White papers why and how to achieve global erp

1. WHITEPAPER
WHY AND HOW
TO ACHIEVE
GLOBAL ERP

2. CONTENT
WHY ACHIEVE GLOBAL ERP?........................................................................................ 1
NO SHORTAGE OF IMPEDIMENTS.................................................................................. 2
STOPGAP MEASURES................................................................................................... 4
CONCLUSION: SELECTION AND IMPLEMENTATION......................................................... 4
ABOUT IFS .................................................................................................................. 6

3. 1
WHY AND HOW TO ACHIEVE GLOBAL ERP
WHY AND HOW TO ACHIEVE
GLOBAL ERP
BY DAN MATTHEWS, CTO
IFS AB
In decades past, only the largest organizations needed to worry about managing a
business across multiple locations, countries or continents. Today, even traditional
mid-market companies are becoming global enterprises. But they lack the expansive
IT organizations and structures of traditional, large scale multinationals.
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. They want to achieve the cost savings and simplicity that come from
operating far-flung business units on a single database, on a single instance of ERP.
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. That definition is probably too narrow for many
situations because companies with multiple sites or divisions within a single country
may face many of the same challenges as a multinational, and can also benefit from
standardizing on a single ERP instance.
In this white paper, 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 cannot 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 enterprise
software and associated hardware and human resources 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 hard-
ware. From a cost standpoint, global ERP allows consolidation of these IT resources
in one location where you can build centers of excellence, consolidate license manage-
ment and achieve more negotiating leverage with vendors.
To achieve many of these cost efficiencies, it is not necessary to run on a common
database, but rather run out of a common data center. An alternative strategy (which
we support these days by deploying IFS Applications on Windows Azure) is to deploy
into a globally standardized cloud service. Then you have the same agreements for
licensing and management regardless of where geographically the instance is actually
located.

4. 2
WHY AND HOW TO ACHIEVE GLOBAL ERP
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. In fact, quite
often the main driver for single instance is to force alignment of business practices
across different countries or divisions. 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 enhanced visibility and
control of the organization by standardizing on 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 senior management team 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 over-
come when moving toward 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.
Sometimes the ideal solution may turn out to be a single data center with a couple
of different databases but one application code where you can handle different divi-
sions or collections of divisions that have radically different data models and are dif-
ficult to consolidate on the database level. But at the very least, the goal ought to be
consolidating down to a very small number of databases and data models and a sin-
gle application instance—or a couple of application instances at most—that support
all of your different operations.
Five to 10 years ago, when we talked a lot about global single instance, the technol-
ogy was there to support it, but only in major cities in developed countries around
the world. While it requires careful planning, at this point, a company can get the
bandwidth with maximum latencies required
to connect users from wherever they are in
the world. Certain parts of the developing
world still have some challenges with connec-
tivity, but most locations where a company
might set up a distribution hub or a manufac-
turing facility, or where a sales manager may
need to access customer relationship manage-
ment (CRM) software, are adequately served.
The global instance also
provides senior management
with enhanced visibility and
control of the organization
by standardizing on one data
model across all enterprises
and entities.

5. 3
WHY AND HOW TO ACHIEVE GLOBAL ERP
Regional barriers including multiple languages, time zones, currencies and units of
measure are typically handled effectively by a modern enterprise software product.
There may be limits to the number of languages and currencies supported by some
products, and that ought to be a factor in selecting ERP for a global instance.
The biggest challenges turn out to be not difficulties with hardware, software or
connectivity, but rather with the people involved in the process.
One concern is whether or not all of your different divisions can agree on a
common set of standards like product nomenclature, customer naming conventions,
customer views and credit management policies across different divisions around the
world. As you move into a single data model, each entity has some ability to make
adjustments to deal with their regional issues, but fundamentally, you are dealing
with similar processes and a common set of master data. From a business standpoint,
this can be a very positive thing, but each division may find it unappealing to, for
instance, renumber hundreds or thousands of parts or restructure some of their
supply chain or remanufacturing data to comply with a new corporate data standard.
In implementation, people resources and software architecture can also be a
barrier to global ERP. While most enterprise software vendors have a certain degree
of global reach, many of them implement through different resellers or partners in
different parts of the world. This can increase project risk and present challenges
when it comes to ensuring consistent processes globally. A vendor with strong global
services teams and strong partnerships with global consultancies will be a more
secure choice. Software architecture also needs to enable a phased implementation.
This allows a management team to implement subsets of the functionality to
address immediate business needs, and roll out additional functionality once the new
processes are fully absorbed by the organization. It also allows them to roll software
out at one or two business units, locations, divisions or countries at a time. This helps
mitigate project risk and limit business disruption. Why bite off more than the organi-
zation can chew if you can cut the global ERP project up into more manageable pieces?
Other impediments are inherent in how the different divisions or entities want to
use the software. Most software today like IFS Applications is highly configurable
and flexible, and can be modeled to conform to various business processes within an
operating unit. But there is often a limit to how much variability you can achieve
with a single instance of an application.
That means that achieving global ERP
requires overcoming some resistance to
change and overcoming resistance to
commonality.
All of these are management problems
rather than software problems, so they can
be overcome by a strong ERP project team
that has solid management backing.
The biggest challenges turn
out to be not difficulties with
hardware, software or
connectivity, but rather with
the people involved in the
process.

6. 4
WHY AND HOW TO ACHIEVE GLOBAL ERP
STOPGAP MEASURES
Sometimes, the variation between business models within an organization and the
different philosophies on how you run the business make getting to that gold
standard of the single instance impractical. If you have two different divisions in
radically different lines of business, asking them to conform to the same types of
interfaces or data exchange frequencies and accept the same software model may
require too much work. In that case, you may want to have a consolidated IT infra-
structure with a couple of data models that can adequately accommodate both of
them.
If you are running a hybrid model where some divisions are on a global system
and others are not, are running the same application suite enterprise-wide but with
different implementation models or have a multi-product strategy where different
divisions are using different enterprise software products, your situation starts to
get a lot more convoluted.
In these cases, you can build front end portals that provide views into these
different applications across the enterprise. One common way to do this is to build a
data warehouse and extract, transform and load data from these diverse applications
to deliver a common view of data from across these multiple applications. This is
done purely for purposes of information consolidation.
While a data warehouse may offer a tool for consolidated reporting and viewing
of data, it can be difficult to achieve from a technical standpoint and a data modeling
standpoint. Differences between how different applications interpret data mean that
certain quantities, part numbers or structures in your disparate systems may be in
different states and therefore must be interpreted differently. What that means is that
when you get that data into the data warehouse, things do not always make sense.
Another downside of using a data warehouse as a substitute for global ERP is that
this is typically a one-way street. You will be pulling data out of your transactional
systems and into your data warehouse, massaging the data along the way. And that
always opens the door for data consistency problems where the
transactional system says one thing and the data warehouse says something slightly
different. So if you do build that, the ability to move backward from the data ware-
house to the source system for auditability must be a consideration.
CONCLUSION: SELECTION AND IMPLEMENTATION
There is a strong business case for moving to a global instance of ERP. Getting to a
single global instance can reduce cost, increase global visibility, accelerate decision-
making and extend standardized, consistent business processes across a geographi-
cally diverse organization.
Selecting an ERP application for a global instance requires that some specific
questions be asked at the beginning of the process. For instance, can the software

7. 5
WHY AND HOW TO ACHIEVE GLOBAL ERP
handle the “multi-multis” ... the multiple currencies, the multiple languages, multiple
units of measure, multiple sites, multiple manufacturing modes or business models,
multiple organizational structures or hierarchy of sites. Lacking this degree of flexi-
bility, it is unlikely that an enterprise software product can satisfy current, much
less future, needs across a global organization. As issues arise in the business, lack-
ing visibility through ERP, management will be blindsided and unable to make a
course correction in time. Or changes affecting the business may require costly
work from systems integrators to get the application to conform to new require-
ments. The ability of an application to handle diversity and agile business operations
is important in order to achieve global ERP.
It is also important to determine how much experience the ERP vendor or systems
integrator has when implementing across multiple geographies. An implementation
organization must know how to navigate not just the IT challenges, but the human
factors of a diverse implementation.
A successful selection and implementation also requires that the implementation
methodology used supports a phased implementation approach. Global ERP is
typically not implemented all at once. Individual countries or sites are implemented
in steps to reduce the disruption of the enterprise. Your enterprise software partner
must not only offer software that is flexible enough to do this, but needs to be
capable of planning your entire global implementation in advance so that you arrive
at a successful global instance even though you will be rolling out one phase at a
time. Your implementation partner needs to guide you through the process so that
you do not implement one or two sites and then find that your configuration is
incompatible with subsequent sites. It is imperative that the implementation plan
address the entire project holistically from the start in order to avoid false starts,
rework, and cost and timeline over-runs.
Selecting an ERP application and implementing a global single instance can be
challenging, but the benefits and return on investment can be considerable.
As the Chief Technology Officer (CTO) at IFS, Dan’s responsibilities encompass researching,
formulating, and communicating the strategic direction for IFS Applications. Matthews leads
the Research & Strategy unit within IFS and manages IFS’s key technology partnerships.
He has held a number of positions within the company, including software engineer and project
manager. Early in his IFS career, Dan played a vital role in the initial development of a graphical
user interface for IFS Applications. Recently, he has been the driving force behind the innovative
IFS Enterprise Explorer user interface and IFS Touch Apps. Dan holds an M.S. degree in
Computer Science and Software Engineering from the Linköping Institute of Technology.

8. En11015-1Production:IFSCorporateMarketing,December2013.
ABOUT IFS
IFS is a public company (OMX STO: IFS) founded in 1983 that develops,
supplies, and implements IFS Applications™
, a component-based
extended ERP suite built on SOA technology. IFS focuses on agile
businesses where any of four core processes are strategic: service
& asset management, manufacturing, supply chain and projects.
The company has more than 2,000 customers and is present in
50+ countries with 2,800 employees in total.
More details can be found at www.IFSWORLD.com.
For further information, e-mail to info@ifsworld.com
www.IFSWORLD.com
THIS DOCUMENT MAY CONTAIN STATEMENTS OF POSSIBLE FUTURE FUNCTIONALITY FOR IFS’ SOFTWARE PRODUCTS
AND TECHNOLOGY. SUCH STATEMENTS OF FUTURE FUNCTIONALIT Y ARE FOR INFORMATION PURPOSES ONLY
AND SHOULD NOT BE INTERPRETED AS ANY COMMITMENT OR REPRESENTATION. IFS AND ALL IFS PRODUCT
NAMES ARE TRADEMARKS OF IFS. THE NAMES OF ACTUAL COMPANIES AND PRODUCTS MENTIONED HEREIN
MAY BE THE TRADEMARKS OF THEIR RESPECTIVE OWNERS.
IFS AB©2013
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