There are many reasons to replace your current ERP systems. The most common is age. Once an ERP system nears its tenth birthday, just too much technological advancement and functional innovation have taken place to continue to settle for a system you’ve probably outgrown and that no longer provides competitive advantage.

ERP system

Replacing you ERP system? Consider how much things have changed. (Part 1)

If this is the year you begin a review of your current system and start to take inventory of what a possible replacement should look like, it’s time to think about how very much has changed in the world of business. Those changes can be used as touchstones to test how well possible software suppliers have responded. Ask yourself how the following mega trends have affected your organization, then ask each ERP company you talk to how their systems have changed to accommodate these trends.

Globalization. The world has shrunk a great deal in the past ten years. Outsourcing was not a common part of the lexicon then. Today, companies find their supply chains are becoming ever more global, particularly as manufacturing regularly defaults to the country or region with the lowest labor costs. It’s not just supply chains that have become so global. Most American companies realize that significant growth is going to come from outside our borders. American companies are setting up offices, warehouses and factories, establishing subsidiaries and acquiring local partners worldwide as a competitive necessity.

Globalization makes several new demands on an ERP system. Today they must have support for multiple languages and multiple currencies, and must monitor and adjust for monetary exchange rates in real time. Doing business in the local language reduces errors, speeds up responses and is the essence of thinking global while acting local. A global ERP system needs to take into account local regulations and taxation issues while also ensuring that labor practices meet international standards.

Companies with units in many parts of the world are good candidates for a two-tiered ERP system. The headquarters operation back home, with its closely linked factories and warehouses, employ a top tier ERP system, such as Oracle and SAP. Satellites in other parts of the world, with lower functional requirements and without the IT resources to support a top tier ERP system, employ simple, less expensive ERP software served over the Internet at a fraction of the cost but with all the basics covered. The satellite operation retains some autonomy, and has the flexibility to respond quickly to changing local circumstances, while headquarters management retains control of financial applications and has real-time visibility into operational performance. This type of “cloud” or SaaS (software as a service) ERP is now available with the capability to integrate transactions and data with the parent SAP or Oracle system, so for many companies it is a best-of both-worlds solution.

The coming decade promises to accelerate the globalization trends, as China becomes more accessible, India and Brazil continue their growth and many countries around the globe emerge from third-world status to become active economic entities. Consider an ERP vendor’s global commitment to proactively respond to this megatrend as an issue as important as the functionality of their software today.

Continued in Part 2

Written by :

Don Lucky