Global ERP: the pros and cons

Rolling out a global ERP system can be one of the toughest jobs faced by a CIO. It involves both technical and people management challenges, but the benefits of successful delivery can put millions onto the bottom line.


Since Colorcon consolidated all of its global offices and seven manufacturing sites onto one ERP system in 2001, the benefits have been indisputable. The specialty chemicals manufacturer has increased its annual inventory turns by 40%, closes its books each quarter more than 50% faster than it once did and has improved its production lead times. "It was a significant improvement," says CIO Perry Cozzone.

But getting to a single, global instance of Oracle's 11.5.10 E-Business Suite has also been fraught with challenges. Those included cleansing and verifying data from legacy systems, standardising business processes globally and getting buy-in from business leaders in locales as disparate as Brazil, Singapore and the UK.

"It was hard work," says Cozzone, who oversaw the final stages of the system implementation.

Transitioning to a single, global instance of an ERP system is a heady challenge for large and midsize multinationals alike. "It's a real struggle for many companies to have consistency around their business processes" because of differences in regional business requirements, says Rob Karel, an analyst at Forrester Research.

Companies that have achieved a single instance say it is worth the struggle to streamline financial reporting and increase the visibility of operations around the world, because doing so allows executives to make decisions faster.

Change management

For many organisations, the toughest challenge in moving to one ERP system is change management. "The organisation has to reach consensus on business processes," says Jim Shepherd, an analyst at AMR Research. "That's far and away the most challenging aspect of these projects."

Goss International began moving to one instance of SAP's ERP system in 2002 in an effort to consolidate its global financial reporting, close its books faster and have greater visibility into operations such as manufacturing. Following its 2004 acquisition of Heidelberg Web Systems, Goss implemented the SAP system in its Bolling Brook , headquarters in 2005 and at facilities in the UK and Shanghai earlier this year.

Because Goss had stuck to SAP's industrial machinery and components industry template, there was a 95% correlation among its sites in how the SAP software was pre-configured and how the company ran its operations, says Mike Masters, director of global applications and solutions at the printing press manufacturer.

The project team still had to work through regional differences. For instance, the French government requires that businesses report their inventory figures as a moving average. So the ERP project team had to adjust the SAP general ledger system used by its French unit so it could report one set of figures to the French government and a standard set to the company.

The experience at Millipore was similar. "The toughest part of all of this was implementing a change management policy," says Tom Roy, manager of application services at the Billerica based life science products and services provider.

The changes associated with Millipore's consolidated ERP effort started in 1999, when the company established central, round-the-clock support for Oracle ERP users in 32 countries. It was difficult for workers in the US to replicate the IT support service that employees in Japan were receiving locally, says Roy, so "we had to put different business processes in place."

Millipore placated many users by assigning three database administrators on rotational schedules to handle support calls from its international offices.

One of the biggest pieces of the change management puzzle is gaining buy-in from local business leaders accustomed to suites tailor made to support their unique business processes, says Forrester analyst Paul Hamerman. "There's often reluctance among business units to give up the systems they use," he says.

"Recommended For You"

Workday CEO explains how the company plans to take on the ERP giants William Grant criticises SAP for lacklustre performance during procurement