Should you roll out a mega-business system, or can you operate with a less complex product in your subsidiaries? asks Craig Stephens
MOST GLOBAL businesses wrestle with the management of multiple business IT systems accumulated over many years. For the finance department in particular day-to-day life can become a constant uphill struggle.
Consolidation, integration, maintenance, and the support of standard business processes are complex and difficult against this backdrop, and this has become more acute as companies become increasingly accountable for compliance of their far-flung subsidiaries.
The obvious solution is to rationalise the organisation on a single finance or ERP platform, and there is nothing new in this strategy. Many of the world’s leading companies have maintained a single vendor strategy for decades.
Unfortunately, the execution of this strategy throws up challenges of its own – particularly for smaller business operations, and those operating in emerging markets. This is the key finding of a recent global strategy survey conducted by Epicor with over 1,600 respondents.
Only half of those with a single business system, sometimes known as single-tier, strategy had successfully completed its implementation across their global sites, and a third were now considering a two-tier strategy.
A single-tier strategy simply means that a company deploys a single platform in all locations, both large and small, irrespective of user and site needs. Most finance and ERP platofrms have a “sweet spot” where they can deliver the maximum benefit at their lowest total cost of ownership (TCO), but no solution is a perfect fit for all environments.
A dual-system, or two-tier, strategy overcomes this issue by combining a bigger, complex solution for larger sites where needed, with a leaner product for smaller or more rapidly changing locations.
Properly implemented this approach will appear to all users and departments as a single integrated system. Users benefit as they keep access to the capabilities they need with localised language, financial and business rules, but without unnecessary fat.
The subsidiaries are fully integrated with the central system, providing global visibility and reporting, without a duplication of data. Through this approach overall costs are driven down and in many cases, responsiveness and agility are increased.
But what do businesses that are considering a two-tier strategy need to ask themselves and their vendors before making a final decision?
1. Scalability – How scalable is each vendor’s product in terms of numbers of users, sites, and hardware support?
2. Total cost of ownership – What is each solution’s typical TCO for small and medium-sized subsidiaries?
3. Global functionality – Does the software currently support corporate governance and financial reporting compliance requirements in the countries you intend to operate in? Will these features need to be added at additional cost?
4. Data consolidation – Can each vendor consolidate data from across the business into a single reporting system?
5. Standardisation – If you are looking at a single vendor, ask whether you can standardise on one version of the software across borders
6. Support – What are the support costs and terms for each vendor in the different countries you operate in? For example, how strong is the in-country support if you need somebody on site?
7. Infrastructure – Does the solution offer a choice of deployment models including on-premise, hosted and software as a service?
8. Reporting – Will it be possible to monitor KPIs across the business from a central dashboard?
9. Implementation – Ask vendors to demonstrate their experience in deploying multi-site or global rollouts
10. Upgrades – How will both vendors in a two-tier strategy approach upgrades when you want to move to the latest software?
Should you go with a two-tier strategy? Every company is different, but you should be aware of this strategic approach and at least consider it as part of your next business system review. As our survey showed, many companies that excluded the approach or were not aware of it, now find themselves considering it to solve existing issues.
Craig Stephens is director for product marketing at Epicor