Large South African companies have firmly established themselves as giant players in the global markets for the products and services they provide.
From mining and heavy industry to energy and petrochemicals, many of our largest listed companies have rapidly expanded from here into the rest of the world.
Today, we are also seeing mid-sized businesses in these sectors strive to expand from South Africa into the rest of the continent and even into the Americas, Europe, and the Pacific Rim. But as they do so, they face the challenge of building an IT platform that enables them to manage the business across multiple locations, countries or continents.
This means that more and more South African companies need to build global ERP solutions. 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.
They understand that getting to a single global instance of ERP can reduce costs, increase global visibility, accelerate decision-making and extend standardised, consistent business processes across a geographically diverse organisation.
Barriers to global ERP
Yet, there are different challenges to overcome when moving toward that single global ERP instance. The biggest ones are not difficulties with hardware, software or connectivity, but rather with the people involved in the process.
Overcoming resistance to change and commonality is usually the biggest challenge companies face in rolling out global ERP. These are management problems rather than software problems, so they can be overcome by a strong ERP project team that has solid management backing.
One concern is whether or not different divisions in the business can agree on a common set of standards like product nomenclature, customer naming conventions, customer views, and credit management policies.
Moving into a single data model gives each entity some ability to make regional adjustments, but fundamentally each part of the organisation will be working off similar processes and a common set of master data. There may be some resistance from departments or divisions to restructure their supply chain or remanufacturing data to comply with a new corporate data standard.
Human resources and software architecture can also be a barrier to global ERP. Most enterprise software vendors have some global reach, yet 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.
Selection and implementation
To choose the right ERP solution for a global instance, a business must ask some specific questions at the beginning of the process. For instance, can the software handle multiple currencies, multiple languages, multiple units of measure, multiple sites, multiple manufacturing modes and business models, and multiple organisational structures?
Without this degree of flexibility, an enterprise software product will not satisfy current or future needs across a global organisation. Without visibility through this sort of agile ERP solution, management will be blindsided by business issues and unable to make a course correction in time.
It is also important to determine how much experience the ERP vendor and the systems integrator have in implementing solutions across multiple geographies. An implementation organisation must know how to navigate not just the IT challenges, but also the human factors of a diverse implementation.
A successful implementation also demands a methodology that supports a phased implementation. Global ERP is typically not implemented all at once.
Individual countries, sites, business units and departments should be implemented in steps to reduce disruption.
The enterprise software partner must not only offer software that is flexible enough to do this, but needs to be capable of planning the entire global implementation in advance. It is imperative that the implementation plan addresses the entire project holistically from the start in order to avoid false starts, rework, and cost and timeline over-runs.
What’s more, the solution should allow for implementation of subsets of the functionality to address immediate business needs. Additional functionality can be rolled out once the new processes are fully absorbed by the organisation. This helps mitigate project risk. Why bite off more than the organisation can chew if one can cut the global ERP project up into more manageable pieces?
Selecting an ERP application and implementing a global single instance can be challenging, but the benefits and return on investment can be considerable.
