In 2012, a multinational electricity and utilities organization went live with their SAP implementation when they were not ready. They were over budget and had extended timelines. When you rush in to implement your new ERP system without reconciling and validating data, what can go wrong? Everything! They couldn’t process 15,000 vendor invoices, employees were either underpaid or overpaid, financial reporting was all awry so their bank wouldn’t approve short-term loans which meant no cashflow.
Now this could also happen to your organization, and there is also a risk of bankruptcy or major losses if things go wrong. If you have decided to upgrade and move to Microsoft Dynamics 365 ERP from a legacy ERP system, you will face challenges in your data migration. Our aim is not to scare you from taking on this endeavor but to guide you and help you be better prepared for your data migration project.
Based on the experiences of our customers and consultants, we share the top 9 mistakes organizations make during data migrations that can result in budget overruns, time delays, or project failures. Brace yourselves for the worst!
9 Fatal data migration mistakes
Are you worried that your ERP implementation might fail due to insufficient testing and process re-engineering? Your fear is based on fact! Based on a survey report focusing on manufacturing and distributors, around 50% of ERP implementations fail the first time due to insufficient testing and process re-engineering.
Let’s dive into the deadliest mistakes organizations make during data migrations.
1. Data migration is an afterthought
Data migration requires planning and strategy but most times it is an afterthought. One of the biggest mistakes organizations make is not planning data migration and doing it earlier in the implementation. Despite planning well for data migration, there are bound to be hidden challenges that might need customizations.
These can cause disruptions to business operations and delay ERP implementation. When data migration is not planned and left for the last leg of an ERP implementation, organizations will need more time, budget, and resources to tackle hidden challenges. For example, challenges in data quality, integrity, and mapping can prolong the project. This could result in a failed data migration.
Our recommendation is to emphasize the importance of data migration and evaluate and test at the beginning of an ERP implementation to better plan and work on your data migration strategy.
2. Unrealistic timelines and budget
You probably have read about the time when a famous chocolatier was unable to process $100 million worth of orders despite having stock. It is no surprise that this was due to setting unrealistic timelines for an extremely complex SAP ERP implementation project.
(Source: https://www.cio.com/article/270245/supply-chain-management-supply-chain-hershey-s-bittersweet-lesson.html)
When data migration is left to the end without adequate planning, the deadlines can be over-ambitious, and the budget could be tough to work with. Complexities often arise, leading to unforeseen challenges that can derail the project. Data migration is a high-risk project, as you could have data loss, downtime, dependency on external parties, and several other such challenges to deal with. Assigning not enough funding and time to the riskiest part of an ERP implementation is a mistake.
Mitigate this risk by conducting a thorough analysis, understanding the intricacies of data migration, and allocating sufficient time and resources. Realistic planning ensures a smoother transition while minimizing disruptions.
3. No data cleansing
Data cleansing and validation is a crucial step often overlooked in the rush to meet timelines. Neglecting this process can result in the transfer of inaccurate, inconsistent, or duplicate entries and cause issues.
Let’s look at an example where data quality led to ERP implementation issues. A well-known supermarket chain was to launch in Canada in 2013 and they were implementing a new SAP ERP system different from the one they used in the USA. They had no plans to use any data conversion and had plans to input fresh data into their system. Thousands of entries were manually entered under stringent timelines by entry-level employees with minimal training. There was no strategy or plan for data cleansing or validation. The results were disastrous. Consumers complained of empty shelves in the stores while the distribution centers were overflowing with products. After careful evaluation, the team found that only 30% of the data in their ERP system was correct and was causing this demand and supply problem and impacting revenue. The conglomerate eventually had to file for bankruptcy, the parent company was in more than a billion-dollar debt, and 17,600 people lost their jobs.
(Source: https://canadianbusiness.com/ideas/the-last-days-of-target-canada/)
When migrating data from a legacy system where the data quality is questionable and you have archaic historic data that might not be relevant, data cleansing should be prioritized. Using a simple lift-and-move approach for data migration does not work as data cannot be moved as it is from a legacy ERP system to Microsoft Dynamics 365 F&SCM. Every ERP system has its own business rules and logic, so the data needs to be transformed to fit into Dynamics 365. Prioritizing data cleansing to eliminate inconsistencies throughout the data migration can ensure better chances of success post go-live.
4. Not spending enough time analyzing historical dataWhen you move systems, there could be a lot of data present that can be considered junk data. When you switch to your new ERP system, you want to migrate data and do it right the first time. Analyzing historical data and evaluating what data will add value and is worth moving is never a priority when moving data as it means more time and investment, but it causes issues with operations if moved as it is. When organizations migrate all historical data as it is they see inconsistencies, errors, and duplication after go-live.
You need to move historical data that can help you extract valuable insights and help with reporting. Organizations need to allocate enough time to analyze historical data and ask the question ‘is this data worth moving’? However, organizations do not want to invest time and money doing this, and this is also the reason why things go wrong after a go-live. A data migration project is an opportunity for organizations to sort through legacy data and understand how they got this far and what helped them get there.
5. Data mapping errors
Data mapping requires you to understand the nomenclature and functionality in each system and map data accordingly using the right terminology. When you're mapping data incorrectly, you might actually be moving wrong data or then get stuck as Dynamics 365 F&SCM will throw an error. This could result in data loss or downtime or other issues. When you have strict timelines and pressure from business, and you just go ahead and migrate anyway even if you are not ready the results can also lead to business disruption or even worse, bankruptcy.
Going back to the example of the multinational electricity and utility supplier that was shared in the introduction, their SAP ERP implementation was wrought with delays and budget overruns. They needed to extend the project by another five months, but they decided to go live anyway. Unfortunately, at the same time, Hurricane Sandy hit the East Coast.
As a result, employees received too little, too much, or no pay, and the company lost $6 million in overpay and twice as much for short pay and deductions. They were unable to process vendor invoices, struggled with financial reporting, and therefore did not have enough cash flow. Therefore, a rushed migration can result in an inaccurate data migration.
(Source: https://www.henricodolfing.com/2019/04/case-study-sap-wipro-national-grid.html)
6. Not planning for data transformations
Every ERP system has its own business rules and data structure. The data structure of a legacy ERP system and D365 F&SCM will not match. So, when you have to map data, you might need transformations to make it fit into D365 F&SCM’s data structure which usually involves development or using an enterprise-ready solution.
So, prior to data migration, while analyzing the data and defining the scope of work in your data migration strategy, organizations need to account for and plan resources, time, and a budget for data transformation. And this is important because the transformation impacts everything else. For example, data cleansing, mapping, and the final migration.
Not prioritizing transformations can limit the capabilities of your new ERP system and result in compatibility issues. Evaluating data and planning for data transformation earlier will ensure a seamless transition to Dynamics 365 after the data migration.
7. Not enough testing and validation
When an organization makes the mistake of rushing testing and goes all in to migrate data, it becomes a risky high-stakes game. Testing helps you weed out data errors, check for duplicates, and validate data. You improve your chances of success when you prioritize testing. Thorough testing and validation are paramount in preventing post-migration discrepancies. Here we recommend you validate the data being migrated against the source system. Skipping or insufficiently conducting these processes can lead to data that doesn't reconcile accurately between the legacy system and Dynamics 365 ERP.
Revisiting the example of the multinational electricity and utility supplier, their data didn’t reconcile, and that led to millions in losses and a publicity disaster. When you go live without validating data your sub-ledgers will most likely not reconcile, at the end of the month, your trial balance will not reconcile, and then you will need resources and time to fix that. This may lead to issues with publishing financial statements and also affect cash flow if your bank doesn’t accept your financial statements. If you're a public company and your subletters won't reconcile, you can't publish a financial statement.
8. Lack of documentation
Documentation often takes a backseat in the urgency of a migration project especially when data migration is rushed with limited time and budget. If you’re trying to fast track your project but you have people leave or external parties involved without documentation, it can be chaotic and cause even further delays.
The bigger the project, the more important the documentation is. If you are in a highly regulated industry, such as healthcare and finance, and need to maintain certain standards for compliance and security, skipping documentation can also be an expensive mistake.
Therefore, underestimating the importance of documentation can result in confusion and inefficiencies. In fact, comprehensive documentation can serve as a guide as to what worked and what didn’t and can be used as a valuable resource for troubleshooting and future reference.
9. Lack of communication and training
When you are planning an ERP implementation or switch it is important to have communication as part of your plan to get organizational buy-in. Ensure people know about a data migration prior to moving the data. If we look back to the supermarket conglomerate case, the ERP was implemented even before the employees could be properly trained to start using the new ERP system.
Effective and regular communication is part of the change management process. Sporadic or inconsistent communication can lead to delays and a lack of stakeholder buy-in. You could have your team members record data in Excel if they aren’t ready to start using the new ERP system after the data has been migrated.
Be sure to share a cadence of communication and plan training before the data migration, so that team members anticipate and are ready for the change. A transparent approach fosters collaboration and will improve your chances of a successful transition to Dynamics 365 F&SCM.
Are you looking to move to Dynamics 365 Finance & Supply Chain Management?
Data migration can make or break an ERP implementation. Getting it right the first time is important. We hope the above pointers will serve as a guide as to what not to do during a data migration. If you are looking for ways to shine during the ERP implementation, we have 'The Ultimate Data Migration Guide to D365 F&SCM' with expert insights to help you drive a successful data migration. Download the resource from the link below.
Additionally, if you are looking at enterprise-ready solutions to improve the chances of meeting your timelines while reducing the complexity of your data migration project, check out our solutions on our product page.
Eric Van Hofwegen
