In today’s business environment, even traditional mid-market organizations have become global enterprises. More and more companies are implementing a global ERP to drive optimization and integrate data and information across multiple countries into connected applications. Developing and maintaining a global ERP solution comes with its own set of challenges – but with the right ERP strategy, companies can navigate through the barriers to meet their objectives.

For any organization, the typical goals of a global ERP Implementation can be as below:

• Standardized business processes on a global level
• Improved data quality and consolidated reporting
• Simplification of the IT landscape and reduction in operating costs

Before embarking on the ERP implementation journey, organizations need to have a clear vision of where they are and where they want to be. It is a huge transformation effort and involves significant changes to business processes, technologies, and culture. The success of the implementation does not solely depend on the technical aspects. It also requires detailed attention towards organizational change management.

The ERP universe is ever-expanding, but ERPs can only deliver results when the fundamentals are in place. An executable strategy can maximize your return on investment and set your organization up for long-term success.

 

ERP Strategy

A pre-study or a conceptual phase is often carried out to prepare for a large-scale ERP implementation exercise. In our experience, a conceptual phase can help in defining the scope, goals and expected outcome that can be communicated to all the internal and external stakeholders. Some outcomes are as follows:

• Clear vision and blueprint of business needs, alignment of all stakeholders
• Final scope, time plan and roadmap for the implementation exercise
• Program Methodology, Governance and Team Structure
• Sourcing Principles and Strategy
• Data Strategy and Key Design Decisions

 

1. Sourcing Strategy

 ERP programs are often very large investments for organizations and are associated with operational and financial risk and are a driver for major change. That is why it is essential to form a solid strategy for sourcing an ERP implementation partner(s) early on. There are many factors to look at – for instance, make versus buy strategy, pricing model, sourcing objects, supplier capacity, and capabilities to engage the right partner(s) in a timely manner and to help deliver on the transformation objectives.

These areas are generally part of an ERP Implementation Partner Sourcing Strategy:

• Strategic Drivers or Business Value
• Sourcing Direction (Sourcing Objects, Supplier Selection, Make or Buy decision)
• Application Maintenance and Support Services
• Program Governance
• Commercial Engagement Model

To know more, you check our article here.

 

2. Data and Reporting Strategy

Today, many organizations are flooded with data and are looking for better ways to develop real time reports and insights. Technologies are often implemented without yielding the envisioned results and become overly complex to maintain. Why? To put it simply, it’s the lack of an overall data and reporting strategy to integrate, synchronize and govern. What’s more, while companies are inundated with data, much of that data is in disparate, non-integrated systems. Master data can be all over the map in global organizations with layers of different ERP systems. For multinational enterprises, this issue is further amplified by the number of subsidiaries.

A robust data and reporting strategy – focused on clean, consistent, and well-defined data – can assist companies to drive growth and overall competitiveness. To build a successful ERP data and reporting strategy, companies must start by accounting for different stakeholders across the organization.

Fig 1: Data & Reporting requirements of Stakeholders involved

Program Methodology:

ERP implementations are often multi-year initiatives that involve significant capital investments, long-term planning, and business process re-engineering. The implementation approach you select for your company must fit your company’s complexity and culture to maximize the chances of a successful implementation.

Many companies try to derive the best values out of different methodologies to identify a best fit for their organization. For instance, a waterfall approach can provide good structure and milestones which can then be combined with agile within each phase to iteratively create the phase deliverables. It is always a good practice to maintain an MVP mindset and try to get user feedback as early and frequently as possible.

• Fit To Standard:

Organizations now view ERP as a backbone for their operations. ‘Fit to Standard’ is hardly a new concept but there is a renewed focus on it as companies strive to reduce cost of ownership, implement best practices and create a clean core solution.  A stable core is essential as it is relatively easy to add niche capabilities on top.

A Business change impact assessment, while building the strategy, can assist organizations to study existing processes and identify what they can or cannot live without. If needed, only the truly essential processes should be customized. This can give organizations a better control over their IT landscape and make way for easier governance.

• Global Template:

 When you finally make the decision to implement an ERP solution, there comes a point when you need to decide whether deploying a global ERP template across multiple sites, divisions, and regions is worth it. The answer to this question can drive the overall strategy of design, development, and deployment decisions along with the long-term support services going forward.

International organizations often have non-standardized business processes and deciding to implement a global ERP system across any enterprise is not easy. For one, the decision to globalize or localize isn’t black and white. While standardization allows to scale for growth by consolidating business processes and driving operational efficiency, organizations also need the flexibility to serve diverse customers, employees, economies, and regulatory bodies.  Striking the right balance between standardization and flexibility thus becomes essential. To know more on this, you can read our article here.

Figure 2: Risk for Global Template Rollout

Program Management and Governance

Any ERP implementation is a complex and costly undertaking that requires careful planning, execution, and monitoring. Project management and Governance are thus key factors that can determine the success or failure of an ERP implementation. With global implementations, the complexity for the program management teams is higher as several projects run in parallel across different regions. Additionally, there may be several implementation partners working simultaneously leading to multiple participants and a need for an even better coordination. Organizations, thus need to have a set of governing principles that help them define the PMO teams and structure.

A key aspect of ERP project management and governance is to monitor and control the progress and performance of the project. Organizations need to use appropriate tools and techniques, such as dashboards, reports, meetings, and feedback to monitor and control the project. PMO needs to track and measure the key performance indicators (KPIs) and milestones of the project and compare them with the baseline and expectations and communicate it with all stakeholders – internal or external.

Another critical aspect of ERP project management and governance is to ensure the quality and testing of the ERP system. You need to verify and validate that the system meets the functional and non-functional requirements and complies with the standards and regulations. It is important to involve the end-users, business owners, and vendors in the testing process, and document and resolve any defects or issues.

 

Change Management is Critical

Human factors like organizational behaviour and training are often ignored but are just as crucial to a successful ERP implementation as addressing technological requirements. Local entities may be extremely resistant to globalized processes. They need to understand the reasons for transformation and how it will personally benefit them.

It’s important to create a communication plan that addresses how, when, and where you’ll communicate key updates. This includes adjusting your messages as required to accommodate different languages, cultures, and time zones. Communication is just one part of organizational change management.

A plan at the local and global levels is needed to ensure your organization is prepared for a global ERP rollout. Without properly training employees across headquarters and local establishments, it is nearly impossible for a global ERP rollout to occur smoothly.

Throughout the ERP programme, change management needs to ensure that organizations, leadership, and employees are:

• Clear on how the change will impact the existing ways of working
• Aware of why the change is needed and what are the benefits of change
• Ready, willing, and able to implement change

 

Application Management Services

Creating or implementing an ERP is not the end and organizations need specific expertise, robust operating methods and tools that seamlessly enable work across a global team environment. Decisions around AMS can have a profound impact on the total cost of ownership, user satisfaction, solution agility and ultimately the success or failure of the ERP solution.

Organizations should look to prioritize AMS while developing the ERP sourcing strategy and evaluate the benefits of different available options – Developing an in-house team, using an external supplier or a combination of the two.

 

Guiding you through your Organizational Change Journey

A global ERP implementation is not just a technical IT project but a huge change effort. It is an organizational journey leading to new ways of working. Organizations therefore need to create a business change program and mobilize a team to focus on communication and change strategy.

While you may want to rush into it to maintain a competitive advantage or keep up with shifts in customer demand, it is important to ensure your business is prepared for this endeavour. The key is to create a balance between central and local requirements, prioritize communication, and strategize the rollout.

Drawing from our extensive client experience and proven methodologies, we can guide your organizational journey from strategy to implementation and support.

Abhishek Kale & Johan Saks