As businesses expand into multiple countries, geographies, and subsidiaries, company leaders need to ensure that their ERP systems are able to support and enhance their new business models. This means identifying the system that is not only right for your business today but also which will be able to support your business as it grows—whether as an integrated global company or as a more distributed organization with regional businesses. In this article, we take a look at some of the fundamental questions informing this decision.
Financial managers at corporate headquarters need consolidated financial information to provide the complete business overview that shareholder and financial authorities require. Multiple locations give rise to multiple sets of reports—all of which need to be consolidated. A global ERP system makes it easy to automate consolidation and mitigate the errors that inevitably creep in when reports pass through multiple hands.
To get the best out of a global ERP system for financial consolidation, executives need to consider how the system will support the business model. This could mean a fully integrated model where all locations and subsidiaries run a single instance of the ERP system, or a regional model where a number of regional businesses run their separate systems and provide consolidated financials to the head office on a periodic basis to be reconciled, or a hybrid of the two. However, the problem with the second scenario is the mushrooming of a plethora of non-standard solutions around the company which will lead to lost time and productivity and increased risk of reconciliation errors—thanks to manual data transfers across multiple local systems. Bottom line, a global ERP solution needs to be flexible enough to support the expansion model that fits your particular business needs whether your business is undergoing geographic expansion, product line expansion, new subsidiaries, new channels, etc.
When it comes to choosing a global ERP solution, another key consideration for any organization that operates internationally is whether the system can handle multiple currencies, tax regimes and legal frameworks. Currency exchange rates, for example, become a big factor as businesses cross borders. Transactional taxes, such as VAT and GST, apply differently in various countries. Financial reporting requirements vary from country to country. And changes to local legislation can have far-reaching consequences on international business.
The right global ERP system for your organization will have demonstrated success in the countries where your business operates (and also where you might likely operate in the future). It should allow for regional differences to be addressed automatically in a single instance and for updates to be rapidly deployed in response to changes in exchange rates, taxes and business regulations.
A need for effective financial consolidation as well as tax and accounting compliance often drives the move to a global ERP system. However, the benefits of such a system are not limited to financial management.
A global business management system can also help your business streamline and standardize operations from supply chain management and inventory control to customer relationship management and invoicing. More standardized processes will mean more control over operations and greater visibility into those operations from the head office.
The right system for your business will enable you to standardize processes where necessary while still allowing flexibility and decentralization.
It may seem strange to discuss customization in the same breath as standardization, but every implementation of your global ERP system needs to be customized to your specific business, your locations and your objectives. Local employees need to view dashboards and data in their own language and currency, and some local business workflows need to remain in place—without the delays and added costs that result from requiring headquarter's IT support to implement all of those subsidiary changes. Eventually, however, you will need a seamless roll-up and consolidation to the global level.
Since every stakeholder needs a consistent view of the information, all calculations and consolidation should be performed using the same underlying database. The vendor of your global ERP system should be able to provide examples of successful implementations that involve multiple language, currency and business-flow customizations while also satisfying global reporting requirements.
Scalability is all about how the global ERP system enables and supports your business as it grows. A centralized system, with customizable instances for each new business interest, makes it quicker and easier to establish business processes in new locations. Your ERP software should support the growth of your business, not constrain it.
Businesses have often invested heavily in local, on-premise ERP solutions. Therefore, it is imperative that any new ERP system you bring on to manage your global expansion co-exists with your prior headquarters system because, as you know, there is a lot of legacy data in the system which you simply can't move into the new system overnight. A two-tier implementation enables such businesses to keep their existing systems while introducing more agile, cloud-based global ERP capabilities for new subsidiaries and divisions without disrupting ongoing operations. The right solution ensures complete synchronization between the two, ERP systems.
Moving to a global ERP system can appear daunting, but with the right solution and an experienced provider, it can help unleash your business' true growth potential.
Trusted by over 16,000 organizations and subsidiaries—many of them Fortune 100 companies—in more than 100 countries, across 50 tax jurisdictions, and buying and selling in more than 190 currencies, NetSuite is the world's most deployed cloud-based global ERP system.
Here at NetSuite, we have a strong track record of providing flexible, reliable global ERP systems. Take a look at NetSuite OneWorld to see how we help businesses everywhere make a smooth transition to a global ERP solution.