Multiple ERP’s-Decisions and Impacts
Multiple ERPs within a corporation are often the result of mergers and acquisitions, or simply the IT equivalent of urban sprawl. Deciding which systems to retain, which to retire and how to go about it is the situation in which many CIO’s find themselves.
The main benefit of ERP is that it brings the entire organization into a single, integrated, coordinated environment. Fragmented systems lack integration and co-ordination and increase maintenance and support requirements.
To align multiple systems with each other, duplicate, conflicting information issues must be addressed to avoid disparate reporting terminology, inventory shortages and inefficiency in the plant.
Restoring Benefits through an Integrated ERP Environment Roadmap and Approaches:
Companies with multiple ERP systems immediately need a Roadmap to bring the entire enterprise into an integrated ERP environment.The Integrated ERP Roadmap may call for a single corporate solution (all facilities using the same ERP) or a Two Tier approach.
Approaches and Benefits:
Single ERP approach – Multiple instances of the same ERP product. This is the preferred option where regional or line-of-business-level autonomy is critical.
Tier 1 primary, Tier 2 secondary – A ‘backbone’ core Tier 1 ERP system for global operations with simpler and less expensive Tier 2 ERP systems easily deployed to support individual site requirements
Benefits : A common data model, application integration, standardization of reporting and performance measurement
Multiple Tier 1 – Multiple best of breed core ERP systems deployed to address unique needs at a division, plant or business unit level within large, highly diversified enterprises.Individual business units with distinctly different requirements where single ERP is ineffective.Large companies with multiple entities, where implementing a Tier 2 solution is efficient and cost effective.To continue existing ERP in acquired businesses to curb organization change management effort. Alternatively, a simpler Tier 2 ERP solution choice providing minimal transition impact.
- Quick deployment of simple ERP solutions during demergers/sell-offs to protect data security.
- Agile simple ERP deployment being a priority for emerging business units with dynamic innovative segments/products
- Excellent Deployment strategy and disaster management needed
- A bigger global audience hence high risk mitigation capacity needed
- Quarterly release schedule needs to be followed by all bringing in restriction to wait for the next release to deploy changes if needed
- Less flexibility
- Single change affects all globally
- The Roadmap specifies which ERP to be enhanced and the one(s) to become obsolete and over what period.
Example Scenarios for Multiple ERP
A single platform – same ERP throughout the enterprise – is obviously the ideal situation, however, scenarios exist where multiple ERP solutions makes sense, either short term or long term:
The decision to retain different ERPs comes with a clear understanding of the costs and risks. In addition, the evaluation process might uncover opportunities to improve system performance, utility and cost savings.
Challenges of Supporting Multiple ERPs (and Single ERP’s)
Besides integration issues and enterprise performance considerations, uncoordinated multiple ERPs can be maintenance and support nightmares.Different systems require different skills and knowledge in the IT staff as well as the user support community. Upgrades must be installed and tested resulting perhaps in substantial re-engineering.
For both multiple or single ERP,it is crucial to coordinate maintenance and upgrades and custom extensions or interfaces with a unified support structure that keeps all ERP systems operating at peak levels.
Challenges of Supporting Single ERP
The decisions around ERP involve a trade-off. High level comparison between the single and multiple ERP deployment option:
|Criteria||Single ERP||Multiple ERP|
|Total ownership cost||C||D|
|Overall system complexity||C||D|
|Seamless user experience||C||D|
|Business requirement fit||D||C|
|Opportunity to implement shared services model||C||D|
|Organization change management & adoption ease||D||C|
Conclusion & Recommendation
There is no ‘one shoe fits all’ strategy for ERP adoption but there methods for managing multiple ERP environments for the short term or the long term. We want to emphasize two areas: People and Speed.
Crucially, we want to emphasize the people aspects of ERP changes, especially during M&A activity, which can be a time of high stress. During this time, the Roadmap is essential to provide clarity of vision to everyone and avoid the background noise created by uncertainty. You may have two groups of employees and vendors – those with skills on the ERP that is staying, and those with skills on the systems being moved out. Reach out to your partners and vendors for help with this transition.
In the case of a merger or acquisition, decisions need to be undertaken with speed to quickly align reporting systems and terminology. This is critical for infrastructure consolidation and financial applications management, and reduces the unnecessary issues related to uncertainty and change management.