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How to achieve global ERP

Rick Veague | Nov. 17, 2011
In today's rapidly changing and globalized business environment, even traditional mid-market companies are becoming global enterprises -- but without the large IT organizations and structures of traditional, large scale multi-nationals.

In today's rapidly changing and globalized business environment, even traditional mid-market companies are becoming global enterprises -- but without the large IT organizations and structures of traditional, large scale multi-nationals.

This means that more and more companies are developing an interest in global ERP, and are confronting daunting barriers to getting to their goal of a single global ERP instance.

Global enterprise resource planning (ERP) is sometimes defined as the integration of a global, multinational corporation's business on a single instance of an ERP product and on a single database. But that definition is probably too narrow, as a company with multiple sites or divisions within a single large country may face many of the same challenges as a multinational, and can also benefit from standardizing on a single ERP instance.

In this article, we will explore the challenges and benefits of achieving global ERP, and take a close look at why some companies that would very much like to get to that global instance of ERP just can't get there.

Why Achieve Global ERP?

There are really two reasons so many companies would very much like to get to a global instance of ERP. The most universal reason is that consolidation of IT assets can drive down overall IT cost. It is costly to run multiple enterprise software applications with multiple license agreements, different support agreements in different countries and different hardware. From a cost standpoint, global ERP allows consolidation of these IT resources in one location where you can build centers of excellence, consolidate license management and pool your negotiation possibilities.

In order to achieve many of these cost efficiencies, it is not necessary to run on a common database, but rather out of a common data center. But over and above IT resource consolidation, global ERP can allow for process consolidation across far flung and diverse business interests in different geographies. Running the same instance of an enterprise application is one way to ensure that consistent processes are being used to achieve consistent quality results. It also allows for efficiencies across a global organization by eliminating things like duplicate part numbers and streamlining intra-company transactions. The global instance also provides senior management with visibility of the global organization through one data model across all enterprises and entities. The company can serve customers better once it can refer to a customer by a single customer number no matter what geography they are in.

So simply put, achieving global ERP is one way for a CIO to drive down cost while driving up business value.

No Shortage of Impediments

As is the case with any worthwhile venture, there are different challenges to overcome when moving towards that single global ERP instance. The greater the degree of consolidation, the greater the benefit and the greater the challenge, with the ultimate gold standard being consolidation of IT assets down to a single enterprise application release and a single database that supports the entire enterprise typically through multi company or multi site views.

 

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