How Multi-Nationals Should Use ERP
One Size Fits All? I'm Not So Sure...
Years ago, I did an evaluation of back office software packages that served small businesses but had robust international capabilities. I did so because clients were always asking about solutions they could deploy to small offices or subsidiaries where:
- a standalone solution may be most appropriate - the workforce there was so small that a large solution was overkill - the infrastructure in that part of the world was too primitive to support 24x7x366 electricity, phone service and/or internet access
At that time, I thought that products like the SunSystems' Sun Account were a pretty good fit. I even interviewed executives whose firms used products like this and learned some pretty interesting and practical business needs along the way. For example, one big consumer products firm would buy two PCs and configure each with the needed application software, chart of accounts, etc. and air freight them to their new destination. Upon arrival, the local staff was advised to uncrate one of these systems and use it until it broke. At that time, the second system was to be uncrated and the broke system placed in that container and sent back to corporate HQ for repair. It was an inexpensive solution to a complicated international accounting problem.
Fast forward to today and the landscape has changed a bit. Now, internet access is more ubiquitous. The vendor order has changed as have software delivery models. Now, large multi-nationals can choose to:
- force all subsidiaries to use the same software (via the internet or an outsourcer) - put those subsidiaries that contribute a small percentage of total firm revenues or transactions on their own, SaaS-based solution that will be interfaced or integrated with the parent company's systems
Shared Service purists would choose the former option as they prefer everything be standardized. However, a 10 person sales agency doesn't really need a full blown enterprise ERP solution. The learning curve for the employees on this is significant and won't make a material difference in how the firm runs anyway.
Others will like the second option as it provides a solution more in-line with the business needs of the local operation. It's not too hard or too easy, it is (in the words of Goldilocks) just right.
Today, NetSuite announed its NetSuite OneWorld for SAP. This product has pre-built connectors to the SAP R/3 Enterprise product that many global 500 firms use. The NetSuite software permits plants, divisions, remote operations, etc. of a conglomerate to easily connect to the mothership's SAP application suite without requiring each operational entity to be running on the R/3 solution.
In a briefing I had with NetSuite about this, I also learned that their solution also contains consolidation and multi-currency restatement capabilities. This permits a multi-national to see all of their non-SAP businesses in a consolidated, common currency view.
SaaS based applications do change the landscape and require a rethinking on how large, global or multi-nationals should approach their IT ERP deployments. Is it time for your firm to re-visit its strategy?