Businesses that expand into numerous countries and subsidiaries must ensure that they have an Enterprise Resource Planning (ERP) system ready to facilitate and expand on these changing business models. This amounts to identifying the most appropriate system for your organisation, not only as it stands currently but also as it evolves and grows. This could mean growth into a distributed organisation or an integrated global company.
In this article, we will explore some of the fundamental considerations involved in this decision.
What is a global ERP system?
Global ERP systems facilitate automation, streamlining and optimisation of a multi-national organisation. They integrate data and information from different departments in multiple countries and subsidiaries into connected applications for a centralised view.
If you are operating in multiple countries, ERP systems deliver a singular, real-time perspective of all aspects of your business operations. Automation is key, enabling you to move tasks that were previously manually undertaken into automated workflows within the ERP, providing drastic improvements to efficiency and accuracy whilst reducing paperwork and eliminating churn.
Consider the following questions to assess whether a global ERP might be right for you:
- Is your business operating in multiple countries? (Or will it be?)
- Does your business handle more than one currency?
- Are you required to pay taxes in different countries?
- Are you using data centres around the globe?
- Have you recently acquired a new company or is market expansion something you envision for your future?
If you answered ‘yes’ to any of these questions, a global ERP system may be a shrewd choice to drive automation and optimisation among the numerous functions and departments of your business.
Is the ERP system equipped for different currencies, tax regulations and legal frameworks?
When making decisions about global ERP solutions, it is crucial to consider whether a system is able to work with multiple currencies, taxation rules and legal frameworks. For example, businesses that cross borders need to have a finger on the pulse of exchange rates.
There are also different rules in different countries around taxes like GST and VAT. And financial reporting requirements will always vary from one country to the next. Whenever local legalisation changes, it can have profound consequences for international businesses.
The best global ERP system for your organisation will have a track record of succeeding in the geographical locations that your business is looking to operate in. It should accommodate regional differences and automatically address them in a single instance, and updates should be swiftly deployed whenever there are changes that need to be accounted for.
What are your requirements regarding global financial consolidation?
The financial managers are responsible for providing a comprehensive business overview for shareholders and financial authorities, and this means consolidated financial information is crucial. With multiple locations, you will need multiple report sets and all of this must be consolidated into a singular financial statement. With a powerful global ERP system with high-quality automation tools for consolidation, you remove the issue of errors creeping in as reports are passed through various hands.
To make best use of global ERP for consolidating finances, executives must look at how the business model will be supported by the system. For instance, a completely integrated model may be best, in which all subsidiaries and locations run the same ERP system instance. Alternatively, a regional model might be more appropriate, wherein various regional businesses operate different systems and deliver consolidated financials to be reconciled at the head office. A hybrid of these two models may also be possible.
The issue with the second option is that a number of non-standardised solutions throughout the company could lead to a ‘mushrooming’ effect, causing productivity and time losses and increasing the risk of errors during reconciliation. When data is transferred manually across multiple local systems, these types of errors are notorious.
The bottom line is that a global ERP solution must offer the necessary flexibility to facilitate the specific expansion model of your business. This is the case whether you are executing international expansion, launching new subsidiaries, expanding product lines or entering new channels.
Can the ERP provide the necessary customisation?
A global ERP system must always be customised to fit the needs of a specific business. It needs to be optimised for things like your objectives and locations. All local employees must have access to data and dashboards in their currency and language, while some local business workflows will be required to stay in use.
Where this is the case, the ERP will eliminate the costs and delays associated with needing IT support from headquarters to implement subsidiary changes. Eventually, a seamless consolidation and roll-up at the international level will be required.
Every stakeholder must have a consistent view of all pertinent information. This is why all consolidation and calculations should be carried out using the same fundamental database. Vendors of good global ERP systems will be able to show examples of implementation success stories where multiple languages, currencies and business-flow customisations were implemented without undermining compliance with global reporting requirements.
What level of visibility will be provided by the system?
The move to a global ERP system is often driven by a need for tax and accounting compliance across borders as well as effective financial consolidation. But there are far more benefits beyond mere financial management.
With a global business management system, you can streamline and standardise various operations like inventory control, management of the supply chain, invoicing and customer relationship management (CRM). With more standardised processes, you have greater control over business operations and enhanced visibility from the top down.
With the most appropriate system in place, your organisation will be able to standardise key processes where required whilst still allowing for decentralisation and flexibility as necessary.
Is the ERP system scalable?
Scalability means the ERP system continues to enable and support a growing business. With a centralised system, customised and optimised for all new business interests, it becomes swifter and simpler to establish business processes wherever they are needed. ERP software is intended to support business growth; it should never hold it back.
Can the ERP system exist alongside an on-premise ERP system if required?
Many businesses invest extensively in local, on-premise ERP systems. If you have done this, you will want the new ERP system you implement for your international expansion to co-exist with the current system you have in place. There will be a great deal of legacy data in that system, so you will not be able to migrate entirely to a new system all at once.
With a two-tier implementation, businesses that this applies to can maintain their current systems whilst bringing in the more agile, cloud-based international ERP. This will accommodate new divisions and subsidiaries without any disruption to ongoing operations. But the best solution will be able to ensure perfect synchronisation between those two ERP systems.
The move to a global ERP system can be daunting, but the right solution from an experienced provider can unleash the real growth potential of your business.
NetSuite OneWorld is a fantastic solution offering a number of benefits for businesses. The three broad areas where it delivers are:
- Its cloud-based infrastructure, offering unparalleled flexibility, scalability and near round the clock uptime, wherever you are in the world.
- Powerful financial tools designed specifically to handle the intricacies of operating in numerous geographical locations including multi-currency, multi-tax, multi-language and local compliance measures.
- Sophisticated reporting tools for greater visibility throughout global operations.
NetSuite has a strong track record of providing reliable and flexible global ERP systems. If you are looking to expand in any way, and are not already using NetSuite, it should definitely be on your radar.
You can learn about NetSuite OneWorld in our informative article NetSuite OneWorld – Global Business Made Easy.
Why choose Eventura for your ERP project?
Eventura have been helping businesses in their digital transformation journey for two decades. From the implementation of industry-leading ERP solutions such as Sage 200 and NetSuite, to helping them move their entire operations to the cloud and away from costly and restrictive on-premise solutions.
As well as being NetSuite Solution Providers, Sage 200 Partners and Microsoft Gold Partners, we also offer a wide range of managed IT services, meaning we can take your business as a whole and help it achieve digital transformation.
If you would like to speak to one of our experts, you can request a free call back here.