The future of ERP: With composable ERP, interoperability and integration are not optional

Analysis

There are many facets to interoperability and integration, and any of them can derail your success with composable ERP.

Interoperability embodies the ability of solution components to exchange and use data. Not only must the ability to integrate (pass data back and forth) exist, but data must be usable by the various components — and not onerously so! Interoperability risk occurs as each new component is added to the solution portfolio. While integration and interoperability issues can arise in data, security, process, or governance, the following are critical to get right:

Data models must be compatible

With composable ERP, there’s the potential for multiple systems to house and use the same data elements. As ERP functionality is broken apart and sourced via different products/services, data that is common across solutions must be recognizable and consistent. For example, a cost center identifier may be eight digits and numeric in one solution but is 10 digits and alphanumeric in another. It may be named something completely different in a third system or may not even be a part of that solution’s basic data model. As data is shared across the solution portfolio, bridging logic may be necessary in integration middleware to ensure data interoperability.

Duplicate data must be governed

In order for the various components in the ERP portfolio to work properly, the same data may end up being duplicated across systems, or related data may be stored in separate systems. Data governance must be established regarding which product/service is the authoritative data source, and process governance must address which system serves as the primary port of entry. Governance won’t be provided by the product/service vendors, so it must be hammered out by the internal team during solution design. And it must be revisited each time the composition of the portfolio changes.

Process integrity must be manually developed

Process integrity is embedded in an integrated suite where process flow is automated, and transactions are integrated. When ERP functionality is broken apart and delivered by multiple products/services, there is no automatic process flow; it must be manually designed, and individual process steps that cross solutions must be incorporated. Duplicate steps across solutions must be resolved and process gaps filled. The systems analyst role is critical to the initial and ongoing success of composable ERP. You must ensure this role is staffed by experts who have system, process, and business knowledge — potentially a risk in this era of IT tech talent shortages.

Operations schedules must be synchronized

The various products/services in the composed ERP solution must operate on a schedule that works with the related components. For example, real-time updates in one system can create synchronization issues when integrated with a solution component that contains batch processes (Yes, there are still systems that run batch processes!) Another example is different back-up cycles across solution components that may cause synchronization problems if a restore becomes necessary to resolve an incident. An operations schedule and timeline will be integral to a composed ERP solution.

Security must be consistent

The key to securing composable ERP is ensuring that access is consistent across solution components. This means developing a more sophisticated security model than is needed for an integrated ERP suite. For example, individual ERP solution components may each have their own reporting tools. If the reporting tools come from third parties, seamless security across solution and reporting is not guaranteed. Another challenge occurs when security is applied at different layers. One system may secure at the data element layer while another secures at the record level. No wonder the security model must be more sophisticated!

What to watch for

When moving to composable ERP, watch for complexity and incompatibility that could get in the way of success.

The ability for each new component to fit and operate seamlessly is the key to success with composable ERP. Integration tools and skills are essential and become even more so as the number of ERP components expands.

Integration is partially addressed at the tools level with middleware and integration platforms automating some of the burden. However, the tools must be programmed by experts who are knowledgeable about the enterprise’s data. These experts must also have the business and IT skills to analyze how the data is used in order to develop the rules that ensure data passes properly from component to component. The size and agility of the integration team will impact how rapidly the enterprise can accommodate ERP changes.

Actions to take

Begin with the end in mind; composable ERP requires a thoughtful approach to product/service selection.

In the past, best-of-breed projects resulted in systems that didn’t talk to each other, convoluted business processes, and data issues that many users could only solve with complex spreadsheets that reconciled data across systems. To reduce these risks, your tried-and-true integrated ERP suite evaluation and selection processes must be redesigned to accommodate the potential issues created by a best-of-breed approach inherent in a composed solution. Examples of changes to the selection process include:

• Go beyond functional fit to spend equal effort on considering data model compatibility and potential data issues across solutions.
• Determine if process integrity can be assured if the new ERP component is added to the portfolio. What, if any, effort will be required to achieve process integrity?
• Assess operational interoperability — systems timing, backup schedules, incident/support processes, and development/testing processes, to name a few.
• Review the new component’s underlying security model for potential interoperability issues.
• Identify integration points and key integration actions/issues in order to understand the feasibility and potential effort involved in bolting it all together.

If integration and interoperability are handled well, ERP can be a flexible and agile foundation that can scale as your composable ERP portfolio expands. This relieves pressure to swap out your core ERP system and allows you to focus resources on innovation and growth.

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