Implementing the Right ERP Software for Global Operations

Implementing the right ERP software can be daunting for any organization, but is especially true for organizations with multi-national operations. Most of our clients are global in nature – and many are even based in countries outside the U.S., the home country of most ERP vendors – so we’ve navigated our share of complexities among global ERP software initiatives. Even with the wide variety of ERP vendors in the marketplace, we’ve found that not all ERP software is created equally when it comes to global operations.

Indeed, ERP implementations for single-site, domestic organizations can look very different than those for global, multi-site organizations. These latter types of companies are inherently more complex in that they typically want to standardize business processes across international operations, but also need the flexibility to serve multiple and diverse customers, employees, economies and regulatory bodies. All of these factors should impact how the system is implemented.

When selecting ERP software, take time to consider the following factors to ensure you don’t overlook some of the critical components and differentiators of global organizations:

Conduct business process reengineering from a global perspective. Many of our international clients have experienced aggressive growth through the years, either organically and/or through acquisition. As a result, many struggle with disparate operations, redundant efficiencies and business processes that have been reengineered in silos rather than in a truly global manner. Global ERP implementations, however, require more holistic approaches to facilitating business process reengineering and introducing best practices into those processes. In addition to considering business processes directly related to your organization’s product or service, global initiatives also need to take into account indirect business requirements related to regulatory requirements, financial reporting, currencies, languages and other unique aspects of various parts of the world.

Find the right balance between standardization versus localization. One of the most common challenges of multi-site, international ERP implementations is the age-old conflict between global standardization and localization. On paper and in theory, most executives we work with agree that standardization is what will ultimately allow them to scale their organizations for growth and minimize inefficiencies of inconsistent business practices. In practice, however, this noble intent can be difficult to achieve. Local resistance to established ways of doing things, different customers and products, and requirements established by various regulatory bodies are in direct conflict with this concept and inherently put pressure on ERP implementation project teams to cave to local needs. In addition, the need to standardize inevitably creates more resistance among local employees because the new software most likely entails bigger changes to their business processes than if it were tailored to local objectives and needs. The key to navigating this challenge, however, is to differentiate between those areas that are most important to standardization, such as back-office functions that are needed to enable a shared services strategy, versus those than can be localized without compromising the overall benefits of standardization, such as regulatory and reporting requirements.

Organizational change management will be your key to success. As mentioned above, global ERP implementations typically have much higher levels of employee resistance than those at domestic or single-site organizations, which underscores the need for effective organizational change management. To further add to this complexity, the need for solid organizational change management increases the more you intend to standardize and the less you intend to customize the software. In other words, standardization may save you a great deal of money and it may be the best strategic option for your organization, but you need to be prepared to invest in organizational change management methods, tools and expertise to enable this degree of standardization. End-user training alone won’t get the job done; your global employee base will also need to understand the change impacts, receive regular communications regarding project status and business process changes coming their way, and benefit from a host of other proven organizational change best practices to most effectively adopt the technology and adapt to the changes. (Read more about the five major work streams in Panorama’s PERFECT Change proprietary organizational change management methodology).

Define your global ERP implementation strategy. Finally, defining a global ERP implementation strategy is critical to your success. While our experience and the research outlined in our 2013 ERP Report suggests that every company has different needs to consider, a large majority of organizations leverage some sort of phased rollout strategy. Whether phasing by geography, business process, software module or some combination of all of the above, you need to define the approach that makes the most sense for you based on your current business processes, the ERP software you plan to implement, and your tolerance for risk. One rule of thumb: a good starting point is to consider a replacement of your “core” processes already automated by a legacy system as a first phase, while saving more advanced (and currently manual) processes for later phases of the project. There are also quite a few additional implementation variables to consider when defining your implementation plan, which are outlined in our recent on-demand webinar addressing implementation planning.

These are just a few areas to consider when defining your global ERP implementation plan. Every company we work with (and every company in the world) has different operational, organizational, cultural, regulatory and financial considerations to keep in mind, but hopefully these will stimulate some discussion and brainstorming as your team begins to define its ERP implementation strategy.

Click through to learn more about Panorama’s ERP implementation planning service offering. Our experienced implementation consultants can help you define the best rollout strategy for your organization while leveraging technology-agnostic best practices, including those discussed above.