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Postmodern ERP strategy hinges on data integration

Analysts walk you through the data integration strategies behind a postmodern ERP approach, while a semiconductor company explains how it undertook this type of project.

Companies that explore a postmodern ERP strategy must ensure consistent, validated data management, while also becoming more familiar with new vendors to help them achieve this goal. Middleware acts as an important piece of the approach.

The goal of postmodern ERPs is to use the best applications possible -- typically from two or more providers -- in each area of a business, while ensuring that those apps are able to integrate with each other as necessary.

Rick Cimino, enterprise solutions network leader at auditing and consulting firm KPMG, said that organizations adopting a postmodern ERP strategy face challenges around integration and data management.

"There is the need to integrate together all those different applications, so middleware integration tools will be extremely important, even more important than they are today," he said. "I think we're going to see middleware software vendors become as notable as ERP vendors."

Denise Ganly, analyst at Gartner, agreed: "Most organizations don't do data or information management very well, so that's at the heart of it."

Diagram of basic ERP functions

Struggles over who owns data

Performing data management the right way involves establishing the disciplines around it, as well as implementing the tools that automate or support those disciplines, Ganly said.

I think we're going to see middleware software vendors become as notable as ERP vendors.
Rick CiminoEnterprise solutions network leader, KPMG

Because master data management (MDM) is a discipline as well as a technology, enterprises must have somebody who owns that data, maintains that data, authorizes changes to it and establishes what the criteria are, according to Ganly.

However, most organizations struggle with that goal because they get into political battles about who owns the data, where it's maintained and who can access it, for example. "So, those are issues that have to be resolved ... and then you put the tool sets on that help with that," she said.

In addition, enterprises have to deal with day-to-day issues -- for instance, pulling in unstructured data from public data sources in which companies have no control over how the information is set up or maintained or even how clean it is.

"Data is the fuel for the beast, but it is probably the most difficult aspect of postmodern ERP," Ganly said. "That's why a lot of organizations tend to fall back on, 'Let's try to get as much as we possibly can from one vendor because we can control the data structures,'" she said.

Integration done well is the goal

Part of what makes a postmodern ERP strategy possible is that the capabilities of integration tools are much better than they ever have been, said Bob Scarborough, CEO and co-founder of Tensoft Inc., a SaaS and ERP vendor in San Jose, Calif., that sells to the semiconductor and high-tech industries. As such, the challenges of postmodern ERP are less around the tool sets and more around understanding what creates good integration and good design, he said.

"The challenge is not the integration itself, but knowing how to do it well," Scarborough said. Companies get stymied by the details of how to ensure clean data in terms of who owns it and how to validate such data.

"So, they end up with these convoluted processes where they're integrating [and] bouncing back and forth between systems, which is not effective," he added.

It's cleaner to have a whole process in one data system and then integrate the beginning and the end of the process, for example, than to have a business process that goes back and forth between systems 10 times, he said.

"The tools are there if you think about it in a systems way, i.e., what is the easiest and most efficient way to get the data moving between systems," Scarborough said. "This is where a systems integrator or someone who has systems knowledge comes in."

Example of moving to postmodern ERP

In 2014, Tensoft customer Dialog Semiconductor started to use Tensoft's on-demand integration software to incorporate its semiconductor operations and supply chain application with SAP Finance in an effort to move to a postmodern ERP strategy.

A year earlier, Dialog Semiconductor, a provider of mixed signal circuits for mobile devices, acquired Tensoft customer iWatt, a maker of digital power management integrated circuits. Consequently, the companies had to integrate all their systems, said David Sutton, Dialog's former IT director, who was involved in the project.

Because Dialog Semiconductor ran SAP, integrating iWatt into Dialog Semiconductor necessitated a move to SAP Finance first, which required linking a Tensoft semiconductor operations system to SAP. Tensoft's integration product supported the flow of iWatt's manufacturing financial results to SAP, according to Tensoft.

"The integration with SAP went really well," Sutton said. "The simplest approach is to have a best-in-class piece of software doing what it does and not try to make an ERP system keep track of the semiconductor ins and outs and yields because that's not what it does well. [The ERP system] is good at doing the financials and maybe the accounts receivable."

Third parties may substitute for elite talent

For enterprises taking a postmodern ERP strategy, they'll need to go beyond the ERP sellers and also become conversant with integration software and MDM software vendors, he said.

"If I'm a customer and I'm going to be implementing a postmodern ERP [strategy], I'm going to really have to rely on third parties more so than I have in the past," Cimino said. "That's because I'm just not going to be able to afford to hire and retain top-notch talent across five different software packages."

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