane of glass on an Enterprise Grade platform like Snowflake, that has cloud scale that is constantly enhanced with class leading ML and AI features like Cortex.
These combine to power new contemporary insights, yet the most important piece is accessing the SAP data at the heart of the current business. For this we look to Fivetran, with a comprehensive set of capabilities to move SAP data from on-premise ECC, S4 and RISE deployments, quickly and efficiently with minimal latency. In fact, any legacy ERP that is being replaced by S4 can be connected to Fivetran for loading into Snowflake.
Fivetran has a proven track record of moving this data from the largest to the smallest deployments, helping customers solve this problem when other typically recommended approaches have failed.
In future articles from Hakkoda and Fivetran, we will take a deeper dive into Fivetran’s SAP migration analytics capabilities and explore the art of the possible when enterprises integrate their SAP data with historical ERPs and other critical sources in the Snowflake AI Data Cloud.
Ready to unlock enterprise analytics and advanced forecasting capabilities with the help of trusted modern datasmiths? Talk to one of Hakkoda’s SAP experts today.
The post The Hidden Cost of the SAP Migration Analytics Swivel Chair Strategy appeared first on Hakkoda.