A Quick Guide to Data Migration in a Cloud ERP Implementation

Data migration, a key component of an ERP implementation, is so critical that it can determine whether that implementation is successful.

But distributors often underestimate just how complex data migration can be and the importance of doing it right.

What is Data Migration?

Data migration is the process of transferring customer, inventory, sales, financial, and other data from existing systems to a new ERP. This involves data cleaning, extraction, transformation, and loading, and may require the use of specialized tools and techniques to ensure a successful migration.

The goal of data migration is to ensure that data remains accurate, accessible, and usable in the new system, without losing any important information or functionality.

ERP Data Migration Is More Than Meets the Eye

On the surface, ERP data migration may seem simple enough. After all, the migration of core data—customer, vendor, and inventory master data—is usually automated through an intermediary like Excel. Data is extracted from the old system, put into Excel where it’s mapped to the new fields, and then imported to the new system.

But in practice, many distribution companies have felt the wrath of the fictional Murphy’s Law when migrating the data from their legacy software to a new cloud-based platform.

Without careful planning, if part of the process can go wrong, it will go wrong.

Data migration requires thorough preparation and precise execution to minimize disruption to business operations. Because it’s so complex and often takes more time and energy than expected, starting the planning early can minimize delays and ensure a smooth transition.

Steps for Successful ERP Data Migration

The following are the steps we recommend when migrating data from a legacy software to a cloud-based ERP platform.

  1. Identify Systems and Data

Before implementing your new ERP, assess your current infrastructure and identify which systems will be replaced. Conducting an inventory of all systems will help you determine which data needs to be migrated.

To keep track of the data extraction, consider developing a spreadsheet that records the source systems and the data being extracted from each. This will ensure that all necessary data is transferred to the new system and can be easily accessed when needed.

  1. Cleanse

Again, performing a thorough data review is critical to the accuracy and completeness of your data. For instance, it’s essential to verify the correctness of customer addresses, especially for international addresses that are prone to incompleteness.

Another area to focus on during the data-cleaning phase is duplication. While customer duplication is relatively uncommon, inventory duplication is more prevalent, particularly for consumables. Identifying and removing duplicate inventory items will streamline your data and improve the efficiency of your ERP and other systems.

  1. Extract

For a smooth data migration, develop a comprehensive plan for extracting the source data. Even if you haven’t finalized the target format, you can still create a starting point.

For each source, determine the best extraction method, such as direct database queries or export from within the application. Ideally, this should be automated and repeatable for consistent results.

Exclude any unnecessary data identified during the cleaning step. Set cutoff parameters in your queries based on dates to facilitate easy updates.

Another critical factor to consider during this step is timing. Determine the sequence in which each extraction should run and estimate how long each step will take. This information will be invaluable when planning the cut-over activities, especially for data that needs to be extracted within a specific timeframe.

Finally, test the extraction and review the results for any embedded characters or spaces that may have been added. Data from older systems is often prone to such issues and addressing them early on can help prevent problems later on.

With a structured and proactive approach, you can streamline the migration process and ensure the accuracy of your data in the new ERP system.

What to Consider Before Data Migration

Companies often fail to regularly archive their master data, which can lead to a buildup of unnecessary and irrelevant data, such as old customers, vendors, and inventory. When implementing a new ERP, you can leave behind outdated data.

Consider the following when you’re deciding what should stay and what should go:

Numbering schema

In the past, it was common to create meaningful customer, vendor and item codes that would identify the record to the observer. Consultants still debate whether it’s better to use meaningful or random codes. Whatever you prefer, it can usually be accommodated if planned for—and if you’re working with an experienced cloud ERP consultancy.

Open transactions

When migrating to a new system, certain transactional data, such as open accounts receivable (AR) invoices or balances, inventory on hand, open purchase order lines, open sales order lines and work in progress, should always be migrated. However, it’s recommended that clients use this opportunity to clean up their old system by writing off small balances, paying down open vendor invoices and writing off obsolete inventory where applicable.

Chart of accounts and general ledger balances

During a system migration, one area that often undergoes change is your chart of accounts. With the adoption of dimensional accounting, you may need to reconsider your existing fixed coding structure or outgrown coding systems. Many companies bring over their general ledger balances from the old system to have comparative reporting for the prior period or year. Regardless, if you decide to overhaul your chart of accounts, you will need to reclassify your historical financial transactions if you want historical comparatives in your reports.

Historical transactional data

Generally, organizations do not bring their detailed transaction history, such as sales and purchasing history, into their new systems. Instead, the recommended approach is to use a data warehouse to leverage historical data. Historical data is pushed into the data warehouse along with new data, and reports that cover both past and present data are generated from there.

You may be struggling with the thought of losing detailed sales and purchasing history. Keep in mind that this thorough preparation and data clean-up can greatly reduce the amount of data that needs to be migrated, streamlining the process.

We recommend working with a trusted ERP consultant such as Sikich to find ways to optimize the visibility of historical data.

Partner With Sikich for Expert ERP Data Migration Solutions

The success of your data migration can determine the success of your ERP implementation.

Starting the planning early and taking a strategic approach to deciding what data does and doesn’t need to be migrated can help you ensure the accuracy of the data in your new ERP system and facilitate better decision-making.

Sikich has helped thousands of companies choose, implement, update, and manage ERP solutions that deliver impactful business results.

Contact us today to learn how we can help you.

This publication contains general information only and Sikich is not, by means of this publication, rendering accounting, business, financial, investment, legal, tax, or any other professional advice or services. This publication is not a substitute for such professional advice or services, nor should you use it as a basis for any decision, action or omission that may affect you or your business. Before making any decision, taking any action or omitting an action that may affect you or your business, you should consult a qualified professional advisor. In addition, this publication may contain certain content generated by an artificial intelligence (AI) language model. You acknowledge that Sikich shall not be responsible for any loss sustained by you or any person who relies on this publication.

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