There are some specific pitfalls and dangers involved with this strategy that need to be carefully addressed before you take the decision to implement a global single-instance ERP system.
IFS Applications was born in Sweden, a small country in northern Europe with a tiny population of 9 million people. It didn’t take long before we had to expand our business outside of Sweden to get a larger market and follow our international customers. As a result, multi-site, multi-language and multi-currency capabilities have been a native part of the software for over 30 years. Another consequence is that the majority of our customers are international companies using IFS Applications as their business backbone.
In this post I would like to share not only the benefits of implementing a global ERP system, but also the potential pitfalls and lessons learned from almost 20 years’ experience of supporting global roll-outs as a consultant, project manager, solution architect and more recently from the product development perspective.
The Tempting Opportunity
The potential advantages of one single ERP instance supporting your entire enterprise globally are great. The most important justifications for a company to go for a global single ERP are usually things such as:
Business Process Harmonization
Leaders want one way to do one thing and implement best practice globally. Running one common ERP system is a way to accomplish this.
Process Integration
If everyone shares one ERP platform, it is easy to share information and use it to monitor, plan and conduct business. Sales orders flow seamlessly through an integrated supply chain, bills of materials or formulations, customer and supplier records – everything is easily shared globally.
This shared asset information creates an excellent source of information for reporting and business intelligence.
Example: A simple thing such as extracting a report of how much you bought last year from one of your global suppliers can be a serious challenge if you need information from 30 different ERP systems in different versions and from, say, 15 vendors.
You only have to have knowledge of a single ERP system and deal with a single vendor. This will not only lower the cost of ownership, but also make you a more important customer compared to if you had multiple ERP systems to manage in the enterprise.
Any investments you make to improve the software are available to everyone, everywhere – instantly.
Traceability
A single-instance ERP system allows you to easily track transactions throughout the entire companies supply chain without any needs to integrate or consolidate information.
Which of these things matters most is different between companies. Either way, the promise of a single, enterprise-wide ERP system is a very tempting opportunity.
The Business Issues
There are some specific pitfalls and dangers involved with this strategy that need to be carefully addressed before you take the decision to implement a global single-instance ERP system.
In my experience, some of the most important traps are:
- Obviously different geographies have different legislation and business practice. Your potential ERP vendor must be able to prove that their product can be used in all regions in which you plan to roll out the new solution. But maybe not as obvious – it is important that the software elements developed to support a particular region are developed and supported by one company and integrated within one single code-line.
- Global roll-outs make harmonized product, customer and supplier codification a necessity. If not everyone speaks the same language, a lot of the potential benefits will be lost in confusion.
- Process change management – large companies, especially those that have grown through acquisition, tend to run their businesses differently in different places or areas. Everyone is simply not IKEA or McDonald’s. It is probably not good enough to run a true one-size-fits-all strategy and expect everyone to align with a single business process. You will run the risk of ruining some of the competitive advantage that constitutes the foundation for your company’s success. You will need an agile and flexible ERP system that can accommodate various local flavors.
- Not everyone will be happy about the new global ERP system. Maybe they have a favored local ERP vendor that meets their specific local needs in a very good way; or maybe they feel threatened by the new level of transparency created by the global ERP platform.
It almost goes beyond saying that the majority of these issues are not IT related, but business related. This in turn means that the roll out of a common ERP to some extent is an IT project – but to a much larger degree a business development project that will have a usually significant impact on all the company’s vital business functions.
It is very important that the management of the company understands and commits to this, and actively supports the project. In a coming blog post, I will elaborate a bit on which things really matter when it comes to selecting an ERP system for global roll-outs. In the meantime, do share your experiences. What opportunities did you see in your situation? And the pitfalls – what did you find and how did you address them?
Discover more about IFS Applications – software for global business management – with insights and tips in our whitepaper “How To Achieve Global ERP.” Free download.
