- 8 May 2013
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Many organizations are becoming increasingly global. To support these efforts, they have established multiple sites or locations—manufacturing plants, branch and regional sales offices, distribution warehouses and national, regional, and even global headquarters—that may be distributed within a country, a region, or around the world.
As organizations expand into new territories, they face a number of operational challenges. They need to adapt to the business rules of foreign countries, including government regulations, reporting requirements and variations in tax and labor laws. They must accommodate multiple languages, multiple currencies and varying local best practices. And because companies operating in multiple countries are required by law to create separate legal entities, inventory transactions become more complex with intercompany movements being treated as purchases and sales between legal entities.
Cre8tive Technology & Design (www.ctnd.com) will be posting a three-part series on “Choosing the Right ERP Solution to Support a Global Business”
Part One Each Business Unit Chooses its Own Solution
Part Two Consolidating the Entire Business on a Single ERP Solution
Part Three Using a Combined Solution
Part One – Each Business Unit Chooses its Own Solution
As they grow, many organizations allow each regional office or business unit to choose the most appropriate system. For example, local offices each typically use their own accounting systems to support their local practices. These systems rarely communicate with each other. Businesses rely instead on external systems, such as spreadsheets or hard copy reports, to consolidate management and financial information. Alternatively, many organizations acquire multiple ERP systems as a result of mergers and acquisitions.
The advantage of each division or unit choosing its own solution is that it can select the application on its merits. Most specialized systems have a simple, generic core that is adapted to meet specific customer requirements. This tailoring provides a very tight fit with the organization’s business needs. Local systems may also be significantly less expensive to implement and support than large systems designed for a global organization.
The disadvantage of having different applications for each unit is that data is in different formats with different identifiers, inconsistent master data, varying time periods and so on. This makes it difficult to deliver consolidated figures for the business as a whole that can be traced back to the original transaction. Although integration can enable the necessary consolidation, the cost of integration is typically very high. Additional drawbacks include the fact that local systems are unable to deliver the benefits of standardization across the global enterprise; organizations end up with a hodgepodge of systems, all needing support, maintenance, training, and frequently different skill sets. This redundancy leads to higher overall operating costs. Extensive customization can also make it difficult to upgrade or modify the systems later on.
As a result, many organizations are moving away from the practice of allowing individual business units to select and implement their own local applications.
From an Epicor White Paper
Epicor Software Corporation is a global leader delivering business software solutions to the manufacturing, distribution, retail, and service industries. With more than 40 years of experience, Epicor has more than 20,000 customers in over 150 countries. Epicor solutions enable companies to drive increased efficiency and improve profitability. With a history of innovation, industry expertise, and passion for excellence, Epicor inspires customers to build lasting competitive advantage. Epicor provides the single point of accountability that local, regional, and global businesses demand. For more information, visit www.epicor.com.