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Migration to a Standardized ERP System Migrating to a Standardized ERP System in a Cloud Computing Environment at ABC
Corporation Minh Khiet Do Managerial Applications of Information Technology – IS535 (ON) Section B
DeVry University, Keller Graduate School of Management Course Project Example used with permission from student 1 Migration to a Standardized ERP System
Table of Contents
Abstract 3 Company Background 3 Business Problems 4 HighLevel Solution 5 Approach 5 ABC’s Systems 6 Detailed Options/Solutions
Web Application
Native.NET/Java
Database Type
Management/Monitoring Tools
Security Risks
Changing Cloud Providers
Dynamic Scaling 9 Highlevel Implementation Plan
Changes to Technology
Changes to Personnel 20 Conclusion 22 Summary of Recommendations 24 References 26 2 Migration to a Standardized ERP System 3 Migrating to a Standardized ERP System in a Cloud Computing Environment at ABC
Corporation
Abstract
The business problem to be solved is how to improve operational efficiencies, reduce IT costs related to ERP systems, and improve insight into the financial management aspects of the company for improved strategic planning and performance monitoring. Company Background
ABC Corporation (ABC) is a twelve billion dollar ($12B), publicly traded, global management consulting and technology company headquartered in the United States. ABC has
two business units, a public service sector that focuses on supporting federal, state and local
government needs, and comprises eighty-nine percent (89%) of corporate revenues; and a
commercial service sector that supports all other types of industry and accounts for the remaining
eleven percent (11%) of corporate revenues. The company has over 52,000 employees globally.
ABC is the product of rulings by the Security and Exchange Commission (SEC) in the
late 1990’s that forced large public accounting organizations to divest themselves of their
consulting branches due to perceived conflicts of interest. Examples of the divestitures include
Arthur Anderson who spawned Accenture, or KPMG that spun off KPMG Consulting (later to
become BearingPoint). ABC spun off from its “Big 5” accounting parent in 1999, taking all of
the parent company’s non-accounting related work with it. By 2000, they were fully independent
of their parent company and began to grow within their U.S. based operations. During 2002,
Arthur Anderson filed for bankruptcy protection and ABC decided to purchase assets in foreign
countries, thereby creating an immediate global presence and also tripling their revenue base. By
virtue of this rapid growth, the existing IT infrastructure was not closely reviewed and has Migration to a Standardized ERP System 4 created redundancy as well as a question as the reliability and accessibility to critical global
financial data. In order to overcome these issues, “stove-piped” IT solutions that are unstable or
not well integrated with a main system, as well as other solutions that require manual
transference of critical data have been developed.
Business Problems
ABC currently has a presence in over 30 countries and the home office in each country
operates on one of the following Enterprise systems: PeopleSoft, Infor (formerly Baan), SAP or
Deltek. To further complicate matters, the umbrella corporation that owns all of the various
entities (ABC Holdings) took a PeopleSoft base ERP program, customized it without the
assistance of Oracle and has created a quasi-proprietary ERP system called “Obtuse”. Oracle has
refused to continue support of this system because it has become so customized by ABC that
they can no longer identify their core code. Obtuse has failed to meet Sarbanes-Oxley or SAS 70
ii requirements and in order to work around this ABC has created an intricate solution that
requires the manual uploading and downloading of data through Excel spreadsheets and
concludes with the consolidation of all financial data via Oracle’s consolidating system called
Hyperion.
The impact of this hodgepodge of ERP systems to ABC is broad. As noted earlier, the
systems are not well integrated. ABC must maintain extensive financial and operational
reporting staff in order to manually process all of the data each month. They are paying
maintenance fees on six different financial and operational management systems as well as per
seat costs. An inordinately large IT staff must be maintained at each site in order to support the
unique needs of each system. Further, corporate management at ABC Holdings is only able to Migration to a Standardized ERP System 5 have insight into the financial health of their company at a high level and cannot easily access
project level detail at the various office locations around the globe. High-level Solution
In order to more effectively manage the financial and overall operational aspects of ABC
for strategic decision making, I propose that ABC consider transitioning to a single ERP system
that meets the broadest needs of all of their entities and to streamline their IT functionalities to a
single hub or a cloud base, which will have the added benefit of allowing the
financial/operational support to also be streamlined thereby reducing both IT and Finance
staffing requirements. ABC may also be able to recognize further cost savings in the per seat
pricing because of economies of scale in transitioning to a single ERP solution. The final benefit
for ABC could be one of social responsibility – reducing their carbon footprint creates a more
environmentally friendly company by reducing brick and mortar space requirements.
Approach
Determine if a single ERP platform, possibly set in a cloud computing environment will allow the company to achieve the aforementioned goals.
Through the use of subject matter experts (SMEs), determine if each division within ABC
has a limitation that requires it to utilize one ERP system over another – e.g., does each division provide a different service that is better supported by a specific ERP solution; or are there unique, country specific legal compliance requirements that only one specific ERP system addresses. Once accomplished, select the single ERP system that meets the greatest needs and determine if any “work arounds” will need to be accomplished. Finally, in conjunction with Migration to a Standardized ERP System 6 systems analysts and other SMEs, determine what functionality, if not all can be moved to a single hub or to the cloud. ABC’s Systems:
The following are the systems ABC utilizes to support both core business systems and support systems:
1. Hyperion – Hyperion is an Oracle product commonly used for consolidation of financial data from multiple sources. It can interface with most ERP systems (although some better than others) so that the need for manual input is alleviated.
2. SAP – this is one of the top five ERP systems in the world with over 35,000 clients in more than 120 countries. It is utilized by thirty percent (30%) of ABC’s global offices and integrates well with Hyperion. Although it can be modified for use in the professional services sector, it lacks the robustness and ease of use found in other ERP systems that have been specifically developed to support professional service entities and government cost accounting requirements. As such, the system does require some accounting functionality to be supported in an environment that is external to the ERP system. Still, SAP has a strong accounting, HRIS, payroll, time keeping, and CRM components. Its standard database is on a SQL platform and operates in a Windows environment. SAP has traditionally been an onsite application and has only recently
started to explore the software as a service (SaaS) market. As such, SAP cannot yet support cloud computing needs. Migration to a Standardized ERP System 7 3. Infor – Infor is the third largest global ERP provider (behind SAP and Oracle) with over 70,000 customers; however, their focus is the manufacturing environment, not the professional services industry. Infor’s database is an MS SQL platform and operates in a Windows environment. It offers accounting, HRIS, payroll, distribution and manufacturing (e.g., bill of materials or kitting) components, yet lacks strong CRM capabilities and requires manual operations outside of the financial component to meet government cost accounting standards. It clumsily integrates with Hyperion. This ERP solution is considered to be more suited to middle market companies and may not be robust enough to fully handle the needs of ABC on a corporate wide basis. Currently ten percent (10%) of ABC sites use Infor. Infor yet support the SaaS market.
4. PeopleSoft – PeopleSoft is one of several ERP solutions offered by Oracle. Its database is on an MS SQL platform and it operates in a Windows environment. It offers accounting, HRIS, payroll, time keeping performance and CRM modules that are robust and competitive with those offered by SAP. The ERP solution still does not meet all of the requirements of government cost accounting with the ease that the Deltek product does, so some financial activities need to take place outside of the main environment. PeopleSoft integrates well with Hyperion and has been successfully implemented in a cloud environment through Amazon EC2. Oracle offers both private and public cloud solutions. Twentyfive percent (25%) of ABC’s offices use PeopleSoft.
5. Deltek CostPoint– Deltek is considered the leading ERP solution for government contracting and professional services enterprises with over 11,000 customers. It operates Migration to a Standardized ERP System 8 in a Windows or Novell environment and its database is in an SQL platform. It offers strong accounting, CRM, HRIS, performance management, procurement, and inventory modules. Deltek’s robust professional services and government cost accounting focus resolves the need to perform critical financial functions outside of the primary financial system. It integrates with Hyperion, but not as efficiently as SAP or PeopleSoft. Deltek lacks a global presence but has begun to operate in the SaaS market offering private and public cloud solutions. They do presently offer some services through the cloud. Approximately thirtyfive percent (35%) of all ABC sites use Deltek.
6. Obtuse – this ERP system is derived from a PeopleSoft base and is only used by the holding company. It is completely noncompliant with government cost accounting needs as well as other government reporting needs (e.g., 10K, 8K, SarbanesOxley and other financial reports). Its database and operating platform are the same as PeopleSoft’s.
This software will not be considered as an adequate solution to transition the entire corporation to.
7. MS Excel – this product is used heavily to supplement ABC’s various financial systems (with the exception of those sites on Deltek) and is used by all of the divisions to prepare data for financial consolidation to Hyperion. It is ultimately used to augment accounting systems; however, is a poor solution. Due to the open nature of excel, version control, access control and other problems exist, as does the error rate due to the manual input requirements. The use of excel to assist in the generation of financial reports places all financial data into question and increases the audit risk for the corporation and its investors. Migration to a Standardized ERP System 9 8. Network and infrastructure – ABC has a large central purchasing organization that all divisions must utilize when procuring equipment. As such, PC’s are either Dell’s or IBM’s, and all systems operate on Windows NT with standardized configurations. Because there is no central purchasing organization, different parts of the business use different equipment. Implementing a standardized ERP system in a cloud or at a central hub location can be easily achieved due to this standardization; however, no location has sufficient server capacity to support a single ERP system, so increased server needs as well as the transition or relocation of IT resources to a central hub will need to be considered. 9. Website – ABC has an excellent website with intranet and extranet capabilities. It is well
maintained at the ABC Holding’s office site in Vancouver and allows for sharing of some
data. Detailed Options/Solutions
ABC has four viable ERP systems inhouse that are operational. Two of these systems can offer a cloud based solution (SaaS), which is desirable from a consolidation standpoint for ease of use and for reducing the capacity requirements of the globally distributed IT departments.
All of the ERP systems operate on the standard operating system that ABC already uses, Windows NT and all of the databases are SQL which ABC is familiar with. All four of the ERP systems offer all of the necessary functionality across all operational needs of the corporation; however, only two are truly oriented towards professional service companies (Deltek and PeopleSoft) and only one is truly oriented towards government cost accounting requirements, which comprises eightynine percent (89%) of ABC’s business revenue. Migration to a Standardized ERP System 10 The major questions to be answered in determining which ERP system to select are: 1. What is the return on investment of a cloud environment versus an inhouse hosted solution
2. What is the total cost of ownership for each system under each option (cloud based if available versus inhouse hosted)
3. Will additional hardware be necessary to operate in a cloud environment versus an in
house hosted one with remote access
4. Is a vertical vendor such as Deltek (oriented towards a specific industry) more desirable than a more generic vendor such as SAP (works across multiple industries and has a broad client base in many countries)
5. Can the ERP system manage the level of seats required for functionality
6. Ease of data migration from one system to another (e.g., will data integrity remain intact, can data be migrated easily or will it require manual efforts)
7. Understanding any unique requirements at a country and site level and ensuring that these
needs can be met by the selected system
8. Which system offers the greatest capability for ABC’s needs with the least amount of customization
9. What is required for implementation and what type of support does the vendor offer
10. Who will actually be doing the implementation (e.g., does the vendor have its own in
house implementation team or do they subcontract this out)
11. How flexible is the system and how easily can it be modified to meet changing business needs
12. Are there any other business processes that can be improved through the implementation of one ERP system over another
Given this set of issues to be resolved, the recommendations for an ERP system in a cloud solution or inhouse solution is as follows: Migration to a Standardized ERP System 11 1. Hire an experienced system analyst and other appropriate SMEs to aid in the review of ERP options and the analysis of unique requirements
2. Have each of the four vendors provide proposal and a demonstration of their system capabilities
3. Down select to two vendors, provide them with a script that contains all of the business processes the system must encounter in a day and have them provide a proof of concept.
ABC must perform further research to determine if it should install an on-site ERP
application or if it should look to a cloud-based solution (client-server versus a web-based
solution in a public or private cloud deployment). We will address factors that should be
reviewed and addressed as a part of this determination process and discuss how these might
impact the four ERP solutions being considered – Oracle’s PeopleSoft, Deltek’s Costpoint, SAP
and Infor.
Mallya (Mallya 2010) identified several basic areas to address when considering whether a
cloud solution is reasonable:
1. Is your application a web application?
2. Is your application native .NET/Java?
3. What database type do you use?
4. What kind of management/monitoring tools do you use on your application?
5. What security risks would a cloud deployment will reveal?
6. Will you be able to move between cloud providers? Are you locked into a specific
provider after the application is deployed?
7. Are you able to scale dynamically?
Web Application Migration to a Standardized ERP System 12 The question being considered is whether the application in question is a web application. We have already established that only two of the four software solutions being considered by ABC are fully web compatible – Deltek’s Costpoint and Oracle’s PeopleSoft. IBM’s WebSphere Cast Iron Cloud Integration solution (Cast Iron) offers a configurationbased solution for data migration and application integration of the SAP solution in lieu of requiring the writing of potentially complex code and it requires no middleware. Cast Iron indicates that it
can integrate with BaaN; however, BaaN no longer truly exists and was integrated into the Infor ERP solution. It is unclear whether Cast Iron can support Infor as it currently exists, which may mean that a source would need to be found so that code could be written. Since cloud providers are clearly offering Costpoint and PeopleSoft on the web with no conversion needs, these applications are recommended as the two to review further. Although SAP can be converted through Cast Iron, it will require more effort than Costpoint and PeopleSoft and the convertibility of Infor is fully in question, so neither application is considered a viable solution for further consideration and will not be assessed further.
Native .NET/Java
The purpose of this question is to determine whether a cloud provider can support the
technology stack of the software application selected. A technology stack means the layers of components or services that are used to provide a software solution or application. PeopleSoft uses PeopleCode, AE, SQR, CI, DMS, HTTP(S)/XML (extensible markup language), JDK (Java Development Toolkit), .NET/Java, COM or C/C++ to interface with their components. Oracle has teamed with Amazon Web Service Cloud (EC2) to provide its PeopleSoft product, so can fully support the application. Migration to a Standardized ERP System 13 According to Jakovijevich (Jakovijevich, 2006) “Deltek Costpoint 6 is a scalable Java 2 Enterprise Edition (J2EE)based platform of ‘industrial strength,’ capable of supporting even organizations with over a billion dollars in revenues. The product is standardized for integration with other technologies, and has the flexibility to support multiple OS platforms, with support for
Webnative HTML, DHTML, Java Script, or rich client on the UI tier; Microsoft SQL Server or Oracle as databases; and the Actuate reporting server.” Costpoint uses a Microsoft .NET platform to enable realtime transparent connections via Web Service and XML across multiple platforms and applications. Deltek has also teamed with AppForge to deliver mobile applications to mobile and wireless devices including PDA’s, smart phones and other industrial devices without having to be connected to the network, potentially reducing hardware investment
by the company.
In summary, Costpoint and PeopleSoft should be supportable by a cloud provider, so both are still equal contenders for selection in a cloudbased solution. Costpoint may offer more flexibility through mobile applications.
Database Type
This question asks us to look at the database type that we are using and determine if it is
supportable by the cloud provider. ABC is already using both Deltek and PeopleSoft
applications in a client-server deployment. Further, we know that the cloud providers such as
Amazon (EC2) and Salesforce.com support these applications in a public cloud environment so
we know that these database types are supportable. The question that would need to be
addressed in an analysis other than this is what a data migration solution would entail for the
ABC divisions that are presently utilizing SAP and Infor applications. In essence a data
migration process would need to be developed to include the following (Database Answers): Migration to a Standardized ERP System 14 1. Choose a data modeling tool with Reverse Engineering Capability
2. Define and create the data dictionary
3. Identify all the required data sources and the “owner” for each source considering
data feeds, legacy systems and operational data stores
4. Define the data items required, in consultation with the users
5. Create the data models for the source data
6. Define the data validation checks (bottom-up) and clean-up business rules for
source data
7. Carry out an audit of the data quality in the major databases, (bottom-up and topdown)
8. Define the staging area with MIRror Tables to store extract files.
9. Create the business data model for the consolidated database
10. Create the data model for the target ERP database 11. Define the data mapping between source and target data items. 12. Define acceptance tests for data in the integrated database. Management/Monitoring Tools
This area reviews whether the management tools (e.g., dashboards, status reports) used
can be used on the web or in a cloud-based environment. The management tools currently used
by ABC are those developed in their “Obtuse” product from a PeopleSoft base. We know that
ABC’s intent is to migrate from the four ERP applications presently used to a single application
– in this study PeopleSoft or Deltek – and the management tools utilized by either of these
solutions would be adopted. ABC would be more comfortable with the look and feel of the
PeopleSoft tools because Obtuse utilizes similar management tools; however, the Deltek tools Migration to a Standardized ERP System 15 are more relevant to the industry that ABC support – management consulting. Through the
answers to the previous questions we know that PeopleSoft and Deltek all have web-compatible
as well as cloud-compatible management tools since both are currently being used in a public
cloud environment.
Security Risks
This is a critical area of evaluation and impacts whether a public cloud deployment or a
private one is more appropriate for ABC. Mallya (Mallya, 2006) states that there are two steps to
evaluating the security risks:
1. Review the provider’s regulations and trust level
2. Know that security hazards can be created by making the client available from any PC
that is connected to the web
The EUKhost Blog indicates “the location of deployment is the prime differentiating
factor between” a public or private cloud option. A public cloud hosting solution is one that is
offered over the Internet and the service provider bears the cost and responsibility of managing
the infrastructure and security. Data storage is shared with all of the users of the service. In this
type of a situation, ABC would have to rely upon the security measures the host implemented as
satisfactory. For example, if ABC were to consider using Amazon’s EC2 option of cloud
support, Amazon’s privacy policy states, “we will implement reasonable and appropriate measures designed to help you secure Your Content against accidental or unlawful loss, access or disclosure.” This does not tell the consumer much about what exactly Amazon does to protect
the data in their care.
EUKhost Blog states that a Private cloud hosting is created “using software operating on
hardware provided by the customer.” In this case, the data is fully managed by the customer, not
by the cloud provider, so all security is that which the customer institutes. Another advantage Migration to a Standardized ERP System 16 that eUKhost Blog identifies with a Private cloud solution is that of greater scalability because of
the ability to expand existing architecture.
In 2010, the Cloud Security Alliance (CSA) issued their report on the top threats to public
cloud computing (CSA, 2010). The report indicates the following:
1. The abuse and nefarious use of cloud computing. This impacts mostly Infrastructure
as a Service (IaaS) and Platform as a Structure (PaaS) and exploits their weak
registration systems and limited fraud detection. Botnets have used IaaS for
command and control functions as well as to introduce trojan horses and malicious
code. Solutions include stricter initial registration and validation processes, enhanced
fraud monitoring and coordination, comprehensive introspection of customer network
traffic and the monitoring of public blacklists for one’s own network blocks.
2. Insecure interface and APIs. The security and availability of general cloud services is
dependent upon the basic APIs used to manage and interact with cloud services and
this threat impacts IaaS, PaaS and Software as a Solution (SaaS). This potential
weakness can impact the confidentiality, integrity, availability and accountability of
data. Examples include reusable tokens or passwords and limited monitoring and
logging capabilities. Solutions incl...