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ERP upgrades – how retailers can avoid headaches

ERP upgrades – how retailers can avoid headaches
Tuesday November 26 2013

An accurate and efficient enterprise resource processing system to manage supply chain operations is vital. But software testing expert Colin Armitage highlights Oracle's impending EBS support deadline

Economic fluctuations and rapidly changing customer patterns, the shift from the High Street to online, plus technological disruption means the modern retail organisation constantly has to innovate to keep operational efficiency razor sharp. 

With competition snapping at retailers’ heels, Colin Armitage, chief executive of application testing company Original Software, said the pressure to retain market share, boost margins, get new products in stores quickly and hold their own on customer service has never been more pressing.

“To be able to do this and do it well, the well-oiled running of retailers’ ERP [enterprise resource processing] systems is vital,” Armitage stated. “So it’s no wonder that retail IT professionals and business owners recoil with horror at the very thought of an upgrade.”

Upgrades spell significant headaches for corporations, the cost of which he said can run into millions. “And it’s not just about cost – upgrades spell risk and disruption for the organisation,” he continued. “This is particularly pertinent at the moment for retailers looking down the barrel of an Oracle EBS [E-Business Suite] upgrade.”

Spotlight on Oracle EBS 11i

Extended support from Oracle for EBS 11i runs out soon and Armitage said retailers are caught between the rock of sticking with their current Oracle EBS system and taking a significant risk when support gets switched off and the hard place of an upgrade. “And it is no wonder retailers are balking at the thought,” he explained. “The EBS upgrade involves a totally new set of core financial systems, posing a significant risk to the operational efficiency and accuracy of retailers’ finance departments.”

So whether it’s an Oracle or SAP ERP, or for that matter, any other upgrade that a retail organisation might be going through, Armitage highlighted their inherent challenges for retailers.

One of the biggest is that ERP upgrades are not merely the domain of the IT department any more. “The business carries a significant load,” he said. “Whether it’s the finance or HR [human resource] department, e-commerce function or distribution system, business users will be responsible for a significant amount of the work, usually in the form of validation testing, ensuring the system is fit for purpose. 

“This all sounds very sensible, but the time drag on the business is phenomenal – retailers can spend hundreds or thousands of man days ensuring the application works, but obviously, the time spent on upgrades is time spent away from day to day jobs. This can seriously impact productivity and the ability of a retailer to meet its objectives.”

And the cost to the retailer isn’t just time and productivity. “This validation testing work tends to be manual, with business users going through swathes of tests, time and time again,” Armitage added. “For business users, who might never have envisaged a life spent validating upgrades, it’s extremely boring. Upgrades have been known to have a negative impact on employee satisfaction and can increase churn.” 

Reducing the margin for error

This leads to another cause for upgrade headaches – the margin for error. “Despite the best intentions, the fact that validation is a manual process – and a very tedious one at that – means that the likelihood of defects going unnoticed before go live rises significantly. And we all know what a defect riddled system means,” he said. “In the finance department, it can have disastrous consequences, with invoices going unpaid and inaccuracies in the P&L [profit and loss]. For e-commerce, it can be a nightmare, with website glitches causing problems for consumers, resulting in customer dissatisfaction.”

While admitting it may not be possible to completely eradicate defects before a system goes live following an upgrade, Armitage said there are strategies retailers and IT professionals can deploy to narrow the margin for error. A key element is the automation of testing within upgrade projects, which drives down the involvement of the business, puts ownership back into the hands of the IT department and can significantly improve defect detection, meaning the retailer can ‘go live’ with more confidence. 

“The problem for retailers is that the issue of upgrades isn’t going away,” Armitage concluded. “If anything, it’s getting worse as upgrades become increasingly frequent. On the bright side, it means retailers will become more adept at dealing with them. With upgrades, many businesses hesitate, wondering if they should take the leap or stick with what they have. In the future, they’ll be leaping far more quickly. So having the right upgrade procedures, the right tools to smooth the way and ultimately, the right culture and attitude to make them work will help retailers stay ahead of the upgrade game.”

Tagged as: ERP | supply chain | upgrade | testing | validation | risk | finance | e-commerce | Oracle EBS 11i | SAP | Original Software